Retaining Your Customers
Customer loyalty should be a key focus in any business, with good reason. Estimates suggest it can cost six times as much to get a new customer as it does to keep an existing one.
A business that is not paying proper attention to this is like a farmer milking a cow with a hole in the bucket. You have to work even harder at milking while the leak continues. Working out how big the hole is for your business is the first step to take in improving your customer loyalty, the next is understanding how and why they are leaving.
Working out how many customers leaked out is not just simply comparing the No. of customers you have now as compared to how many you had this time last year; that would give you your net gain/loss of customers.
The formula for working out how many customers you have lost in a given period is:
Total No. of Customers =
(No. of Customers at the start of the measuring pd.) X (No. of Customers at the end of the measuring pd.) + (No. of new customers added over the pd.)
So to measure how many customers you have lost, you really have to measure how many you have gained!
It is important to find out why do customers leave? The six main reasons for customers taking their business elsewhere are:
* 1 % Death
* 3% move away
* 5% buy from a friend
* 9% sold by a competitor
* 14% product/price
* 68% perceived indifference
The biggest reason of all is perceived indifference i.e. the customers don't think that you care about them or that they matter to you. If this is the reason for them leaving, then it is a really tough job to win them back. The key focus should be to keep them happy while they are a customer very much a case of prevention being better than the cure.
These days with the abundance of alternative options available to customers, you really have to focus on keeping them satisfied. Simply providing them with the product or service is not good enough
Here are seven tips for providing that extra bit of attention that will make your customers want to keep coming back:
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Master delivery. Deliver on time every time. Inform you customer if there is a problem and explain how you are going to be dealing with it. And then follow up and make sure that everything turned out ok. Make sure your invoices are correct and delivered in a timely fashion.
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Thank you notes thanking them for their order or business.
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Follow up calls to find out if everything is ok (like they do when you have a meal in a restaurant)
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Prior notice of new products or of an upcoming sale.
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Deliver your product with an unexpected gift.
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Send cards. Birthday, anniversary or any other date relevant to the customer.
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Depending on the product, a follow up call to offer them another or a refill or an add-on.
Most of these things are not difficult to do. Yet very few businesses do them. Make them a part of the way you do business and you will have made a very important and valuable improvement to your business.
How Many Customers Can You Afford To Lose?
According to the Harvard Business Review, 67 percent of customers who choose a new supplier said they were satisfied with their former supplier! On an average, most U.S. companies lose half their customer base every five years. So why would customers who are satisfied stop doing business with you? Well consider this – “Customers go where they are wanted and stay where they are appreciated”.
Varying estimates place the cost of acquiring new customers at six to ten times more than selling to existing customers. Losing customers can drastically affect your company’s reputation, credibility, referrals, sales, and profitability.
Seven Ways to Retain Your Valued Customers:
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Never assume you know what customers want – ask them! Customer surveys are a great tool for understanding customer needs and identifying innovative ways to solve their problems or exceed their expectations.
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Measure and reward customer satisfaction. If customer satisfaction is really a priority in your business, demonstrate this to your team. Develop a method to measure it, set goals for improvement and reward the team when the goal is accomplished.
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When you hire people to interact with your customers, make sure they possess good customer service skills like trust, empathy, flexibility and verbal communication proficiency. Each customer contact with your team is an opportunity to build your reputation or destroy it.
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Say Thank You. Sounds obvious but consider this. When was the last time you received a thank-you note from a company you do business with? This simple strategy can really make an impact and says a lot about your company and the value you place on customers.
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Stay connected with your customers – by phone, mail or email. While the frequency may vary, every customer should receive a ‘touch’ at least once per quarter.
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Make valuable customers feel more appreciated than non-customers or prospects. While new customers are critical to growth, make sure current customers get some VIP treatment. Programs, offers or specials just for current customers work well.
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Look for opportunities to sell multiple products or services to your existing customers – to create the perception of a one-stop solution provider. Research shows this builds loyalty and retention. It’s also a great way to increase revenue and profit!
Finally, make customer service everyone’s responsibility – especially in a small business where team members wear many hats. Train your team on customer service. From the receptionist to the delivery driver, your team will make an impression. The kind of impression they make is up to you.
