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Feb 07, 2012 | 4 comments
A new customer always comes with the baggage of acquisition costs.
It’s only when that customer returns for a second purchase that you can make 100% on your profit margin.In some sectors, companies make their first sale at a loss and look to recoup it from subsequent transactions.
This is why cracking the customer retention challenge is the key to long term growth.
When the talk turns to specific strategies for retention, the go-to option for most companies seems to be discounts, deals and freebies. They do result in increased footfalls, but at the cost of significant losses.
Just ask those merchants who jumped on the daily deals bandwagon but saw only losses and bargain hunters.
However, there are smarter strategies for getting repeat buyers that do not involve flushing your money down the toilet. Do these things, like:
Using a CRM package with customer tracking features will help you identify who buys when and how much from you. Don’t skip this step- mining and analyzing customer data can help you devise successful marketing strategies and avoid costly mistakes.
As to cost, you needn’t hire an IT department or write a check for thousands of dollars to get a CRM. There are many good CRMs for small businesses which can be used by people with regular computer skills.
All your customers are not equal- 80% of your profits and sales will come from 20% of your customers. Use that CRM solution to find out who these good people are and lavish special attention on them.
A minority of the 20% are going to be your evangelists- spreading good stories about you through word of mouth, writing glowing testimonials and probably naming their cats after your brand. Having a group of hardcore fans is one of the ways to becoming a company that survives for years
A customer goes to your store and gets brilliant service. She gets a good feeling about you and decides that next time she needs that particular widget she will be buying from you. You’ve earned yourself that important second chance.
So far, so good. But now she decides to order through the phone and gets stuck in interactive voice response hell. Not only is she going to abandon that purchase, she will feel like an idiot for even considering the second transaction.
You don’t want that to happen. Ensure that the quality of your customer service is uniformly good across each and every customer channel.
If satisfied customers are the cake, motivated employees are the ingredients, the recipe and the oven. Employees low on morale don’t do their jobs well and the inevitable result is degradation in customer service. No matter how good the product is, that is guaranteed to turn off customers.
I mean, think back. Did you pay a second visit to that delightful little cafe down the road with the sinful chocolate mousse and freshly ground coffee served piping hot by an extremely boorish barista?
Being at the service end of a complaining customer might remind you of the times back in school when a teacher gave you a tongue lashing for not doing your homework. But like that lashing, negative customer feedback can be valuable if taken in the right spirit.
Like your teacher, you should actually thank those customers who spoke up with their problems. They are doing you a favor for free which otherwise would have been job for highly paid consultants.
After getting negative customer feedback, deal with the issue. This kills two birds with one stone- not only would you have a satisfied customer who is impressed at the speed of your positive response, other customers won’t have to face the same issues when they do business with you.
Sometimes, the easiest way to get loyal customers is to provide value. This might sound cliché but if you do a decent job of connecting with past and present customers in a non spammy manner the name recognition ensures that come buying time, your name will be on the top of their minds.
This is an immense competitive advantage in your favor and does a lot to increase the average lifetime value of your customers.
When you have got the basics right, keeping in touch with your customers is relatively cheap compared to the payoffs. Depending on your target market use a combination of email, social media or mobile to start these initiatives.
What are your non gimmicky strategies for keeping customers coming back for more?
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