An air-tight customer retention strategy is just the secret sauce you need to increase your business profits. But trying to increase customer loyalty without first understanding the reasons behind why customers leave businesses is like trying to eat your tomato soup with chopsticks. You may be getting a little taste, but chances are that you’re not really catching any of the good stuff.
So why is customer retention so important? Well, for starters, there’s an old business rule that says: “It’s six times more expensive to acquire a new customer than it is to keep an existing one.” Now I’m no mathematician, but I have a funny feeling this means you would need to invest way more resources to acquire new buyers than you would to keep your current customer. It’s a heck of a lot harder to convince a new potential buyer that you’re worth their money than your returning customers who already like your product or service. You just need to make sure they continue to like it!
How do you do that? Well, let’s look at the top three reasons that customers leave businesses.
They had a bad experience
Statistics show that 68% of customers leave a business because of poor attitude or indifference on the part of the service provider. Maybe a salesman talked down to them, a customer service rep seemed a little annoyed, or the teenage cashier just got into a fight with their BFF and wants the whole world to know all about it.
To your employees, this may be just one random customer who they’ll likely forget about by tomorrow, but you can bet your bottom dollar that your customer will remember that experience the next time they think of coming your way.
The obvious remedy is to train your employees that the customer always comes first and to not let them walk out of your door unless they’re happy.
Despite your best training efforts though, there may still be a time where a customer has a bad experience. In this case, it’s best to immediately remedy the situation and promise the customer that it won’t happen again. Throwing in a discount on their next purchase goes a long way in these situations. The quicker you do this, the more likely the customer will be to give you another chance.
Their loyalty isn’t rewarded
It’s no secret that just about every business has a loyalty program that rewards customers for repeat visits. It’s worth noting that the average American household is involved in 29 of these programs. But did you know that they only actively use (earning or redeeming just one point per year) 12 of them?
What does that tell you? That the loyalty program itself isn’t enough to keep your customers coming back for more.
Rewarding customer loyalty is paramount to keeping that loyalty. Occasional discounts, letting them try out new products before release, throwing in an extra service for free every now and then can all go a long way toward making a customer feel like they are truly valued and appreciated.
But what about adding a personal touch? Customers want to be more than just another number. Developing a personal relationship with your customers will not only increase their loyalty but also gives them a reason to brag to their friends all about your business. Customer retention AND word of mouth advertising? Now that’s a two-for-one deal that’s just too good to pass up.
They find a better deal elsewhere
Let’s face it, a customer can be completely satisfied with your products or service, but if it doesn’t save them dollars, it doesn’t make cents sense. If they find a considerably cheaper or more convenient deal for a comparable product or service elsewhere, they are likely to take it… and customers are always looking for the right deal. This means that you need to ensure your deals are at the forefront of their mind.
Business text messaging is a fantastic way to do this, as customers are always on their phones and getting updated on what’s new. Why not update them on what’s going on with your business? In 2012, the CFI group found that texting is the highest-rated contact method when it comes to customer engagement.
With that in mind, a quick “Hey Jen! Just wanted to let you know your favorite product went on sale today” text message should be enough to make a customer think twice about getting their goods from the new store just around the corner. They already know that they like what you offer, and now they know they can get a deal on it. In the business world we call this a “no-brainer.”
Customer loyalty is the gift that keeps on giving
At the end of the day, it’s much harder to acquire a new customer than it is to keep an old one. Sure, you may have to invest a few dollars into your customer engagement program, but it will still save you money you’d otherwise have to spend on new customer acquisition.
One of the biggest benefits of having loyal customers is that they will spread the word about your business to friends, coworkers, and family members. This means you’ll start seeing new customers come in without having to spend a dime attracting them. Save money on marketing to new customers, and generate more customers from your loyal ambassadors Talk about a win-win situation.
A happy customer is a loyal customer, and now that you know why customers leave businesses, helping your loyal customers bring in more and more happy customers is a walk in the park.