Building Loyal Customers, For Life
As you grow your business, think about the life time value of each customer and, what it will take to turn them in to loyal customers for life.
Easy To Write Out A Cheque, Than To Accept Facts
Why is every company and marketing director hell bent on spending fortunes on advertising and marketing to new customers only, this is something I have never been able to understand. When you are starting out in business yes we all need to attract, convert and build loyal customers better known as customer retention, hold it - just rewind back a bit – did I say retain customers? Yes I did. You see it is far too easy to bring in new customers by advertising, marketing or putting more sales people on the road but what about the costs associated with that? It costs between 5 to 7 times more to acquire and sell to new customers than trying to look after your existing loyal customers and selling more to them.
What Worked Yesterday, May Be Hurting You Today
What worked for some companies yesterday is not working for them today - in fact it could even be hurting them without them even knowing. With the internet the average customer is a lot smarter and wiser, especially on high value ticket items most customers research online then make a decision, they look and search on social media sites for feedback before making a buying decision for a product or a service.
A Band-Aid Will Only Slow The Bleeding
So why do we continue making the same mistakes even when we know better. Last month I was at a corporate golf day on the outskirts of London and in my group was a director of one of the three largest power companies. As we got talking about what we did for a living, he told me that one of his biggest problems was the retention of existing customers. So I began to ask more questions as you would do (when at work, we talk about golf and when on a golf course, we talk about work), if the subject is of interest to you. What he told me did not surprise me and it was nothing new that I had not heard before.
This is what he said to me “It is much easier to write out a cheque each month to our ad agency to bring in more fresh customers each month by offering discounts to switch them over from our competitors, this is normal in our industry”. He went on to say,“we have had a number of attempts setting up Net Promoter Scores systems but the heads of department did not like them because it was way too much hard work” he said to me, waw. If the leader of a company has no interest and feels that way about his customers, what chance have the poor employees got to retaining loyal customers through customer experience or by any other methods? The leaders not only have to buy in to a retention program but also more important they have to believe in the need to keep loyal customers through great customer experience.
Wake Up, Smell The Coffee
The above statement is as common as they get from the corporates, to big, too much money to burn and it is too much hard work looking after “whinging and whining customers” he said, who they see as pests after the sales has been made. But the companies who have changed their attitudes and see the bigger picture have started put their customers at the heart of their businesses and are growing with evergreen customers with sustainable growth and profits. So who are these companies who care more about their customers than anyone else, and are generating more sustainable profits.i.e. JetBlue Airlines, Southwest Airlines, Ebay, KPMG,Plusnet, Amazon, Zappos, John Lewis, Ritz Carlton and the list goes on.....
When Should A Company Start With A Retention Program?
So at what point do companies really start paying attention to customer retention, loyalty programs and for me personally, is the Customer Experience using the NPS system. Having worked with companies as little as £7 million in sales through to £179 million who have never heard of the word customer experience, and yes, they exist, even dough it’s hard to believe. One company we worked with went from £17 million without losing many customers then when their turnover reached just over £31 million within two years they notices it needed to bring in more new clients just to keep pace with the leakage at the bottom. Another business with sales at £176 million with very high leakage at the bottom could not keep pace with replenishing new customers and within 14 months the turnover dropped to £119 million because of attrition. Not nice to see let alone experience it, especially if the competition is growing at your expense. WARNING: The longer you wait to address your customer retention, the more you will spend in the long run and the less effective you become, until it is too late.
“You can’t use the same thinking, the same people and the same systems to fix the same problem – When the same people were the ones that caused it. You’ve got to bring in fresh thinking people and possibly fresh systems to stop the leakage”
Growing a business is never easy regardless of the size but incorporating the concept that the customer comes first every time in the equation will allow you to grow theEvergreen Clients for life. Setting your business up from the start is much easier around the customer focus than trying to change it later when it has grown and the bad habits and mixed culture of people are installed which loses you customer rather than loyalty. Below is a list of ways management can adopt to make sure you have evergreen clients for life:
Learn From Experts
First thing is first and that is to fully understand what is a customer experience and how does it work and what management needs to do to start implementing it in to your company. If you don’t have budget for CX Strategist or a Mastermind Strategist then get yourself the number one book on customer experience titled “The Ultimate Question” by Fred Reichheld, Fred was the creator of the NPS scoring which everyone in the industry uses today.
Building A Customer Retention Program
Every business should have a customer retention program regardless of the size of your organisation, customers are the life line to any business. It is my opinion over the coming years you will find more and more companies will begin to realise how important it is to have a customer loyalty / retention program or they will not survive. If you do not have a program which tracks your customers and at the same time allows you to interact with them, then you’re in for a surprise over the coming years if you last that long. Customers are demanding more and more by the day, gone are the days you could get away by treating everyone like sheep, these sheep have become intelligent since the internet. The customers are slowly taking back control from the suppliers and voting with their feet by going elsewhere and they also have the power of social media to tell others the news about you good or bad. Don’t say I did not warn you. The future is all going to be about building relationships, yes this means a two way dialogue and listening with both ears.
The Power & Value Of Your Customer Base
Just imagine if you had a database of every one of your customers and you sent them weekly or daily offers which brought them back in their droves to spend more with you. How would you value your customer base, I have seen businesses with customer bases and they put zero value and say it is a waste of time and money. Until someone, shows them how to turn and churn the database, in to gold, until then most companies don’t put a monitory value on the customer base what so ever. In my years working with clients I helped my clients earn 10’s of millions in profits from databases which they did not see a value in. So start building your customer base and if you are still unsure how to make money from the customer database, make an appointment with and I will show you.
Creating Loyal Customers
To create loyal customers, you have to first understand what their wants and needs are then you can start on figuring out how to keep them coming back for more. The more interaction you have with your customers the greater the chance they will become loyal and evergreen customers. i.e if you get a customer to buy from you once, there is over 80% of a chance you will not see them again but if you get them to come back and buy twice from you have a 60% chance of not coming back to you. And if they have been back three times to buy from you that falls down to 50% and so on…. You really have to work on building, trust, credibility and a relationship with two-way communication, which of course will mean listing to your customers and acting on their feedback.
Targeting The Right Customers
Targeting and attracting the right type of customers of course helps, by this I mean, attracting and converting the customers who are less likely to leave. By analysing historical customer data you should be able to figure out which type of customer is likely to become a loyal customer and which ones you will never see again. I always say the more you understand your ideal customer the greater the chances are you will be able to reach them much easier than a scattergun like most businesses do. They are forever bringing in new fresh customers only to leave the back door wide open for them to walk right back out after the first sale. Avoid the customers who is just price driven as they will jump ships as soon as your competitors offer a better deal. Never take the relationship for granted, after all we are all human beings driven by feelings. The more connected way you find with your customers the greater the chances they will stay loyal to you over time but remember. You must always create value at every stage of your customers journey for you to grow. FEEDBACK: Which of the points are true in your business or your experience? Care sharing some examples with our readers?
Moe Nawaz: Author - Speaker - Strategic Advisor & Mentor to FTSE 100 Leaders