Every customer that you retain pours profit to your bottom line. Every sale that you make to an existing customer comes at a much cheaper spend, when compared with new acquisitions.
Why can you not afford to lose existing customers? According to Salesforce:
- It costs 6 to 7 times more to acquire a new customer than retaining an existing one.
- The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%.
- A 2% increase in customer retention has the same effect as decreasing costs by 10%.
- A dissatisfied customer will tell between 9-15 people about their experience.
Just as products do, customers also follow a life cycle. There will always be a stage when a customer demands more attention than they used to! What should you do? Give them that attention, BEFORE they start displaying signs of dissatisfaction.
Existing customers seldom defect because of price, or your product’s functionality. According to a study by research firm CRMGuru, bad customer service is the major reason why most customers defect to competition.
In this article, I will talk about practices that will PREVENT customers from leaving. I am not talking about steps that you can take after the customer has already decided that they are leaving you.
The ideas that follow, have helped us improve customer retention by 25% over the last couple of years!
1. Treat them like valued partners
Customer interactions need to elevate to the realization that they can be more than just problem solving sessions.
Tell your customers about large scale product changes. Tell them that a new product feature is in the works, and ask for their feedback. Tell them about your major achievements, your failures. Make them feel that you genuinely want to talk to them.
Customer – I really wish your product has X feature.
Bad response – I’m sorry but we do not have this at the moment.
Great response – Oh that’s a great idea, I’ll put this across to our product managers. Thank you for your suggestion. I’ll be sure to tell you how this goes!
Why is it great? You come across like someone who is paying genuine attention to actual needs, and who VALUES the customer.
2. Never leave them wondering, follow through
It’s crucial that you never leave them wondering whether you actually have a solution for their problem. Even if you do not have one, be there to communicate.
They have all the rights to vent. A phone call, or an email that says “we are working on it, and I will talk to you as soon as it’s fixed” is a great reassurance for even the most exasperated customer!
Clarity in communication is equally important. The moment you say ‘as soon as I can’, there is a good chance that the customer has already started thinking about trying your competition’s product.
Be as specific as you can, tell them that problem might take X number of hours to solve. If you do not have a solution within the promised time, call up and tell the customer that you are working on it, and it might take X more hours.
Takeaways: Always communicate. Be very clear in your communications.
3. Never question their expectations
If they expect your product to have a certain functionality, there can be numerous reasons behind it, such as.
- Your marketing folks promised a bit too much.
- Your competitor has that functionality already.
- There’s a genuine need.
Be patient when the customer asks for something, or makes a suggestion.
Tell them that you will find a way to accommodate their request, also tell them about the steps that you plan to take. It will make them realise that you genuinely care.
It does not end there. Follow through – call them, and tell them what happened, even when you could not fulfil the request. This is a great way to garner loyalty.
What’s even better? Offer an incentive for the suggestion, if the customer has made one. Thank them for the suggestion, and offer a week of free usage. This is bound to get you good word of mouth.
4. Be honest when you screw up
Honesty, and transparency are crucial to keep the relationship with the customer growing.
Trying to cover up, or making an excuse when a customer complains can never go well with them. There is nothing wrong with accepting that there was an irregularity on your part, and apologising.
Word of your honesty is bound to get around. Honesty also opens the door to sympathy, the customer will be able to relate with a genuine problem (say, a technical snag). Here’s 5 reasons to stay honest with your customers.
After you have apologised, there are some beautiful things that can be done to communicate to the customer that you genuinely care.
- Send them a handwritten note with an actual human ‘signature’. All you’ve got to write is that you care.
- Offer them a week of free usage.
- Offer them a free trial of your new product, and ask for their thoughts/suggestions.
5. Reduce the effort required of them
I’d say the best way to please a customer is by doing something that they were not expecting at all. Throwing a pleasant surprise by reducing customer effort is a great way to build a relationship. It’s a great way to communicate that they mean more than just ‘paying accounts’.
Things that can be done:
1. A customer is asking for help. Do not make them fill a form. Call them up, ask how you can assist.
2. A customer needs help with a functionality. Do not send them a product handbook. Send them an email with steps involved, and screenshots attached. Do it for them if you notice that they’re facing a problem.
3. You notice a customer trying to troubleshoot. Do it for them. Call them, and tell them it’s done.
Being proactive is always better than being reactive! There’s no better way to tell them that you want to help them. Read these 5 simple strategies to reduce customer effort.
Customer retention is just like the old saying that wants you to prevent, and not cure!
Author: Niraj Ranjan Rout. Niraj is the founder of Hiver (formerly GrexIt), an app the lets you share Gmail labels with other Gmail users. Niraj works on programming, customer support and sales, and also contributes to design and UI. He’s a fusion music aficionado, loves to play the guitar when he can.