Grow Your Profits with Customer Retention

Customer retention is central to successfully building a business. As many of you already know, it’s easier to sell to an existing customer than a new one. If you’re not already aware of the importance of customer retention, here are a few facts:

  • According to some studies it costs up to 7 to 10 times more to acquire a new customer than to keep an existing one.
  • Studies also show that a 10% increase in customer retention can translate to as much as an 80% increase in profitability.
  • They also state that a 2% increase in customer retention has the same effect on a business as decreasing costs by 10%.

Overall, customer retention should be central to your small business marketing activities. Not surprisingly customer retention relates directly to the strength of your relationships with your clients. Follow these tips to keep your relationships strong, and retention rates high.

Five Tips for Increasing Retention of Your Small Business Clients

  1. Be trustworthy: Owner/client relationships, like all relationships, are based primarily on trust. Developing trust comes down to doing what you say you will do, when you will do it. Always be your word. Think through deadlines and deliverables before promising, make sure you’ll be able to deliver on what you say. Missed deadlines add up and chip away at your clients trust. Without trust, you have nothing.
  2. Under promise, and over deliver: This relates to the tip above; always deliver on what you promise. One approach to building trust while also surprising and delighting your clients is to under promise and then over deliver. This means when you are selling your services, keep some deliverables up your sleeve. Many sales people do the opposite—they over-promise. Over-promising in the long run can destroy your business.
  3. Adding Value: Value added remains an important concept in client retention. Assuming you are giving your clients everything you promise to, how else can clients benefit from working with you? Offering free advice and giving leads and referrals to your clients are popular ways of adding value to their relationship with you.
  4. Good customer service: Never forget that your customers pay your salary, always listen, be open to their needs, always try to meet them, and know how to apologize when things go wrong. These are some of the principles behind good customer service. Good customer service goes a long way in retaining customers, and a policy of poor customer service can be devastating.
  5. Cross sell. Let existing clients know about new services that you offer and that will complement the services or products you currently provide them with. Cross-selling  isn’t about pushing more products on people, it’s about understanding your customers needs and finding new ways of meeting them. Clients appreciate hearing about new services and products that their providers offer.

SimplifyThis is dedicated to helping small businesses to run more efficiently. Our online invoicing and appointment scheduling software helps entrepreneurs to better manage their time, while projecting a professional image to clients.

 

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