John and Tofunmi both run businesses in the city mall. John’s cosmetics store has an influx of customers (most of them regulars), while Tofunmi’s gift shop has fewer regulars and is mostly patronised by curious shoppers drawn by the billboard placed near the escalator. John’s business seems to be getting bigger even though he seems not to be committed to advertisement. Tofunmi on the other hand, might have to move to a cheaper store to mitigate the cost of advertising monthly.   

Contrary to what people may think, acquiring new customers is not all the work a business needs to grow and expand. The real key to sustainable growth lies in retaining those customers you have acquired. As a firm, we’ve seen firsthand how businesses that prioritize their customer retention strategies often outperform those that focus only on customer acquisition. Just like John outperformed Tofunmi in our case study. Businesses like John’s prioritise customer retention strategies to make better sales and grow fast because they spend less on marketing, and also have the opportunity to apply upselling tactics for their loyal and returning customers. How? This is because retaining customers is cost-effective and more profitable in the long term. 

Let’s go further and explore together, exactly why customer retention matters, and how customer retention strategies can drive sustainable growth for your business.

WHY CUSTOMER RETENTION MATTERS

Customer retention works by consistently delivering a positive customer experience to prevent your customer from switching over to a competitor. This includes engagement, addressing their needs, and making offers. If you can consistently do this, your loyal customers are more likely to make repeat purchases, spend more over time (especially when you upsell), and become your brand’s advocates. 

Interestingly, research has shown that acquiring a new customer can cost five times more than it does to retain an existing one. Additionally, increasing customer retention rates by just 5% can boost profits by 25% to 95%. Anyway, we have compiled below customer retention strategies you can adopt:

• Deliver unique customer experiences

As stated earlier, the foundation of customer retention is delivering unique and positive customer experiences. Beyond providing a great product or service, a positive customer experience should be memorable and make your customer feel valued. This involves:

1. Making personalised offerings by going through customer data e.g. special birthday discounts, customised orders, or freemium access.
2. Proactively supporting by addressing pending issues before they escalate or anticipating their needs e.g. sending a reminder email to a customer whose subscription has almost ended, and so on.

• Run your business transparently

Trust is the cornerstone of customer retention, if relationships are the foundation. Customers feel more comfortable with and are likely to immediately become loyal to a business that shows transparency through:

1. Clear pricing. This means simplicity in your pricing structure. Having hidden fees or surcharges is always a turn-off that cannot help you retain customers. 
2. Transparency. Customers always appreciate businesses that own up to their mistakes and take swift action to resolve the issue. Always remember to communicate with your audience transparently. Customers appreciate honesty and are more likely to stay loyal if they feel you’re acting in their best interest.

•  Leverage Technology 

Adopt the use of technological tools to help you understand your customer’s needs and preferences. This will help you save time, improve workplace efficiency, and serve your customers better. Try these:

1. Automate follow-up, or reminder emails. Instead of putting all that work on a member of your staff, automating this task with the help of Artificial Intelligence will ensure time is not wasted, and delays in communicating important information to clients are avoided.
2. Set up a Customer Relationship Management system either by using premium or free software systems, like Hubspot,(depending on the one you can afford). This helps you to actively track your customer’s interactions, know their preferences, and study their behaviors. The data collected can be used to deliver targeted campaigns to particular customer segments.

• Measure and Optimize

Finally, retention strategies are only effective if you measure their impact and continuously refine your strategies. Track key metrics like customer lifetime value (CLV), churn rate, and Net Promoter Score (NPS) to gauge success. Use these insights to identify areas for improvement and stay strong on what’s working.

IN CONCLUSION 

When you prioritizing relationships, deliver exceptional experiences, and leverage technology, you can create a loyal customer base that fuels sustainable growth for your business. Biz Vital Signs is a company that specialises in helping small and medium-sized businesses develop and implement strategies that drive long-term success. 

We invite you to partner with us for your business growth and business advisory needs. Contact us today to learn how we can help you achieve sustainable growth.