With the season of festivities almost upon us you may be thinking it’s about time for some rest and relaxation. Think again. It’s time to be planning what you are doing next year to make it your best year ever! With that in mind it’s not time to put your feet up, it’s time to be working on your retention and referral strategies.
Let’s start with retention. I’m sure you will all have heard it’s more costly to acquire new customers than retain existing ones. The cost of acquiring a new customer can be anything from 4 times to 10 times, and there are even some quotes of it being as high as 30 times! But more often than not it will be somewhere around 7 times. So, if it’s so costly to get new customers why do so many companies focus more energy on getting new customers than nurturing their existing ones?
You see it all the time. Take car or home insurance as an example. I find myself every year on the market comparison sites looking for the best deal, and typically every year I will save myself money by changing company. Increasing your renewal premium is a sure fire way to put an existing customer off staying with you. But so many people are apathetic and just stay with the same company, and companies make money out of this apathy. However does it do the company’s reputation any good? How much value does retaining the apathetic customer really add? And, more importantly, could doing a little extra add even more value to your business?
I am a great fan (and now colleague) of Byrony Thomas and she writes about the marketing-sales funnel, or customer journey as I prefer to refer to it, in her bestseller Watertight Marketing. She identifies where businesses lose money, and customers, throughout the funnel. Her first leak is on customer loyalty and forgotten customers. You may think you’ve won the business so it’s job done. Wrong. Customers aren’t obliged to stay with you – they can pack up and go at any time. You’ve got to keep earning the right to be their preferred choice. You may not receive many complaints or even have a high attrition rate but you’d be wrong to assume that your customers are delighted with your service. Our old faithful customer apathy means customers won’t tell you they are underwhelmed by your service; instead they will bumble along with an ‘it’s ok’ attitude while you provide a mediocre service at best. By looking at your post-sale servicing and customer touch points, you’ll be able to identify areas for improvement. There always is scope for improvement no matter how good your service is.
New Years’ resolution #1 – love your existing customers
- Look at your touch points with your customers – annual communications, newsletters, letters, reminders, ad-hoc updates, key times during the year for where your product supports your customers life or buying habits, website, online servicing, telephone servicing and the list goes on and on
- Ask a sample of customers what there three biggest bug-bears is with your service. Collate the results, establish the bug-bears that feature most and put an action plan together to address them. Change things, improve things, do new things; but address those bug-bears
- Make your service excellent – not just mediocre. Love your customer; in turn they’ll love you – and refer you!
Unhappy customers will tell more people about bad experiences than good ones. It’s a known fact that we get some sort of kick out of venting our bad stories. Whether the unhappy shares their story with 2 people or 10 is to be debated, but either way it won’t do your reputation any good. However, even a few good stories shared can make the world of difference to your business. It’s a recommendation to use you – a referral.
Good stories and recommendations are a way of potential customers getting evidence that you offer a good, valuable, service. You can be trusted. Their friends trust you so you must be ok. Another one of Bryony’s leaks is no proof during the evaluation stage of the marketing-sales funnel. You are far more likely to convert business if potential customers have some form of proof that you will do a good job. It’s common-sense really – after all, you’d be unlikely to trust Rusty Motors Ltd when they just pop up around the corner and you’ve never heard of them!
So, why are referrals so good for your business? Well, referred customers are cheaper to win, easier and quicker to convert to clients and they typically spend more (or bring more money with them).
Many small businesses get referrals but it’s more through chance than any proactive referral strategy. Any business we speak to will tell you time and again getting referrals is great and they may only get one or two a year. Imagine what your business could achieve if you establish your niche market (the one that’s really profitable), segment your customer base to identify your existing customers that meet your niche and then proactively seek referrals from that audience? Increased revenue for your business? More of the customers you want to do business with? Improved operating profit? All of the above and more: with more of your desired customers onboard, being serviced better with your #1 New Years’ resolution ‘love your customers’ retention strategy there will be more happy customers to spread good news stories and refer you more.
New Years’ resolution #2 – get a scientific referral strategy in place
- Identify your ideal customer (develop ideal customer personas)
- Find your ideal customers in your existing customer bank
- Implement your new retention strategy incorporating your referral communications and touch points
- Spread your good news - e.g. testimonials in communications, on your website and get tweeting and posting about what your customers say if social media forms part of your marketing strategy
Hopefully it’s obvious the linkage between retention and referrals – they go hand-in-hand; one will feed the other. So get your year off to a cracking start and plan your R&R.
With a diverse marketing background, she specialises in setting strategic marketing plans with long-term goals and is skilled in implementing integrated marketing programmes that deliver sales results.
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