Are you spending too much time and money on attracting new customers? Mat Wylie highlights the importance of focusing on those customers you’ve already won over.
2020 could become known as the year that revived retention as a core focus for businesses.
With everything so uncertain, many businesses are putting a renewed focus on looking after the customers they already have. Those businesses realise that repeat customers create a financial foundation for your business – helping you get through the tough times and invest back in the business when things are looking up.
Customers are an investment – so invest in them
I’m a big fan of the “catch and keep ‘em” strategy.
Let’s say it costs you $50 to acquire a new customer. If they buy something from you once for $20 and never come back again, you’re $30 down. But if they come back ten times a year for ten years, you could turn that investment into thousands of dollars.
Depending on the type of business you have, that return on investment could be even higher – even into the hundreds of thousands.
Making the most of your investment just makes sense – so once you’ve “caught” the customer, make sure you keep them by giving them an incredible experience.
The cost of an unhappy customer
Beyond the cost of acquiring a customer and the opportunity cost of them not coming back, there’s a third cost that every business needs to take into account – the cost of an unhappy customer.
If that same customer comes in once and spends $20, you may be $30 down. But if they start spreading the bad word about your business, that has a multiplier effect. Whether it’s telling a few friends over drinks or heading online to give you a bad review, you could end up missing out on dozens or even hundreds of potential customers simply because you didn’t give that first customer a great experience.
Have a retention strategy
I’m surprised by how many companies don’t have a retention strategy. So often, businesses are so focused on getting new customers through sales and marketing that they forget to focus on those customers that they’ve already won over. A clear retention strategy can fix that.
So what should a good retention strategy cover?
• Collecting the data: Do you even know if your customers are coming back or not? If you don’t have a loyalty programme that measures this, there are other ways to collect that data, such as getting their info for a warranty, or collecting their email address to send an e-receipt (this is also a bonus for the customer as it means that, if they need to return anything, they don’t need to keep the receipt).
• Making it a core focus: Build in retention measures to track how well your team is performing and they’ll be far more likely to focus on it. If you currently have a retention rate of 50 percent, how can you get to 60 percent? Give your team a benchmark and something to improve on and you’ll see how much more engaged they get.
• Dealing with complaints quickly: Put a process in place that prioritises turning someone’s experience around and fixing their problem quickly. Listen to them, make sure they’re satisfied, and invite them to come back.
• Learning from your mistakes: It’s all well and good solving an issue for one customer, but if you make the same mistake time and time again then you’ll always end up missing out. So what are the actions you need to take from dissatisfied customers? What processes do you need to change, what training do you need to implement, what cleaning do you need to improve?
If you focus on improving from the feedback you get, you’ll absolutely move the needle in the right direction.
Happy customers come back more often, spend more, and become your biggest advocates – so focus on making your customers happy and it will always pay off.
Rather than just spending additional money on marketing to bring in more new customers, ask yourself – are you looking after the customers you’ve already got?
