If you want to see consistent growth year over year, you need to set (and meet) a reasonable retention goal. There is simply no other option. If you don’t, you will always be fighting an uphill battle.
So, why does retention matter? Well, just look at the numbers.
The Importance Of Retention
Creating a strategic retention goal is often treated as a low-level concern for business owners. This is a critical mistake.
You see, many business owners use most of their marketing team to reach out to new customers and ignore the current customers responsible for nearly all their yearly revenue. Yet when those active customers don’t feel appreciated or seen, they often begin leaving in droves, switching to competitors who value them more.
But how big of a problem is customer turnover? Here are some important stats to keep in mind.
- A 5% boost in customer retention has been shown to result in a 25%–29% increase in annual revenues.
- Retaining existing customers can boost profitability by 25%–95%.
- Approximately 50% of a company’s revenue will come from the top 8% of loyal customers.
- Some companies get up to 70% of their business from a handful of high-value customers.
- It costs 14%–16% more to retain a current customer than to attract a new one.
- It can cost 5–25 times more to attract a new customer than to retain an old one.
- Current customers spend about 67% more on average than new customers.
- Many companies report 65%–75% of their business comes from existing customers year over year, with a minority of business coming from new customers.
In other words, meeting your yearly retention goal is a big deal. A very big deal.
So, how can you set and meet your retention goal every year? Here are 7 essential tips for building a lasting and loyal customer base, starting with building real relationships.
Make a Personal Connection.
Taking the time to invest in personal relationships with your customers isn’t just a nice business perk. It’s a necessity. This is especially true if you’re a small-business owner because the competition is even more fierce. If you don’t make your clients feel special, someone else will.
Think about it this way. Let’s say you go on 2 blind dates. The first person takes a minimal interest in you, only seems interested in what they can get out of you financially, and generally ignores you during the date.
By contrast, the second person is warm and friendly, uses your name, takes an interest in the things you like, and shows appreciation for anything you purchase for them. Later, they text you about how much they enjoyed the date and open up a consistent communication stream.
Who seems like they value you more? The one who makes a personal connection, right?
It’s the same with your customers. They want to feel like you see and value them as an individual.
But you might have hundreds, even thousands, of customers. How can you possibly form a personal connection with every single one? Well, it’s easier than you think.
Here are a few ways to make personal connections with your customers.
- Memorize the names of all your regular customers. It also goes a long way to remember their interests and shopping preferences.
- Send your customers a token of your appreciation in the mail (like a greeting card).
- Personalize your marketing efforts and tailor your content to the individual as much as possible. That means segmenting your list to target interest groups, making sure to have complete information on your mailing and email lists, and adding friendly touches to your copy (like putting “Dear [name]” in your emails instead of “Dear client”).
- Share personal stories with your audience through content marketing so they can get to know you better as a person.
- Research tactics specific to your particular niche, as you may have more opportunities to connect with your clients based on your industry.
By forming personal connections with your clients, you are communicating that you value them as individuals (not just people with wallets). In our experience as a company specializing in relationship marketing, this is an essential component of meeting any retention goal you might set.
Provide Value Outside Of Transactions.
The unfortunate truth is that for many businesses, if you’re out of sight, you’re out of your customer’s mind. That’s why you need to provide value for your customers outside of the products and services you already deliver. If you can, you set yourself apart from other people in your industry and stay top of mind.
The easiest way to do this (and the way we recommend) is through content marketing. By providing your audience with funny, entertaining, or educational content via email newsletters, print newsletters, or social media, you are giving them a reason to talk about your business and interact with your brand. Do it well, and you might even see referrals as a result of current clients sharing your content with friends and family.
Content marketing is also a fun and unique way to share personal stories with your audience and work on building and maintaining a personal relationship with them (as we discussed above). You provide valuable emotional capital they will attach to you and your business.
However, it is worth mentioning that many business owners ruin their content marketing potential by spreading boring, purely promotional, overly specific content. Don’t do that. Focus on telling personal stories and basing your content around subject matter that appeals to a broader audience (not just experts in your industry).
Keep Communication Consistent.
Once you have a good content marketing plan in place, keep it consistent. After all, it’s nearly impossible to maintain a relationship with anyone without consistency — especially customers, who can be fickle.
