Simple Dos and Don’ts of Customer Retention

The simple fact is: It costs more to get new customers in the door than to retain current customers. In fact it can cost on average almost 5 TIMES more to get a new customer than to retain a current one. This rings true in every business, especially small businesses where every additional cost adds up quickly and can be the difference between making a profit that month or not. So how much harder is it to retain current customers? The truth is it’s pretty easy, but it’s also just as easy to mess it up and ensure they won’t be back.

Last week I went to a local coffee shop to meet with another business owner. During our conversation we both got up and ordered some coffee. Neither of us had been to this shop before, but I picked it out because it had good ratings online and it was central for both of us. That’s the first thing small businesses need to remember when they think about customer retention. Are your customers giving you good reviews, meaning are they having a good experience when they come into your store? If the answer is “Yes” they’re automatically more likely to return. In the age of social media, everyone’s a critic, and every review is that much more impactful.

Back to our story.

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We ordered our coffee and paid for it on their Square POS (Point of Sale, not piece of well you know…) and I have nothing against using Square for small businesses, but at the end of it, they asked for my phone number so I could get points for visiting. They explained that after 10 visits I’d get a free coffee. Not a bad incentive, but there’s still something missing. Any guesses? No? How are they going to convince me to come back after I’ve already left and have forgotten about the average experience I had? Sure, after 10 average visits I get a free coffee, but is that really an incentive that works?

In addition to obtaining phone numbers, they should have also collected email addresses from their customers by offering a 10% off coupon for their next visit and signing up to their email list. If you had both of these processes in place in your business, you’d have two ways to connect with your customers! You can text them and email them and with a 10% off coupon for their next visit, they’re a lot more encouraged to come back, because who doesn’t like discounted coffee? With your growing list of customer emails you can begin to build a relationship with them. Invite them in if they haven’t been around for a while, tell them about cool upcoming events, wish them happy holidays with a special “treat”, give them birthday discounts, tell them about monthly specials, share fun, educational, or funny experiences.

By just adding that one piece to your process you now have more flexibility when it comes to reaching out to your customers and encouraging them to come back. That relationship nurture aspect would be almost impossible to build through automated texting alone. Most people don’t want to be bombarded with automated text, but almost everyone I know takes a few minutes out of their day to check their email. It is worth mentioning that people tend to ignore emails that are pointless or spammy.

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The most important thing you need to do if you want customers to read your emails is provide value to them. Coupons are cool and everyone loves free or discounted stuff, but value goes beyond just discounts and coupon codes. Providing value is the whole point of any business, your trading with your customers. They’re giving you their time, attention, and money and in return they expect something of equal value.

How do you create value outside of just your product or service?

Environment is a great place to start. Let’s go back to the coffee shop story for just a second. The coffee shop is located on the edge of a small historic downtown, and the building’s an old early 1900’s house (or at least built to look that way). Cute, nice paint color, and quaint looking. Great start. When I went inside they had redone the entire interior to look like something out of The Office and not in a good way. All plain and basic light grey walls, white counters, dark grey cabinets with low quality tables and chairs, and a drop tile ceiling. Truly unremarkable and 100% forgettable. It would have been so easy to continue the historic vibe the rest of the buildings surrounding it have and it would have added some element of atmosphere that was otherwise lacking.

Okay, I’m done ranting. My point is, once I got into the coffee shop, the value I was receiving was immediately lowered by the quality of my environment. This is something you have to keep in mind with your own customers. If they don’t feel like their getting the value they deserve, why would they come back? On top of that, why would they recommend others to go too?

The last thing you can do to help encourage your clients to come back is to make it personal. When you go for coffee in the morning at your “local” Starbucks, how do they make your experience personal? What drives you to keep coming back? Anything stand out? What about when they greet you as you come in? Sure, they do that for everyone, but it still feels good to have someone say, “Good Morning! Welcome!” and then there’s the name on the cup. They put everyone’s “name” on a cup, but when you get your cup of coffee after they call your name, you look at it and it’s identifiable. It’s YOUR grande green tea mocha frappuccino with a dash of soy milk. Those subtle touches make your experience there more personal even if you don’t realize it. As businesses owners, that’s the goal. Make your customers believe and feel like each one of them is getting their own personalized experience. No one likes feeling  as if they’ve pulled a number and are waiting to be called to spend money. No one likes the DMV.

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How’s that different from the coffee shop I visited? I got my order, but not only was I almost completely ignored by the staff the entire hour and a half I was there, but the majority of the time I was there they were neglectfully conversing with other employees without any attention on the store or its customers. They were only interacting with customers when they absolutely had to. No one likes to feel ignored; worse yet? No one likes to feel like they’re imposing on someone else and you’ve got a problem if your customers are feeling like that in your place of business.

It’s easy to get lost in the rabbit hole that is Google trying to figure out how to improve your profits and retain your customers, but truthfully there’s some simple fixes you can implement to drive your business forward and keep your customers coming back for more.

Be Personable.

Help make each customer feel like their getting their own specially catered, individualized experience and they’ll not only come back to have that feeling again, but also be more inclined to tell their friends about it.

Create value.

Nobody likes to feel like they’ve been suckered. Whether that’s in giving up their personal information (phone number and email address), giving up their time and attention, or giving you their hard earned cash. Return the favor by giving them an experience on top of delivering a product or service. You can also provide information or entertainment. Just remember, you’re trading with your clients. What would you expect from someone in return for trading in your time, attention, money, and personal information?

Build a relationship.

Think about how often you talk to a friend. Your customers should be treated similarly. Interact with them and incentivize them to return, establish a relationship with them through open dialog and encourage them to be honest. Ask for their opinion through surveys and open ended questions on social media. As  your returning customers become your regular customers, remember their name, add to those personal touches to their experience, and treat them like a friend.

How have you helped encourage your customers to return?

How successful have your strategies been?

If you’ve got other tips, ideas, or stories on how you’ve worked to improve customer retention or if you liked this article and would like to see more, let me know in the comments below.  If you have questions or want to read more detailed articles about specific ways we can better retain customers, as well as other topics, subscribe at my website and let’s chat!

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