Customer retention is an element of business practice that is often overlooked.
It’s sort of the Cinderella of the business world.
It’s forgotten about, shunned, made to feel like it’s not as glamorous as the other business practices.
But retention of customers has the potential to the bell of the Ball.
She can be a beautiful addition to any small business.
Why Customer Retention Is really more Beautiful than People Think
Customer retention doesn’t get the praise that it really deserves.
A business that is able to create and retain a loyal fan base that are ravenous for its new products, will always out sell and be much more sustainable than its flash in the pants competition.
A small business that is effective at retention of its customers has a business that can last through the boom and busts, the ups and downs of the economy.
For example, there is a steak restaurant that I grew up going to on every birthday.
For years every time me or one of my brothers had a birthday we all wanted to go to this same restaurant.
It didn’t matter what day it was weekend or weekday, the place was packed.
Now that’s customer retention, and customer loyalty.
So how did they do it? They focused on creating an excellent product.
Customer retention is not based on fancy gimmicks, or using marketing ploys to get people to come into your store.
But customer retention is all about eliciting a deep level of satisfaction within your customer by providing an excellent product or services.
In the case of my steak restaurant, they provide just an awesome steak. A steak that was hard to replicate elsewhere.
A quality product is half the battle of customer retention.
Creative marketing gimmicks can only hide a horrible product for so long.
Often times and small business owners were often feel like we are under the gun to get as many visitors to our store as possible, so we sometimes neglect other important elements of our business.
The difference between a business that focus on customer retention and one that does not, is the difference between judging having a hustle and having a true business.
A hustle is only concerned with approaching as many people as possible and is on to the next one.
A business is about creating wealth.
A hustle doesn’t have systems in place that allow for predictable, and repeatable income.
A business focuses on customer retention because it knows that a happy customer is a happy business.
What is Customer Retention
In the online SaaS world customer retention has been renamed churn rate.
Small online business owners are always being asked what is their churn rate.
Because a high churn rate means that customers are constantly falling through your business funnel.
Even if a business is getting traffic and sales, if it has a high churn rate they are just prolonging the inevitable.
They are just languishing in Purgatory before they will be cast down to business failure.
A high churn rate functions basically like a leaky water bucket.
No matter how much water you keep putting in the bucket, because it has so many holes, it will never be able to retain water.
A business that does not focus on customer retention is doomed to fail.
Customer retention is cultivating a low churn rate.
It’s asking yourself the question. Are my customers coming back, or are they one and done?
Am I creating solid customer relationships or one-night stands?
But, The hard part of customer retention is customer retention.
It’s easy to talk about how great customer retention is but to actually implement is a little more difficult.
Customer Retention Best Practices
As discussed earlier, creating an effective customer retention program is about creating an “awesome steak”.
Ask yourself and your customers the following questions.
Are you providing a service or product that once your customers experience it, that they can’t live without?
If not, how can you make your product or services unforgettable?
Most businesses have a foregetable product or service.
They don’t as Warren Buffet says “delight” their customers.
When you delight your customers, customer retention is almost automatic.
You need to focus on creating a service that really satisfies your customer in a holistic manner.
In this, How do you compare with your competitors in customer retention?
If they are better than you at customer retention,
What practices our they doing? Go into their store, on the website, join their email list, call them on the phone, try to get a feel for their customer experience.
See where they excel, and see where they are deficient.
How can you do better?
List their weaknesses and strengths compared to your weaknesses and strengths.
Do you even know your weaknesses and strengths?
Determining your weakness and strength can provide you with an objective look at your business.
You might have to have some eyes from the outside look at your business as you may be too biased to be objective.
Maybe a mentor, colleague, or even a trusted customer.
I’m not saying you have to show them your books, but they can show you a lot about your business that you maybe unable to see.
What are you missing in your product or customer experience?
Excellent customer retention requires constant iteration of your product or service until you find a perfect blend of customer satisfaction and cost efficiency.
It’s a delicate balance, that once found can lead to contintinal business growth through the years.
Business that succeed at customer retention live, business that do not die.