Customer Loyalty and Retention: The Real Value
Customer loyalty and retention. What does it mean for you and your business?
Does it matter? How do you measure it? Do you and your business invest in developing better service to provide for your customers? If so, how frequently?
What are the outcomes when you start measuring?
Every business and companies measure their performance to see if they’ve consistently provided a quality of service or if their products continuously satisfy their customers.
Giving importance to customer loyalty could fast track the growth of your business.
Let’s start with the 20/80 rule. 20% of your customers represent 80% of your sales.
If you dig into it, the 20% are recurring customers that have a strong relationship with your business. For the most part, these clients are not problematic: they pay on time, and never complain. They are the kind of clients you want and need to scale your business up.
Formula For Customer Loyalty
The question every business owner asks is how do you find more clients like the top 20% and how do you keep them around?
First it is key to focus on building a strong foundation with your customers. This is achieved by providing them with great customer service and value/knowledge. Having a strong foundation will help you to increase your retention and better serve them.
You won’t need to evangelize X number of new clients every month to increase your income by a small increment each time. You will decrease the number of new clients by being more selective, which would save you resources and you will just focus on better servicing your existing customers, cross-selling or up-selling them.
Your top customers will be always willing to pay extra if they see the value added of doing so, a better customer service can on its own justify a price increase. Great customer service makes customers stick around for longer.
Existing or New customers
The real question is- Who should I invest more into?
Indeed, did you know it costs you five times, more to acquire new customers than it does to retain current customers?
And did you know existing customers are 50% more likely to try a new product of yours as well as spend 31% more than new customers?
Focusing on building a recurring customer base is the perfect way to increase your margins and scale up your business by better managing your time and your resources.
What if your business model is a one and done model, meaning that recurring customers are non-existent?
Well, if your customer only buys one time from you then the business needs to be reevaluated. Indeed, you either need to up-sell or cross-sell them right after the purchase.
For instance, if you are selling home inspections, you can up-sell them insurance or detailed reports with bids for the repairs to increase the dollar amount you are getting on each customer.
You can also offer a subscription for a quarterly home inspection for preventive maintenance for the new homeowner, turning your one and done customers into recurring customers. Those recurring customers will be very valuable to your business as they are becoming loyal to your business, they will bring you referrals.
What is the real secret to retaining customers? What’s the best strategy to transform them into loyal customers that will support and rave my services or products?
To retain customers, you’re probably thinking that having a great product and service will keep them…
It’s a short term strategy and it won’t last if you make your business evolve in that idea or worse, may cause you and your business more than you thought
Start caring for your customers. No, that’s it. There are a lot of factors on keeping them but this proven strategy can change your approach to your customers- new or existing.
Did you know that your customers more likely to leave when they feel you don’t care about them than being dissatisfied with your service?
Have a solid customer database to store pieces of information about your existing customers. You probably have gathered information about them but do you use them wisely?
That’s your money maker.
It’s probably sitting in your system but using them could jumpstart your customer service game.
We discussed caring is the top strategy for retaining customers, right?
Let’s put it this way, you can use your customer’s birthday and send something that will make them feel valued and special. Making them feel you remember them! You could send a discount or coupons that they can spend with their birth month in your business!
Giving them the “Birthday Special Offer” is most likely for them to not miss. This method works wonders.
List and track customers who are active and be supporting your business since the day they’ve been consistently purchasing from you.
This is a no-brainer strategy that other companies and businesses do. It is simple and when done right, it increases its reward over time.
You can’t go wrong with any marketing strategy you send to your customers that are personalized, see our latest blog post, Stop Making Bad Newsletters and Here What You Should Do.
It has a psychological and emotional effect when you do so. They have a different response to it than when it is not. They are more likely to take action
Prioritizing existing customers has a greater chance to increase sales and customer lifetime value and is undeniably less expensive.
Evaluate and give meaning on what customer loyalty it is to you and from that, you can build your strategy.
For businesses, it is challenging to retain and the same time work on acquiring customers. It includes a lot of time, money and effort if you are doing it on your own
Don’t wait, let us help you to scale up your business and increase your margin.
Julia is our content creator. She is always on the hunt for good photos and videos. Caption ideas are flying left, right, and center.