Are you spending to “get” or “keep”?
In today’s challenging economy, small business owners sometime forget the importance of their customer retention efforts, spending their marketing dollars on acquiring new customers (the “get”), rather than continuing to build a relationship with their current customers (the “keep”).
In 2001, Frederick Reichheld wrote The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value In his writings, Reichheld advocated creating “loyalists” within your customer base, and that in doing so for just 5% of your customers would, on average, lead to a increase in profit per customer of between 25% and 100%! He also wrote that the cost of acquiring a new customer is five times the cost of serving established ones To start, think about your business and answer the two questions below:
- Does your business benefit from repeat customers?
- Does your business benefit from referrals from satisfied customers?
If you answered “yes” to either of these questions, then you need a customer retention program. In designing that program, here are some things to think about:
- Do you currently have a sales process for retaining your current customer base?
- Do you have a clearly defined follow-up program that “keeps in touch” in an appropriate, memorable way?
- Do you continue to add value to your customer relationships over time?
In the Book Yourself Solid system, we call this “Keeping in Touch”, which is one of the Book Yourself Solid seven core self promotion strategies. From a customer retention perspective, keeping in touch with current clients in an appropriate, relevant and perfectly timed manner is the key to keeping your clients engaged with you. Depending on your business, this may mean a lot of different things. Most importantly however is that you dedicate time and resources to do it.
For the mortgage broker, it might be quarterly rate updates to the their client base. For the chiropractor, it might mean monthly seminars on a specific health topic. For the banker, it might mean customer appreciation events or trips.
Whatever it is for you, consistency is the key. My mortgage clients know that they are going to get a phone call from me on the anniversary of their home purchase or refinance closing. That call does a lot of things. First, it lets the client know that I am watching things for them and am keeping in touch. For me, I might learn about a change in the client’s financial life that means a new mortgage opportunity. It also gives me a chance to introduce the other people that should be in my client’s financial life like an estate planning attorney, a financial advisor, or life insurance agent.
I think there also needs to be some non-business related communication to build goodwill and humanize you and your business. A personalized birthday card for example. Not the stock, generic birthday cards that we get from our insurance agent, but a heartfelt, personalized card. This is why I like SendOutCards. This system gives me the ability to send a personalized, heartfelt message, individualized to my customer, all in less than 60 seconds.
For many small business owners, Customer Retention is the difference between being in business and not being in business, so I would like to offer you, the small business owner, a complimentary review of your current customer retention system. In that review, we will identify things you do now, and make suggestions on what you could do better. Then, if you would like a partner to help you improve what you do, we can talk about how you would hire me. Make sense? Get in touch with me from my contact page, and reference “Free Customer Retention Program Analysis” in the comments section. Have a “booked solid” day!
