Would you like to increase your company’s profits by 25% or more this year — and not have to earn a single new customer?
According to a study from Harvard Business School, you can boost profitability by 25-95%by focusing on current customers and boosting retention rates by just 5%. It may seem incredible, however, when you consider the high costs of customer acquisition, the numbers make sense, according to an article posted on Sales & Marketing Management. It costs five times more to land a new customer than to keep a current one in the fold.
So, the key to profitability is to slow customer churn and nurture growth. Here are three tips to get you on your way.
1. Reinvent customer service.
The proverb “No news is good news” tells us to assume everything is going well as long as we hear nothing to the contrary. It’s an attitude that many customer service departments adopt. If customers call in, reps spring into action. If not, they assume all is well. Instead of making assumptions, be proactive and stay in touch.
First, consider whether there are any obstacles to your customer realizing full value from their purchase. Maybe they fail to recognize some of the solution’s features that could be instant time savers. Your job is to remove these hurdles.
Plan a post-purchase call around the time when you think new customers might need your help. Ask if their new solution is up and running smoothly. If not, be prepared to guide them toward a better experience. While you may be able to answer questions in a phone call, it’s also useful to have some quick online tips to which you can refer them. Also, explore further what your customers want to accomplish and ensure they’ve discovered the product features that can help them.
In addition to calling customers, you can use email nurturing — it’s not just for attracting customers. Publish a newsletter that links to informative blog posts. Offer webinars. When doing so, don’t limit your communications to your point of contact. In every business, there are multiple decision makers and influencers. Try to keep them all in your communication loop. By communicating with all stakeholders, you’ll educate them, demonstrate your company’s expertise and build trust. Remember — the more value your customers gain from your product or solution, the more loyal they will be.
2. Ask some questions.
Don't assume that buyers are loyal just because they continue to buy from your company. To overcome your knowledge gaps about the customer experience, conduct research.
A good question to ask is how likely customers would be to recommend your products or solutions to their peers. A recommendation demonstrates a higher level of loyalty.
3. Get social.
It’s important to communicate with your customers where they are already conversing. Today, many of them are on Twitter, LinkedIn, YouTube and forums. Encourage communications with your customers on these platforms. Doing so enables customers to learn from your subject matter experts as well as others who are using your product. Plus, it builds your relationship.
Also, use online social interactions to listen to customers and identify needs and opportunities. Are there any changes you should make to your products or service?
So, increase customer retention and growth by treating customers like gold after the sale, monitoring their loyalty, making necessary adjustments to your product and service to boost satisfaction, and maintaining strong relationships with customers online and off. Enhancing loyalty is worthwhile because if you raise retention by just 5%, you could increase profitability by more than 25%.