Improving Customer Retention

According to Mahatma Gandhi, “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”  His quote reinforces the point that customers are indispensable assets to a business, and of high value for its existence.

If in the process of trying to attract new customers, the business owner neglects the loyal customers; it could be more costly. ...a Harvard Business Review article...states that the cost of acquiring a new customer is anywhere from 5 to 25 times more expensive than the cost of retaining an existing customer.

While growing a business, it is important to grow your customer base. In the trajectory of its growth, there will be old and loyal customers, and a stream of new customers who will come and go. A business owner’s ideal goal is to retain everyone as a loyal customer, but that is not usually the case. Nevertheless, in the process of attracting new customers, it is possible to lose the old and loyal ones – those who offer potential lifetime value to your business owing to their appreciation of the value you offer.

This is not rhetoric; there is research to substantiate the cost of such negligence.  If in the process of trying to attract new customers, the business owner neglects the loyal customers; it could be more costly. There is a Harvard Business Review article to that effect that states that the cost of acquiring a new customer is anywhere from 5 to 25 times more expensive than the cost of retaining an existing customer. Also according to a Gartner research, beyond the high cost, they deduced that new customers tend not to be as profitable to the business, especially at the initial stages as existing customers, re-emphasising the importance of Life Time Value (LTV).

Businesses can offer add-on services to attract new customers, which can also be beneficial to the old customers.

Therefore when trying to grow your customer base, reconsider the following points to achieve balance:

Cross-selling

When growing your customer base and acquiring new ones, business owners can get involved in cross-selling to acquire more business. Businesses can offer add-on services to attract new customers, which can also be beneficial to the old customers. For example, when purchasing an air-conditioner from Jumia or Konga, the merchant can also offer free installation with the purchase of the air conditioner as an add-on service to attract both old and new customers in need. Therefore, it is important to be aware of the various ways to get new customers and maintain existing ones.

Know your customers

Create customer profiles to understand the type and nature of your customers’ preferences. Find out about their needs and how best you can develop products and services to attend to them satisfactorily. If you need to segment your customers to differentiate their needs, then do so, and offer different marketing value. Do not design a solution without some feedback from customers. Run a market survey, using some of the most convenient tools online. This would help you to reduce cost as much as possible. It is important that your questions are targeted to seek how customers and prospects relate with your business and offerings, and how they prefer to be served. You should include questions to capture their income level, profession, location, age, among others; their cultural influences; as well as behavioural patterns like their taste and habits.

Using data

Upon the conclusion of the survey, analyse the data gathered accordingly. Afterwards, consider how best to approach your potential market, for instance whether on social or traditional media, among others. In your communication, remember to focus on how best your services help them, and not on merely touting your offerings.

Social listening

In this world of social media, it is possible to stay up-to-date, round-the-clock with the latest information that interests you. Social listening is when you deliberately follow specific areas that you are interested in on various social media platforms. In practice for businesses, source for information that relates to your business and see how you can take advantage. Set up a Google alert. For instance, you may enter key words pertaining to your competitors to help you know what the users are saying about them and how you can ride on the gaps that you perceive. You may also key-in the name of your brand to know the opinion of your customers about you, every time.

Cold calling

Come up with qualified leads, gathered from various platforms, including personal networks, social media search, advertisement, and social listening, and then place calls to them, targeting their specific needs. For this to be effective, you need to have done some research on the customer’s background if possible, to enable you profile the lead as well as how your business can serve the person.

Word of Mouth

This is the most powerful tool any business can have. Nothing beats the recommendation of your services by a satisfied customer to a potential client. To spread the word to your advantage, prioritise customer service and offer value. Research shows that 78% of people have walked away from a sale as a result of poor customer service.

There are other tried and tested ways to grow your customer base such as the usual suspects: networking, advertising, website, but at the heart of your business are the customers, both old and new, who make daily transactions in the long term for the value that they get, which adds to your bottom-line.

Article originally published in Guardian Newspaper Nigeria