A recent survey among small business owners identified finding new customers as one of their main concerns. While attracting new customers may be on the top of many small business owners’ lists for 2016, customer retention strategies are ultimately the most profitable and most effective ways to growth.
Customer retention is the cheapest way to positively affect your bottom line. Depending on which report you read, and which industry you work in, customer retention is 5-20 times less expensive than new customer acquisition. We have found that in the primary service industries 80% of new customers never return. That number may be alarming, and it is, because when combined with the high cost of leads many small business owners lose money on them.
The 80% are those customers who bought something from you, subscribed to your email list, but you never heard from them again. The key is, if you successfully activate their engagement, they are actually worth more to you than newly acquired customers. According to a report from McKinsey the average repeat customer will spend twice as much as a new customer. We have also found that a repeat customer that comes back just 3-4 times is 10 times more profitable than a new customer in the long run.
Here are a couple of engagement tips on retaining your current customers, and maybe bringing inactive customers back:
Just Start with Something. I think many businesses get busy, and have great intentions to do things that may help their business thrive but they just don’t make the time. A great place to start is to evaluate your customer communication strategy. You may spend $100, $200, or even more to acquire a new customer. You go out and do a really good job, and then they never hear from you again. You are left wondering why they don’t leave you a review, or come back when they need your service again.
Email marketing. To be effective you must master three basic components: segmentation, personalization, and automation.
Each of your customers is different, so putting them all in the same bucket may do more harm than good. What if you had just gotten your carpets cleaned last week, and then you get an email from the carpet cleaner for a 50% off summer cleaning special? Not very effective. Put your customer in buckets, so you can communicate with them in the most appropriate way possible.
Personalization is also important to reach your customers in the most relevant way possible. Many business owners feel that by including their name that is good enough to make a difference. If you offer purchase history information as well it will increase your email effectiveness.
The last point is automation. You can segment your list and personalize your emails, but if you don’t automate the process, you will see limited results. We know most business owners only have a limited amount of time to focus on marketing. These efforts will give you a great return, but only if you can accomplish them in mass, which only comes from automation.
Go Mobile. These days the fastest and often most effective way to connect with your customers is through text communication. With technology available today consumer behavior has changed to desire real time communication. Ever notice that it used to be understandable when you didn’t answer your phone before or after 9-5 business hours but now it’s completely unacceptable if you don’t answer or can’t be reached? It’s because we all have mobile phones and are expected to be connected at all times just like our consumers.
This change in consumer behavior has opened up an entirely new way to market to get them to come back for repeat business. After you finish an appointment make sure you leave letting the customer know that you often have great deals and important information for them and ask if you can fill them in via text. Most will say yes when you ask in person and you can prepare your strategy from there.
Keep in mind that you want your mobile conversations to be cordial but professional and appropriately spaced out so your contacts don’t feel spammed.
Focusing on what will bring customers back will multiply your bottom line and create a foundation for your business that will keep growing for years. The strategies mentioned above are just a few of the things you can do to get started. For more tips follow FreshLime’s blog and connect with us on Twitter, Facebook, etc.
Jay Bean