Why do some businesses offer points, stamps or every tenth coffee for free?
These businesses understand that a customer retention program is a fantastic way to ensure that customers keep coming back. The most recognized customer retention programs are those loyalty programs used by retailers, but this same principal can be applied to any business that wishes to maintain a loyal customer base.
Ask yourself these simple questions.
- Does your business have a comprehensive retention strategy?
- Are you devoting a portion of your marketing budget to keeping current customers?
If you answered no, then you are jeopardizing the long-term success of your business.
Remember it is costs less to keep your current customers then it does to acquire new ones. That doesn’t mean that you should quit spending on marketing attempts to acquire new customers, but you should invest some of your marketing budget on retention strategies. Consider the 80/20 rule which states 80% of your business income comes from just 20% of your customers. A good Customer Retention program will work to convert those occasional customers into “loyal customers” who spend more money on a more frequent basis.
Customer retention doesn’t just happen. Poor customer service can undermine even the best retention strategy. For a customer retention program to be truly successful, the business must look at their total operation to ensure every aspect of their business is aimed at keeping the customers they already have. Is the accounting department too abrasive when collecting overdue accounts? Is the receptionist chewing gum when answering the phone? Every contact with your customer has to be positive for any retention program to work. Depending on the type of business you operate, there are several possibilities in the type of customer retention program could develop:
You can develop a program that provides regular, scheduled contact with customer or prospect (a drip campaign). For example, develop a (opt-in) newsletter campaign, letter campaign or important reminder campaign (oil change, domain renewal etc). This is an excellent approach for many service industries or for sales professionals such as real estate agents or car sales people or any other industries where there is a significant lapse in time between new purchases. You can keep your business name fresh in your clients mind so that they call you instinctively when it is time for the next purchase.
Develop a “rewards” program such as points, free product or service or discounts earned by making. This is the retail rewards program most people are familiar with, but this type of retention program is often used in business to business relationships as well. You could develop a program that will offer cash back or a discount to businesses based on the volume of purchases annually. This type of program works particularly well if you have a diversified selection of products or services, and are looking to encourage your customers to purchase a broader range of your products or services
You could develop a Members only club that combines aspects from both the frequent contact and rewards program.
The best retention programs are those that provide an opportunity for you to learn more about your clients and their spending habits. This is invaluable information that can easily give you a leg up on the competition.