How to Supercharge your Customer Retention
7 Customer Retention Tips for Growing your Small Business
Customer retention strategies are just as important as any other part of growing your business. Many small business owners spend much of their focus and investment on building credibility and customer acquisition. What do you do after you close the sale? How do you follow up with a satisfied customer? This part of the customer experience is one that gets little to no attention and we think it is a huge missed opportunity that goes hand in hand with all other parts of growing a small business. Here are 7 tactics that you can use today to put more focus on the customer experience to drive loyalty and retention. You do not need to stop investing in other parts of your business to also maintain your customer retention strategies.
TL;DR: 3 Tips to Successfully Shift Your Focus to Customer Retention
When it comes to customer acquisition vs. customer retention, it isn’t about shifting dollars, it is about balancing your focus so that you are investing your time and effort into your customer retention strategies.
- Retention is all about delivering on the brand promise. It is about establishing trust, creating value and giving the customer a reason to keep doing business with you.
- Make retention personal, customers with an emotional relationship with the brand have a 306% higher lifetime value.
- You want to continue to spend on customer acquisition, but bring added focus to retention.
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It is vital for small businesses to invest in customer acquisition and it should be the biggest investment you make as a business owner. When it comes to customer acquisition vs. customer retention, it isn’t about shifting dollars, it is about balancing your focus so that you are investing your time and effort into your customer retention strategies. You need to add fuel to the fire you are creating in customer acquisitions.
Customer Retention Benefits
Research by Gartner indicates that 65% of a company’s revenue comes from existing customers. It will always be easier to sell to a customer you have history with than it will be to sell to a complete stranger to your brand.
- It is actually a catalyst to maximizing your acquisition investment
- It is more cost-effective to keep a satisfied customer than it is to attract a new customer
- Existing customers are easier to sell to and are usually more profitable. They tend to spend 33% more than a new customer.
- Retention activities result in referrals (the low-cost acquisition)
Patrick Neff, Manager of Marketing and Digital Experience at Southeast Toyota Finance
1. Focus on Optimizing Your Onboarding Experience
Onboarding begins the moment someone decides to try or buy your product or service. It focuses on setting the tone of the relationship and sets the customer’s first impressions of you and your business. The onboarding is generally considered 30-45 days unless you have a very short consumption cycle for your products.
“Retention is all about delivering on the brand promise. It is about establishing trust, creating value, and giving the customer a reason to keep doing business with you,” said Patrick Neff, Manager of Marketing and Digital Experience at Southeast Toyota Finance during a #BizHackLiveWebinar.
Well onboarded customers are engaged and engaged customers buy 90% more frequently and spend 60% more per transaction.
Keys to Proper Onboarding
- The more complex your product or service the more personalized your onboarding must be.
- Focus on UX (customer experience). Simple and logical interfaces and processes are critical to customer satisfaction at onboarding.
- All about optimizing their introduction to your product or service.
- Humans have a short attention span, so keep your message short and sweet. Break your messages into bite-size pieces if you have to.
- For onboarding to be effective you must speak to THAT customer’s reason for purchase.
- Onboarding drives Time-To-Value
2. Understand Time-to-Value and How It Impacts Customer Loyalty
TTV (Time-To-Value) is the amount of time it takes a new customer to realize value from your product. Over time you want to decrease TTV so that new customers find value faster.
The shorter your TBP (Time Between Purchase), the more important TTV becomes. For example, if your product or service requires customers to sign up for a monthly subscription it improves your TBP.
“We could lose a customer, all the value that we generated from customer acquisition in 30 days if we did not provide value to the customer,” said Patrick.
Faster TTV maximizes the amount of time a customer perceives max value during the ownership cycle and that dramatically will increase the chances of repeat purchases and can even shorten your time between purchases for a greater customer lifetime value.
“TTV is really about understanding the customer and their needs and highlighting those needs in a meaningful way,” said Patrick.
If you sell products B2B, provide them with tools that help them be more productive with their purchase. If you sell products B2C, provide tips and tricks on how to best use your product. If you sell a service, make regular check-ins with your customers to make sure that they are seeing value early and often.