Building Raving Fans Involves Trust
It is well documented that it is more affordable to retain an existing customer than to find a new one; most references sight a savings of six times. Not only do we want these customers to stay, but we want them to become raving fans.
This level of commitment is built on establishing trust, based upon the following:
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Reliability: Can your customers count on, and find you reliable enough to fulfill your commitments and keep your promises? Life is filled with unexpected events; any consistency you can provide, will be a welcome change.
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Competence: Do you demonstrate that you know what you are doing? Is your quality of service high enough for customers to want to come back again and again?
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Rapport: Have you invested in getting to know your clients well? Do you know simple things like their names or their favorite product, etc.?
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Vulnerability: Are you willing to admit when you have made a mistake? Will you go the extra mile when something is not done correctly, and accept responsibility rather than blame it on something (or someone else)? Nothing demonstrates commitment like accountability.
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Loyalty: Will you do what is right for the client (even if it does not maximize your benefit)? Will you continue to treat your clients/ customers in a 'special' manner?
Most customers move onto other businesses, because they do not believe the business cares about them. By establishing trust first, you can build a dedicated client/customer list that in turn, will incluide your true raving fans, and help you build the business you want.
Manage Your Sales Funnel
Most of us know Prado’s 80/20 rule – 80 percent of your revenues will come from 20 percent of your customers. But often times, sales management does not follow this maxim. But what does working the 20 percent mean?
Managing your sales funnel is a practice whereby you can identify where each prospect is in their buy/sell process with you. Think of a funnel, wide on top, narrow at the bottom. Not all of your prospects that start out in the top of the funnel will make it to the bottom. The percent of those who make it the whole way through is your conversion rate.
And there are specific steps within your funnel that should move a prospect closer and closer to you, one step at a time.
To make sure you are managing your sales funnel, take these following action steps:
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Identify the steps of your sales funnel. List out all the steps you and your sales team take from the time your marketing stops or the deal is closed. It’s better to err on the side of too many sales steps than not enough.
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Make sure that your sales steps match your target market’s buying steps. For example if your target market uses the internet heavily, make sure you have a strong, education based website. Remember the rule “make it easy for them to buy." You could be losing sales if you are requiring prospects to jump through hoops that they could find tedious.
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Decide your “moment of truth” in your sales funnel. Too many business owners who are also their own sales people think all the way to the end- all the way to the sale. Instead, I recommend that you back up and look for the critical step that will get them to the sale. For car salesmen, it’s getting the prospect into the car, for a own hospitality business, it is getting the decision maker to see the facility. Clearly identify your own moment of truth sales step.
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Create a simple system that can chart the prospects and precisely where they are in the sale process. This way at any given moment, you can identify where your prospects are in your sales cycle.
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Implement Key Performance Indicators to measure your conversion rate. The simplest of KPI measurement is the conversion rate from lead to sale. You may want to consider additional indicators that measure a second conversion rate from the critical sales step to the sale.
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Create a fool proof system for your sales process. Give some thought to this by answering questions such as, "What happens when a lead calls in?", "What marketing material do we send out to interested prospects?", "Are all sales inquiries followed up the same way?"
Make Your Customers Sell For You
Raving fans are customers who are so over the moon with the business and the service you provide that they will not only tell all their friends and colleagues about you, but actually bring them to you and help you make sales to them.
It's a frightening fact that we spend six times as much money attempting to attract new customers to our businesses than we do to up-sell, on-sell and generally care for, and retain our existing customers.
Another frightening fact is that 68 percent of customers who stop buying from an organisation do so simply because of a perceived indifference. The business actually didn't do anything wrong; the customer just thought the organisation didn't care enough!
Would you like your customers to shout your name from rooftops telling people why, if they're not dealing with you, they're missing out on something awesome? Here are some simple tips that you can introduce in your business today. These tips will help keep your customers not only coming back, but bringing their friends with them as well:
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Use their name frequently.
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Send them thank-you cards.
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Ask them to come back.
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Sell them everything they need to gain maximum benefit from the purchase.
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Call them just to make sure everything is going well.
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Call them when something new arrives in stock that you know they would like.
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Follow-up & follow-up again.
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Under-promise and over-deliver.
Try to implement just a few of these tips. As a Business Owner, you must lead by example; your team will do what they see you do.
The bottom line is that if you care for your customers, your customers will care for you and help you grow your business. It really is as simple as that.
