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June 26, 2007 | Written By Mason Hipp
According to customer retention expert Terri Schepps, it costs about 5x more to get a new customer then it does to retain a current one. And that’s just monetarily - the actual cost might be much greater if you include the time necessary to acquaint them with your company and your working style.
Given that a lot of companies aren’t even sure how to get a new customer in the first place, I’d say it’s a lot simpler to keep your current ones coming back.
So what does it take to keep your customers coming back to you? A little appreciation, saying hello every now and then, and a few other very easy tasks.
Following all of these may seem difficult at first, but with practice it becomes a lot easier. Start with one or two, and gradually build up until you’re using several of them with all of your customers. You will be amazed at how effective these tiny little measures can be.
All of these ideas, while simple and straight straight-forward, are very little and perhaps inconsequential. It seems to me like it would be more important to offer an excellent product that merits repeat business. I wonder how much these will actually make a difference?
While I agree that it’s important to have an excellent product, I think that a lot of small businesses already do. And if that’s the case, these little tips will make a huge difference. Also, while honesty may be ‘simple’ it certainly isn’t easy and can be a big step towards building long-term customer relationships.
I’m also quite sure that there would still be a big customer retention improvement for small business owners with less-than-stellar products.
There’s one way to see how effective they can be - try them! It certainly won’t take you too long : )
There are a lot of absolutes up there. Number 4: “it will guarantee that they always turn to you.” Number 6: “and then you have a customer for life .” Giving them something extra and paying a compliment works sometimes, and doesn’t guarantee anything, and definitely doesn’t secure them as a customer forever.
You should specify that most of these tips only work in service businesses, like 1, 4, and 7.
I think Terri is absolutely spot on.
All business transactions involve either a direct or an inferred relationship. These 7 points contain principles which underpin any business relationship.
Of course, if your product is garbage, you can say thank you all you like and people won’t come back to you. Customer retention is all about a holistic approach to your business.
And I don’t agree that these points apply only to service businesses. Literally, perhaps, but each of them is backed up by fundamental principles of honesty and care, and so forth. These apply to all businesses.
However, a businessperson or manager who can’t see themselves doing these simple things should seriously reconsider their approach to business.
Brandon, you mentioned that tips 1, 4, and 7 don’t apply to product based businesses. I disagree, here’s what I think:
Being honest applies to everyone, across all businesses. I’m not sure how you think this applies only to a service business.
Giving something extra can certainly be applied to product businesses. Think of a retail store in your location that may offer free chocolates, or an unexpected 15% coupon on your birthday.
Have you ever walked out of a store where they didn’t thank you for shopping with them? It’s a lot nicer when they do. And it’s usually common practice for the good ones to say “Hope to see you again soon”
Eliezer - These are all definitely based in caring about your customer, and I think you’ll agree that caring is at the root of customer retention.
Absolutely!
The mean-spirited money-pinchers may do well for a short while, but truly successful businesses are always customer-centric. That means caring (in some shape or form).
All of these are good points. Anything you can do to provide excellent service to your customers will help. Just having a great product isn’t always enough.
thanks for the GREAT post! Very useful…
I almost agree with all the points except no. 4 (giving some extra)
This might be a pain later on if you get the another job from them.
Coz giving the client extra might spoil their habit of asking for more and more without being paid for that.
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