Question: What is the source of highest profit sales? Most likely, it’s your current and past customers. Next question: What is your customer retention process?
You’ve already attracted these customers to your brand, built the know, like and trust factor and earned a purchase from them. You successfully converted a lead to a paying customer. And it cost you money to do that. Maybe a lot of money. How much less expensive is it to keep good customers than acquire new ones?
Download the free Lifetime Total Customer Value calculator so you can get the maximum ROI from each customers this month.
A good customer retention plan has amazing ROI.
In an article posted on Entreprenuer.com, Eric Sui said, “According to Bain & Company, it costs 7X more to attract new customers than it does to keep them. Additionally, if you retain just 5% of your customers annually, you can generate up to 125 percent more profits. Retention strategies truly pay off in the long run and help you build a sound business over time.”
I’ve outlined 13 keys you must have for your customer retention funnel to be effective so you can score more sales.
1. Make retention a top priority.
Prioritize the highest ROI activity your company does, which is most likely customer retention.
2. Measure life time value of customers.
Determine the life time value (LTV) of your average customers. The additional purchases, upgrades, replacements and referrals they send to you add up to a much bigger dollar amount than just the first purchase they make. Download this free LTV calculator here.
3. Provide amazing customer service
Have you noticed that even the cable companies want to “delight customers”? They finally get the importance of keeping current customers happy because it’s way less expensive to keep customers than to acquire new ones.
4. After the sale nurturing
Create a system for following up after the sale at regular intervals. Depending on your business, that may be a week after the sale or a month. Pay attention to how your customers are engaging with your brand, it’s product and services. Respond quickly to customers. Always. A good customer retention funnel has as process that everyone who touches the customers uses to continue nurturing the relationship after the sale. Continue delivering high value content and service and you’ll score more sales.
5. Budget for customer retention marketing
Since the ROI on keeping customers is so much higher than on acquiring new ones, it makes sense to assign some budget to marketing efforts aimed at retention.
Without a good CRM, your customers may be on the business end of an ill-timed phone call from an inside sales rep pitching an upsell, when that customer is currently threatening to leave if a dire problem isn’t solved. Not a good customer retention play.
Since the beginning of CRM time, having a 360 degree view of the customer so that companies could avoid this type of mistake has been the goal. You can’t manage an effective customer retention funnel without a good CRM.
7. Communicate frequently
Your customers want to feel valuable after they’ve spent money with you. Communicate with them frequently to show you care. Birthday greetings, holiday messages, news and updates are great ways to show them you care. Remember to only email customers who have opted into your email list.
8. Engage on social media
Social media is the equal opportunity soap box everyone can use to rave or complain about their experiences with a company. Monitor social media and quickly respond to any complaint. Also, quickly thank customers who sing your praises. You can also use social media to ask your customers about what’s important to them and nurture relationships.
9. Convert complaints into opportunities
Everyone remembers the companies that handle their complaints with such concern for making the situation gone wrong into an experience that feels right. It’s interesting that what’s memorable is how great it felt to the customer that the brand went above and beyond to solve the problem, and not what went wrong in the first place. Be a hero to your customers when they complain and watch that same customer become your advocate.
10. Create a customer loyalty program
Rewarding customers for their patronage is a great way to develop their loyalty. Provide added value, special promos or offers that your customers want. The rewards need to be easy to earn and redeem. Keep things simple. Score more sales by rewarding your current customers and nurturing them to send referrals.
11. Host an event
Show your customer appreciation by hosting an event. An open house, after hours event or guest lectures can provide powerful incentives for your customers to spend more time with your company. Having fun and feeling valued has a way of bonding people tighter together. Events work whether they are virtual, like a podcast or live, like an open office social gathering.
12. Corporate social responsibility
Many customers choose to buy from brands that give back over brands that don’t. If your company already has a corporate social responsibility (CSR) program, share progress and successes with your customers. If not, get one. Select a cause that is consistent with your brand and aligns with your customers’ values and interests.
13. Upsell and resell
Since you’re paying attention to how your customers are using the products or services they purchased from your company, you’ll know what’s important to them. When the time is right, offer and upgrade or replacement product that has high value and will help your customer achieve their goals.
Email marketing with calls to action and free demos or trials, just like regular marketing campaigns. Incent the customer to try new add ons, upgrades and eventually replacement purchases, in some industries.