3. Understand How and When They Use Your Product
It is important to not only understand your customer but to also understand the how, when and why they use your product. This experience allows for you to make their experience with your brand personal. No two customers are alike, if you ask them these questions they expect to receive a unique experience with your product or service.
- Make retention personal- Customers with an emotional relationship with the brand have a 306% higher lifetime value and will recommend the business at a rate of 71% rather than the average 45%
- Retention is a sprint not a marathon- Customers gradually gain trust with a brand over time due to experiences with excellent products, services, reviews, advice
- But the marathon is won by how you start- increased focus on onboarding offers significant or moderate positive impact over the life of the contract or revenue, client renewals and client referrals.
“It is all about look, listen and learn with every single customer interaction,” said Patrick.
4. Understand the Customer Journey But Build Experiences
Modern marketers are obsessed with the concept of a customer journey. While customer journey mapping can be a valuable marketing tool, it can also be overwhelming to smaller businesses. You want to make sure to build experiences at key points of the customer journey rather than creating marketing initiatives at every point in the customer journey.
Identify experiences by looking at the intersection of product features and customer needs. This might be different among various customer segments, you may have a segment that likes 3-5 of your product features and you might have another segment that focuses on 3-5 different features. You will need to have strategies for each of those groups.
You also want to understand where your business is on the CX Pyramid and then plan your growth. Be honest with yourself and where you live on this pyramid. If you are not even on it, that’s great! At least you know where to start. Have a goal to move up just ONE level and have a set goal for when you want to accomplish this move.
The CX Pyramid
- Stage 1: Communication level– Get customers the information they can use via the right channel at the right time.
- Stage 2: Responsive level– Solve the customer’s problem quickly and efficiently.
- Stage 3: Commitment level– Listen for, understand and solve costumes’ unique needs.
- Stage 4: Proactive level– Provide experiences that resolve needs before customers ask.
- Stage 5: Evolution level– Make customers feel better, safer or more powerful.
5. Build Experience From the Outside In
Every business is focused on operational efficiency, which is a metric to measure efficiency. As you start to build your retention programs and try to build relationships, focus on what the value proposition is to the consumer and not how it will benefit your business.
- Inside focused organization– focus on operational efficiency: Initiatives are driven by company needs and may not align with a customer’s need. This generates low adoption.
- Outside focused organization– focus on the customer experience: Initiatives are driven by customer needs and generally see high consumer adoption.
“The reality is, if you benefit the customer, the customer will benefit you,” said Patrick. Customer retention strategies are all about listening to your customer. Survey your customers, use tools to watch as customers engage with your website, look at web metrics, even speak to your team to see what challenges are being brought up by customers via your support channels.
6. Focus On Customer Experience First
Nobody said it better than Steve Jobs, “You’ve got to start with the customer experience and work backwards to the technology. You cannot start with the technology and try to figure out where you are going to sell it.”
To successfully develop customer retention strategies, you must focus on customer needs first and operational efficiencies second. Being customer-focused equals being more profitable, more importantly being customer-focused is what customers expect. Even loyal customers can lose confidence in your brand and move on to a competitor who is able to stay relevant and better satisfy their needs.
Ask your customers why they purchased, listen to what they say, and document it. Then you want to respond and reinforce what you have learned. This should be a consistent cycle in your business.
7. Keep it Simple and Just Get Started
It is important to keep it simple. Thinking about tackling something like customer retention strategies can seem daunting. Just take it one step at a time. It can be as simple as making a phone call after a purchase.
“If you overcomplicate it the process won’t stick. It may seem daunting but it starts with taking one step,” said Patrick.
You want to continue to spend on customer acquisition, but bring added focus to retention. Start by focusing on making the first 30 days great for your customers. Once you have found success in this first step, take the next step.
As a small business owner, you need to make the decision that having in place customer retention strategies is just as important as any other part of your business. Define both your short-term and long-term goals for your customers, make it realistic, and know that this process is never over, each goal you meet brings you to the beginning of the cycle all over again.
