5 Simple Ways: How to Retain Customers for Highest Profits

Customer retention is important for every company whether it's a small or large. The value of a well-retained customer comes in form of recurring revenue and world of mouth publicity which is still the most impactful marketing channel and also the most uncontrollable. According to a Harvard Business Review, the cost of acquiring a new customer is 5 to 25 times higher than retaining an existing one, depending upon the industry. Hence it is critical to the success of a business that it retains its customers. Here are some studies to reinstate the fact:

• According to research by Frederick Reichheld of Bain and Company, a company’s profitability can be increased by 25 to 95% with just 5% increase in customer retention
• The Gartner studies show that 20% of your company’s existing customers result in 80% of its future revenue.
• Marketing Metrics suggest that selling to existing customers require half the effort in comparison to brand new prospects.

Get summarized information from all the 15 chapters of the Sales 101 eBook. Get your copy today:

5 Hacks that'll Help You Retain Customers:

1. Provide Excellent Service:

The best way to keep your customer satisfied is to give them exceptional service. A customer comes or leave because of the quality of service and hence they should be provided support from the company. For this, not only the customer service department but every employee of the organization needs to understand the importance of customer satisfaction.

Consider Disney, all employees (also called cast members) go through a ‘Traditions Training’. It is compulsory for everyone irrespective of the work area. Employees are required to know the basis of their philosophy - customer centricity.  Excellent service should be guaranteed from - sales reps, product managers, directors, designers, CEOs - basically everyone.

Read More: 3 Companies successfully using innovative tech to improve customer experience

2. Reward Loyalty:

It’s human tendency to take actions for which we would be incentivized. The aim of customer retention is not just to maintain profits but is also to increase them. When we reward loyalty we trigger word of mouth publicity from our loyal customers. This attracts more customers and increases loyalty as it is valued by the company.

Discounts, offers, freebies - all qualify as an incentive to loyalty. Starbucks, for instance, excels at keeping customers loyal with its loyalty points system. Every time customers make a purchase they get loyalty points in their mobile app. These can be redeemed as a discount for buying coffee in future. Hence, loyalty is rewarded and repeat purchases are incentivized.

3. Hear them out:

Your customers show you the real picture of the company hence it is crucial that you listen to reviews. Giving customers opportunity to give their opinion also makes them feel valued. Their opinion can be the basis of changes in products, management, and work. Reviews and surveys play a great role in this. With social media turning out to be a platform of choice to voice opinion, brands should also keep a check on activities relating to their brand and product.

Brands are increasingly focusing on social media to hear and solve customer problems. Spotify has a multi-channel customer support account - @SpotifyCares. With this social handle, they provide support for tech glitches, usage tips and tailored suggestions in the form of playlists. They even thank customers for giving their feedback on recommendations and service.

4. Don’t Over-promise and Under-deliver:

Sales reps and even experienced entrepreneurs often overpromise their benefits and services. It is a rookie startup mistake but is also noticed in enterprise-level companies. Promising beyond your technical capabilities may result in an initial win turning into a huge loss. Your unfulfilled commitments can be the reason for drastic churn in customers and negative word of mouth.

Always state exactly what the key deliverables would be in the proposal and final agreement. Also, you should mention what you wouldn’t do and the deliverables for which you won’t be responsible. Often customers assume some services that the company wouldn’t really offer. Try to clear out common confusions before getting into a contract.

5. Measure and Predict:

Though customers provide feedback, there are many factors that influence the level of satisfaction which is not reported by the customer. It is up to companies to look for data and derive insights for better service. With advancement in sensor technologies and big data tools, it is now possible to collect a wide range of data from the customer and predicting their issues and satisfaction levels. Models can also be defined to measure the impact of individual factors on total satisfaction level.

The BMW Group has yet again set a benchmark in this field. BMW’s prototype cars generate an average of 15,000 data points from the car body. By using statistical models, the company finds faults and fixes them before the final launch. Though startups might not have a huge budget, they can take steps to use data already collected through websites and social media. This will help in improving the overall quality of service.

Customer service is a critical function for the success of an enterprise. In small companies especially, startups entrepreneurs and sales reps take up the role of customer service executives and are accountable for failure in client satisfaction. It is worth the resources to go above and beyond to retain customers. Hence try to max out in this field.

Jump to chapter 15 - Hiring your first sales rep

We are in the process to launch an automation solution that will elevate most of your sales troubles using the power of artificial intelligence. Signup for early benefits: