Have you ever heard the phrase “brand new customers only” when you’re an existing customer? How does that make you feel about the brand? ... Exactly! That’s what’s wrong with your only goal being customer acquisition.
Take your focus, love and care away from your existing customers at your peril. They will vote with their feet and leave. If you’re very lucky they’ll tell you but most likely you won’t find out until they’ve gone.
Existing customers will leave
Someone else will be talking to your customers on a regular basis, whether you are or not. If they don’t feel as if they’re your number one focus, or they’re not getting the best value from you, they’ll go elsewhere.
You can always get more customers, right? Read on….
Avoid Customer Churn
The last thing you want is to increase your customer churn (total customers lost in a period divided by total at the beginning of the same period). Getting replacement customers is a costly process, both in terms of reputation, effort and finance. In fact, according to Harvard Business Review, its 5 to 25 times more expensive to get a new one. The damage to your reputation is immeasurable.
Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. - Harvard Business Review
Apart from the immediate cost to you, the churn rate is also important because it's something that potential investors take very seriously, as an indication of the firm’s underlying health. So, if you’re aiming to sell, this is another thing you need to be on top of.
Ensure customer retention
The smart money is on keeping as many of your existing customers as possible and getting them to spend more money with you - you want a bigger share of their wallet.
- They already know who you are, you don’t have to go and find them.
- They already know what you do and sell, they’re already buying from you.
- They already know they like you; they wouldn’t be doing business with you otherwise.
So, that’s a lot of time and money saved – but you have to work to keep them on board. They’re a prize worth having so the work is worth it: a satisfied customer is an advocate; they'll refer work to you if they believe in you.
But, it’s about more than just price and fulfilment, don’t be fooled into thinking this is just a numbers game. It’s about emotion. Human beings are emotional beings and, although some of us might like to believe we’re rational decision makers, behavioural economics shows otherwise. Many of the most effective ways to retain existing customers are based on emotion.
Top 10 retention tools
I’ve talked about the emotional economy before in Why Communication is Key to Increasing your Turnover. If you need a reminder, have a read. Communicating with your customers is just one way to retain customers, here are my other favourites:
Birthday cards, anniversary cards and handwritten notes all show appreciation. Even though many companies are now adopting this, it's still rare enough to be unexpected.
2 Set expectations
Give customers something to look forward to, so they know where you're planning to take the business. For example, online banking app Monzo share their product roadmap via Trello. Simple but effective.
3 Identify valuable customers
Look at all your existing customers and work out who is the most valuable to your business. These are the guys you really need to focus on. Offer them a premier service. Here's how to calculate each customer's lifetime value (LTV):
4 Improve customer service KPIs
The quicker you deal with customer queries, the happier a customer will be. We all know how frustrating it is when you can't get your query answered. Thank goodness for live chat and the fact that it means we don't have to sit on hold for hours on end anymore! Measure your speed of response and the speed of resolution. Make improvements and measure again.
5 Ask how you’re doing
We already know that communicating with the customer is key. So, you'll be doing regular surveys to find out how satisfied they are and what your NPS score is right? Good. But, don't miss a trick here: share these internally so that everyone can see how their work contributes to the improving results.
6 Learn from complaints
Don't be scared of them, you have to front up to them, treat them as a learning experience and solve them quickly.
Your most unhappy source of customers are your greatest source of learning. - Bill Gates
A customer who complains wants to stay. If they didn't, they would just leave. Sky and Virgin are really good at this...every time we tell them we want to leave, we're put through to a special team.... suddenly we've got an amazing deal and we're staying!
7 Educational comms
Webinars, emails or face to face training is great because teaching sells under the radar. By which I mean that the customer doesn't realise they're being sold to. They're being educated about new products or services that they can buy whenever they are in buying mode.
8 Onboarding program
It's natural, after a deal is struck that a customer might buy once and then sort of disappear. When I worked for Searchflow (the largest legal services firm you've never heard of!), we had an onboarding team. Internal account managers would hand hold a customer through becoming a new customer online until they were ordering regularly. This got everyone ordering quickly, and made sure they didn't wander off to a competitor.
9 Advisory board
Create an opportunity to really engage with your high LTV (see 3) clients. Get a group together to share their experiences and future plans. This is invaluable for innovation: if you design the products and services they tell you they want, you've got engaged buyers ready and waiting.
I talked about these in my last blog: the best type of customer is the one that will refer you and they're going to refer you someone just like them. Gousto are particularly good at this: they offer monthly specials:
With so many ideas for retaining those super precious existing customers there's no excuse! I hope one of these resonates with you. If not, drop me a line and we'll work out one that fits with your business. Get in touch at firstname.lastname@example.org.