By Kelly Doyle
Did you know that retaining existing customers is far more cost-effective than acquiring new ones? It’s true. Substantial research shows that focused efforts on retaining customers are more profitable.
So, the question is, why do many businesses often focus more on acquisition efforts than to keep their customers happy and loyal? If customer retention is not at the forefront of your business’s strategic plan, it should be. Here’s why.
Customer acquisition costs are five times that of retention costs. According to Invesp, 44 percent of companies focus on customer acquisition compared to only 18 percent on retention. So why are most businesses hyper-focused on new customer acquisition? We have it backward.
According to customer acquisition and retention marketing stats, the success rate of selling to an existing customer is between 60–70 percent. In comparison, the success rate of selling to a new customer is typically less than 20 percent. Furthermore, a study cited by Harvard Business School found that increasing customer retention by just 5 percent could yield profit increases between 25–95 percent.
Through taking care of your biggest asset—your existing customers—you will develop a loyal customer base that becomes your prime source of new business.
Here are five simple ways to retain existing customers.
1. Proactive Renewals
The best way to retain customers is by reaching out to them before their current contract expires to offer a renewal. Proactive calling keeps more customers, and most customers appreciate the reminder.
Many companies offer special benefits to existing customers, so a pre-expiration call is an excellent time to remind them of these essential benefits, which might be the reason they signed up in the first place. In addition, calling current customers creates a personal connection, which they will appreciate.
2. Reinstate Lapsed Customers
Frequently, customers allow their contract to expire without realizing it. How many times have you called a former customer only to discover they didn’t know their contract lapsed? This is a perfect time to offer a special promotion to them.
Convenience is essential. Always make the renewal process easy by allowing payment directly over the phone.
Of course, this all sounds great, but what if you don’t have the time to make these calls? Consider bringing in call center professionals. Time is money, and outsourcing calls is an ideal way to make the most of both.
3. Win Back Former Customers
When you have dormant customers or former customers not currently using your services, the personal interaction of a courtesy call may be the key to win them back.
According to LearnSmart, the main reason your customers leave is they no longer perceive value in what you offer. As a result, they stop service—or even worse—begin to look to your competitors. However, frequently the cause of customer abandonment is well within a company’s control. It often comes down to effective communication and successfully highlighting products and services that set you apart from others.
Perhaps your company has new offerings. A touchback call is a perfect time to let dormant customers know about what’s new. Strategically reach out to them, let them know you value them, and remind them of the benefits of continuing a relationship with your company.
Do not be disparaging, but make sure they know the differences between you and your competitors. Then, finally, seal the deal with a special offer for coming back.
Last, if you dropped the ball in the past, admit it. Own your mistakes and be sincere. Your former customers may want you back as much as you want them back, but there may be some hard feelings. Nothing breaks down the walls like an apology, taking ownership, and a sincere promise to make it right.
4. Effective Account Management
Account management is about retaining your customers’ business and helping them grow with your products and services. Take the time to learn about the customers you support, identify their goals, and the role you play in helping them meet and exceed these goals.
Sometimes this requires out-of-the-box thinking, but the key is to identify why they choose you over your competitors. What value do you bring that others cannot?
Answering these questions requires you to reach out to your customers often, by phone, to learn their needs, wants, goals, and objectives. In doing so, you become an increasingly valuable business partner, resulting in a more mutually beneficial relationship.
5. Promotions and Blitz Campaigns
Is there currently a sale or promotion running on products or services your previous customers bought? Of course, we all receive promotion emails. However, have you thought about the personal impact of a phone call?
During special promotions, call centers can contact customers, knowing your current promotion and sales offerings. Phone calls may significantly increase sales because they are more personal and create a sense of urgency and excitement about the promotion.
Conclusion
Retaining customers is not always on the mind of business owners. Companies frequently take their customers and the business they generate for granted. By using one or more of these five simple ways to retain customers, you can start to increase your retention rate significantly, enjoy higher profits, and drive brand loyalty.
Customers have a choice of where to do business, and in today’s increasingly competitive environment, it’s more important than ever to make customer retention a top priority.
Kelly Doyle writes for Quality Contact Solutions (QCS), a certified woman-owned business enterprise and an industry leader in call center and telemarketing services solutions, including B2B and B2C programs. QCS offers many telemarketing services and turnkey outsourced call center services that augment sales and marketing programs.