While going through some of my archives of good articles, I came across something thats extremely useful for small business owners and some of the business owners I personally know, swear by these.
According to a researched published in the Harvard Business Review, it could be up to 25 times as costly to acquire a new customer as compared to retaining an old one.
While I’m aware this study is almost a decade old, it couldn’t stop me from thinking about the concept of customer retention.
Is your business really spending too much on acquiring new customers when you should be focusing on retaining the loyal ones? Should you be looking to create more loyal customers than just having ‘more’ customers?
There are a few interesting strategies small businesses could apply to retain more of its customers – and I’d love to share them with fellow entrepreneurs and business owners.
These practices are advocated by some of my business owner friends and the top three that came out from my conversations with them are detailed out.
But first, let’s start with the basics.
A customer won is worth two potential customers (or more)
That’s truer for the customer of today than anything else if you ask me. I say this because it is becoming tougher by the day to acquire new customers.
In one of the research projects I read, it was clearly mentioned that as many as 85% of the customers would not complete a purchase without checking the product on review websites first.
[Source]
That isn’t even surprising because, honestly, wouldn’t we all?
Marketing today is getting expensive or takes time to build an organic stream of online traffic that could bring in potential customers.
After investing either time or money, would you want to churn the customer away? You should think about the value of the time or money per customer that it took so that it plays constantly at the back of your mind.
Customer Retention Strategies That Worked for Me
You can treat these strategies as a helpful guide. But in reality, they’re just my observations on things that worked for me.
Build Trust at your first touch point with the customer
This might sound old-school, but in today’s trust deficit world, building trust and giving a sense of “I am not here to scam you” works well in the long run.
I read in a recent survey that business leaders (92%), consumers (92%), and employees (94%) all agreed that brands have a responsibility to build a level of trust in the community.
Hear me out on this one – building trust not only helps existing customers hold on to your brand but also helps acquire new customers without incremental spending.
As many as 58% of consumers would recommend a brand to their peers, friends, and family because they trust it. This is a form of customer advocacy, and it is doing the job of acquisition for you, all by itself, by way of recommendations and referrals.
Especially if you are a small business, I would request you to thoroughly assess your understanding of consumer trust. This is because not all businesses have managed to grasp the importance of trust yet.
I read that business executives terribly underestimate how much their consumers trust them. Take a look:
So help your customers trust you!
Help your customers use your product better
If you are a small business, it is important for you to really demonstrate why a customer should buy your product. You need to invest in time and energy along with your customer to learn to get the maximum utility our of your product or service.
You should make all the necessary efforts to help your customers understand the value vested in your product and how effectively and quickly they can derive value from it.
In the end, the customers just want to achieve their goals from using your products – if you aren’t able to deliver on that, you won’t be retaining many customers. I actually found some strikingly corroborative data on this.
A statistical report highlighted that poor onboarding experience caused a loss of 96 out of 100 subscribers in the first 3 months!
To add to that, another survey I read highlighted that 93% of the customers would reconsider renewal with a brand depending on how smooth the initial implementation process was.
Long story short, ensure that you are providing the following to your users:
- Provide interactive product demos.
- Provide a seamless onboarding experience.
- Provide ways to shorten the Time to Value (TTV) for your subscribers.
Reduce the Time it takes for customers to realise the value
TTV – the time to value – is the amount of time a customer takes to be able to fully utilize your product to achieve their goals from it. Whether you manufacture anti-acne creams or provide specialized SaaS tools, the TTV to your customers should be as realistically short as possible.
One statistic I found read that customers usually expect ROI from a product within the first 6 months of purchase. If they don’t achieve their goals within this time, you may have trouble retaining them.
Now, when I say this, it also means that your brand must do all it takes to provide all the necessary assistance to your customers to make it possible for them to use your product properly. Effectively, you should consider putting Customer Success strategies in place that stretch from onboarding to subscription renewals – and maybe even beyond.
In the end, customer retention isn’t about how good your product is – it’s about how well your customers are able to use it and whether or not it is benefitting them.
That is the ultimate retention game.
Fight for your customer’s cause and they will fight for you
I sincerely believe that it is the quality of your customers that decides how far your business will go and grow. Let’s face it – having 1,000 customers but losing 700 of them by the end of the year doesn’t translate into true growth.
Through customer retention, I mean that growth comes from acquiring 100 customers and being able to retain 70 of them when the year ends. These 70 customers would be the highest quality of advocates your brand can have, and they will bring in 100 more in the coming year.
Remember what Shiv Singh (Marketing Transformation, VISA) so famously said:
“The purpose of a business is to create a customer who creates customers.”