Research shows it’s cheaper to retain customers, rather than spending money on trying to attract new ones.
Any business in today’s challenging economic climate needs to ensure all marketing efforts are cost-effective.
It figures that customer retention is vital not only to save money, but also to uphold your good reputation. A lot of SMEs tend to focus on customer acquisition, in the belief it’s the best way of growing their business, but this isn’t necessarily the most effective strategy.
Why is customer retention important?
Studies have shown that acquiring a new customer can cost up to seven times more than retaining an existing one, depending on the industry you’re in. One reason for this is that consumers prefer to spend their money with brands they know and trust.
Existing customers are likely to repeat their purchases because they trust you. This relationship is achieved largely due to a high standard of customer service. Other factors include how easy it is to use your website and how effective the product is in meeting customers’ needs.
When consumers trust your company and products, they’re more likely to buy more from you. The longer a customer has a relationship with a business, the more they spend over time, according to a survey by Bain and Company. On average, a repeat customer who has had a relationship with a business for between 31 and 36 months will spend 67% more than they would during the first six months.
Acquiring new customers is much more expensive because it requires marketing and promotions across multiple platforms. These can include social media, Google AdWords, review sites and other related websites. All of this adds up.
Regular customers are more willing to try other products from a company they know, with 70% saying they would consider trying a different range of products from a trusted supplier – they can become brand ambassadors, as word of mouth is still considered to be one of today’s best marketing strategies.
How often do you look for opportunities to re-engage customers? If you don’t market to existing customers on a regular basis, it’s time to create an effective strategy for customer retention now, even through these tough times.
How do you retain cash-strapped customers?
Today’s challenging economic climate makes it more important to hang onto customers who may be struggling financially. If they remain loyal during these troubled times, the chances are they will stick with you when we emerge at the other side.
If you’re a B2B company, you may find your clients or suppliers are cash strapped. No-one can escape the fact we’re living in tough times. Customers need to be sure you’re not trying to sell them things they don’t need.
Build trust by training customer service advisors to work with clients through their choices when required. Your clients might feel isolated in their financial distress but reassuring them we’re still “all in this together” creates an empathy they will remember.
Although times are hard, try to reward loyalty with a small bonus, such as a one-off 10% discount for your products and services, for example. Even a relatively small reward will show people you empathise with their plight, and it will go a long way towards increasing brand loyalty.
How can you compete with your competitors?
Competing with competitors is an important part of your strategy. When there’s less disposable income to go round, find out what your rivals are doing.
Analyse your competition and note details of their services or products, unique qualities, target audience, marketing campaigns and strategies. You don’t need to research every single competitor if there are a lot: simply focus on the top five.
Check if they’re doing anything useful that you’re not. This will help you to understand your direct competitors and mould some of their strategies to your individual needs if useful. Identify your own unique selling point, which is what sets your business apart from the rest. In the eyes of your target market, it must make you seem better than the other brands. To do this, you need to know your customers. Reach out to them through email and social media. Invite them to complete a brief survey or take part in some market research.
Focus on customer relationships and invite them to comment on your social media posts to test their reaction to new products or services. Find out exactly what they’re looking for to refine your marketing and products to meet their needs.
Try to follow customers’ advice when trying to improve. Social media is a great way to gauge how you’re doing.
When you can solve problems for customers through your products or services, it’s easier to build trust and loyalty.
Zoom was one company that solved problems when everyone was at home due to the Covid lockdowns in 2020. People were able to work by participating with their conference facility. Growth was unprecedented, with sales in the final quarter of 2020 increasing by 370% on the same period in 2019, reaching the £705.5 million mark.
Improving customer retention becomes easier when you’ve done your research and found out more about their needs. Focus on relationships and remember, simply satisfying clients isn’t enough. You need to delight them with exceptional customer service.
Implementing the highest standards in all areas of your business leads to improved client relationships and retention. Include pledges such as returning phone calls, or responding to emails, within a specific timeframe. Ensure you stick to these standards and don’t ever let them slide.
Take advantage of technology to re-engage with your customers. This is especially pertinent if you run an IT business. Prove what you can do by building a website that showcases your skills, including recent projects, with the authorisation of the project owners.
Produce a newsletter to share to your customer base and use innovative email marketing campaigns as a solution. As tech experts, you can introduce many ways of involving technology in your marketing campaigns.
Social media is an effective avenue, as you can choose the right platform for your business to make sure you reach your target audience. Some companies that aren’t tech focused will outsource this role to a specialised consultant.
How can coworking help?
Coworking can help with business finances, as well as employee focus. Working from a coworking space enables you to reduce overheads, such as expensive office rental. This puts more money back into your business to improve your services.
It also provides an environment where collaboration is encouraged, enabling you to bounce ideas off your team and fellow co-workers to help move your company forward. Host brainstorming sessions to devise the best strategies for customer retention.
If you’re planning on coworking in Birmingham, look no further than Headspace Group’s coworking space on thriving Temple Street, near New Street station, where facilities include an onsite gym, showers, staffed reception, secure bike racks, break-out areas, a large roof garden terrace and a Golfzon indoor golf simulator.
Coworking space in Birmingham has never been better, with Cathedral Square’s eateries, retail area and businesses right on your doorstep.
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