This is the 3rd and final post in my series and covers the topic “retention“—which is essentially deepening the relationship with your customers and/or audience. In part 1 of this series, I talked about the importance of learning to convert website traffic by correcting conversion problems; in the 2nd part, I discussed ways to increase website traffic. Now that you have traffic to your site and are successfully converting your visitors into fans, subscribers, or customers, it is time to talk about “retention”.
Never Underestimate the Value of Retention Marketing
The first rule of any business should be to retain customers (or fans, subscribers, etc.) and to build or deepen the relationship with them.
“For those who feel that customer retention plays a relatively minor role in helping a company grow a healthy bottom line, here are a few statistics you might be interested in. According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%. And if those numbers don’t impress you, Gartner Group statistics tell us that 80% of your company’s future revenue will come from just 20% of your existing customers. Still not sold on customer retention? One final statistic provided by Lee Resource Inc. should give you plenty to think about: Attracting new customers will cost your company 5 times more than keeping an existing customer.“ Source: Forbes
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Customer Retention Strategies
Reduce Attrition—Attrition, also known as customer churn or turnover, is the loss of clients or customers. All businesses lose customers, some at a faster rate than others; however, one of the keys to reducing attrition is to begin to measure or recognize how and when you lose customers or they become inactive. Often, businesses are spending so much time trying to acquire new customers that they let the relationships with their existing customers go unattended.
- 89% of consumers have stopped doing business with a company after experiencing poor customer service. (RightNow Customer Experience Impact Report)
Provide Outstanding Customer Service/Support—As you can see from the stat above, few businesses can afford to treat their customers badly. Here are some more stats to consider:
- 83% of consumers require some degree of customer support while making an online purchase. (eConsultancy)
- 45% of US consumers will abandon an online transaction if their questions or concerns are not addressed quickly. (Forrester)
- Consumers are 2x more likely to share their bad customer service experiences than they are to talk about positive experiences. (2012 Global Customer Service Barometer)
- A customer is 4x more likely to buy from a competitor if the problem is service related vs. price or product related. (Bain & Co.)
Delivering outstanding customer service before, during, and after the sale, will keep your customers coming back again and again.
Setup Frequent ‘Touch Points’—Infrequent or no communication with your customers will result in them forgetting about you. Depending on the Customer Lifetime Value, this could mean simply sending pre-programmed emails that occur automatically at various points of the pre-sales, sales, or post-sales process; or it could mean providing content via your social media channels; or, it could mean personal phone calls, face-to-face meetings, or other things that show your customers that they are valued and important to your business.
Integrity of Products, Services & Customer Experience—Is there consistency between what you promise, what you deliver, and what is expected by the customer?
“Products with integrity perform superbly, provide good value, and satisfy customers’ expectations in every respect, including such intangibles as their look and feel.” (Power of Product Integrity, Kim B. Clark & Takahiro Fujimoto)
There are no shortcuts when it comes to delivering quality products and services and in setting customer expectations correctly. Businesses who consistently do this are rewarded with returning customers; those who do not, are not. Think about why you keep ordering your favorite dish in your favorite restaurant… because you know exactly what to expect.
Turning Dissatisfied Customers into Loyal Fans
Here’s are a few scary stats:
- 96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back. (1st Financial Training Services)
- A dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people. (White House Office of Consumer Affairs)
Those stats probably have many businesses shaking in their boots, especially the second one as many dissatisfied customers now take to social media to amplify their frustrations.
But, there is a silver lining here:
- Dissatisfied customers whose complaints are taken care of are more likely to remain loyal, and even become advocates, as those that are ‘just’ customers. (Strauss & Seidel)
If you are able to put a system into place to figure out which of your customers are dissatisfied, you will not only have an opportunity to correct the problem, you have the chance to turn them into loyal fans of your business.
Target the Right Audience in the First Place
When it comes to retention, targeting the right audience or clients in the first place is key. It is a common rule of thumb in business that “80% of your sales come from 20% of your clients.” The Pareto principle (also known as the 80–20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.
Some Customers Aren’t Worth Retaining
Based on my own experience owning a web development business, the reverse of the rule of thumb is also true. 80% of all of my customer support requests seemed to come from 20% of my customers; and, they seemed to be the most price sensitive group and least likely to pay on time as well. If you have the luxury of being able to choose your customers, my advice is to “be picky”. Robert Simons proposed in the March 2014 Harvard Business Review that “your most important customers are not those that generate the most revenue but those that can unlock the most value in your business.”
“In a 2010 Entrepreneur Magazine article, Randy Myers noted that regardless of how well you screen, it’s impossible to completely avoid problem customers. He recommends first identifying your best customers and then working doubly hard to keep them happy. Then, calmly and factually assess each of your existing clients based on the profits they yield, the resources needed to support them, and the quality of your relationship with them. You may wish to begin by listing the clients from most profitable to least. Next, consider factors like how difficult or pleasant your interactions with that client have been and how many solid referrals they have sent to your business. Considering both profit and these other factors, group your customers into A, B, C, and D categories. (Profit should never be the only consideration; for example, a low-revenue customer may be placed in the A or B group for helping grow your business through quality referrals.)
Once you have sorted your client base into categories, your objective is to help the C/D groups move into the A/B category. You might bolster customers’ profitability by suggesting they purchase additional products or services that can improve their efficiency, have candid discussions with them about issues such as not paying on time, or develop detailed guidelines that specify expectations between you and their company (e.g., asking them to group their issues into one weekly call versus impulsively calling daily). Eventually, you want all customers to be ranked A or B.
As you gain a better idea of your ideal client, you can avoid contracting with those who don’t match from the onset.” Source: Mike DuBose
Bottom Line: It’s not worth keeping customers that aren’t worth keeping.
Retention Marketing Ideas/Strategies
- Stand for something. What are your company’s core values? “Shared values build relationships. A shared value is a belief that both the brand and consumer have about a brand’s higher purpose or broad philosophy. For example, Pedigree Dog Food’s shared value is a belief that every dog deserves a loving home.” (Harvard Business Review)
- While communicating with your customers is important, relentlessly demanding more and more of their attention is not good. Before sending that email, mailer, or posting that social media update, ask yourself if it is going to benefit your customer. In other words, will it: Educate them? Inform them? Entertain them? Inspire them? Or, are you just making noise? If the answer is “it doesn’t benefit them”, rework it until it does, or don’t post it at all. A great article to read is “What are 4 Key Goals in Content Marketing?” by Jeff Bullas.
- Do a little (or a lot) of data mining. Read “10 Ways Data Mining Can Help You Get a Competitive Edge” by Kissmetrics.
Help Your Customers Succeed
One of the best ways to retain your audience/customers/visitors, etc. is to provide them with all the tools and information they need to become successful. For example:
If you are a Web Hosting Company and your main customers are web developers that resell your hosting services, in addition to providing them with hosting services, you could provide them with a white label solution that includes an easy way to bill their customers.
If you are a Realtor, offer your clients the ability to receive a text message when a new home in the area they want to move to comes on the market; and, after they become homeowners, have them follow your blog or on Facebook where you share information about their new neighborhood, such as upcoming events, information about government services, and local clubs.
If you are a Social Media Marketing Agency, offer insider tips on how clients can receive greater benefit from the services you are already providing. For example, tips on how to increase conversions from the traffic you are already sending them via social media.
You get the idea. These are just a few examples off the top of my head, so I am sure if you sat down and thought about all of the ways you could help your customer succeed, that would likely be the best retention plan of all time!
The 3 Keys of Online Marketing
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