Think about it this way. Let’s say you have a friend who consistently calls you, texts you, shares funny memes with you, and asks how you’re doing. You probably feel pretty close to that friend. Now, imagine you have a friend who only contacts you once and a blue moon and usually wants something from you when they do. You might not even consider that person a friend, only an acquaintance.
It’s the same with your customers. If you only reach out occasionally or because you want to promote your business, you’re already setting yourself up to fail in reaching your retention goal.
Instead, reach out to provide value and personal connection a few times a month at a minimum. This is the best way to ensure your customers consistently interact with your brand and think positively about your business.
Make Customer Service A Priority.
Let’s say you’re a dental provider, and your client, Sarah, comes in for her annual cleaning.
The minute she walks in the door, your receptionist barks at her to give her name and write it on the sign-in sheet. Then she sits in your dirty waiting room for 40 minutes before one of your dental assistants calls her back. The assistant begins the cleaning process, and despite Sarah expressing that she’s being too rough, she rolls her eyes and continues. She meets with you to discuss her chart, then goes home. A few weeks later, she receives an incorrect bill. When she tries to contact the office about it, the same rude receptionist hangs up on her midway through the call.
Fed up, Sarah visits another dental office.
When she walks into the clean, inviting office, she is greeted with a “Hello, how are you?” from the receptionist. She is signed in, waits for 10 minutes, then is taken back for her cleaning. The dental assistant asks her which toothpaste flavor she prefers and prioritizes her comfort during the procedure. When she meets with the dentist, they are friendly and helpful. Sarah later receives an accurate bill.
Where do you think she’s going to start getting her dental services?
If you think this story sounds extreme, it’s not. I had this same experience with a pediatric dentist when I was young. You had better believe my family was out of there before you could say “cracked molar.”
Even if you’re a polite dentist in the first scenario, the damage has already been done. The office and dental staff have already made Sarah feel uncomfortable and disrespected. To her, the message was loud and clear: You don’t value her. If you did, you would provide a pleasant (or as pleasant as possible) experience.
That’s why customer service must be a priority. You must invest in consistent, ongoing training for your staff to ensure you clearly communicate your standards. You also need to gather customer feedback and take complaints seriously and work to resolve any issues with inappropriate or unprofessional behavior quickly.
When you have loyal customers who consistently interact with your business, reward those individuals. Not only does this incentivize them to keep coming back, but it has also been shown to increase your customer base’s overall spending. In fact, businesses with loyalty programs see a spending increase with 54% of their customers.
Imagine what that could do for your business if over half your customers were incentivized to spend more …
So, if it makes sense for your business, consider putting together a referral program. This will help you substantially in your effort to meet your retention goal and exceed it.
Ask For Feedback.
Asking for feedback from your customers and employees is a great way to identify blind spots in your business where you can improve. It’s also a great way to get your customers involved and excited about changes in your business.
Here are some simple ways to encourage your customer to provide feedback and engage with your business.
- Have them vote on what new products they want to see added to your catalog.
- Ask them how you could improve their customer service experience.
- Let them list their favorite products in order.
- Let them vote on what style you should use to redecorate your waiting room.
- Have a competition between your different locations and see which ones customers vote for as the best.
- Ask what content your customers prefer in your newsletters or email newsletters.
Asking your customer for feedback also communicates that you care about how they feel and want to maintain a standard of consistent improvement. Your audience (and employees) will appreciate the concern and promote more consistent interaction with your business.
Differentiate Yourself From The Competition.
One of the best ways to ensure you retain your current customers is to investigate the shortcomings of your local competitors and do better. This is especially helpful if you’re a small-business owner who only competes with other local businesses. Why? You will ensure you’re the top choice in your area.
For example, let’s say you run a floral shop. There are 2 competitors in town, and after reading some reviews, you learn one can’t do same-day orders, and the other often includes wilted baby’s breath in their wedding arrangements. Now, you have 2 key differentiation points to work from, and your floral shop can succeed where your competition fails.
By considering these factors and setting up a competent retention marketing strategy, you can consistently meet your retention goal year after year. This will translate to higher revenues, profits, and ROI, which means more money to invest in your business. That’s the power of marketing to the people who matter most (those who already spend money with your business).
If you want to learn more about implementing a powerful retention marketing strategy, you can fill out the form below to download our free Retention Guide.