A bird in the hand, they say, is worth two in the bush. Well, there’s truth to the cliché or it would not have found its way into the compendium of useful human wisdom. It certainly holds true when it comes to customers, in that retaining the customers already on your books is worth two (or a lot more as it turns out) potential customers.
Customer retention, customer stickiness, increasing customer lifespan, building client relationships – this is the jargon you will hear bandied about the marketing desk, and it means one simple thing: “How do we keep our present customers happy, coming back for more, and sending their friends our way?”
There is a cost to getting new customers on board, and the longer they stay the greater the return on investment (ROI), a phenomenon that keeps the number crunchers at the core of your business smiling. In other words, there is a direct correlation between customer retention rates and making a profit.
Consider these figures:
● Keeping existing customers is 5X cheaper than acquiring new ones.
● Increasing customer retention rates by 5% increases profits by between 25% and 95%.
● Eighty percent of your future profits will come from 20% of your clients (general reference here is the Pareto principle or 80/20 rule).
● Sixty five percent of business comes from existing customers, who are more likely to spend more and purchase more frequently.
● Existing customers are 60% to 70% easier to sell to 4 , compared to the 5% to 20% likelihood of selling to a brand new prospect.
● The quality of customer service plays a huge role, with almost 50% of customers switching to a competitor if they experience bad service.
Of course, how to allocate budget spend between customer acquisition and retention then becomes a debate, but for the purposes of this article, let’s focus on retention strategies, since it is apparent from the documented research that retaining customers has an indisputable positive influence on the bottom line. The figures attest to the common sense notion that looking after your customers keeps them buying and brings repeat business.
Effective customer retention strategies are called for, whether they be of the tried-and-tested variety or the experimental variety.
At Boomerang, we understand that although sales figures speak volumes, it is the quality relationships we forge with customers that keeps them coming back. Smart businesses know that the first sale is just the beginning.
And as experienced customer service professionals, we do this on the behalf of our clients. Here are some of the ways in which we keep customer retention in sharp focus:
1. Our passionate and engaged employees are skilled at relationship building When one of our agents picks up the phone, or responds to an online chat, they are trained to be ‘leaning in’ to the conversation, letting their customer feel important and acknowledged, like talking with a new friend that we’re interested in getting to know better. At Boomerang, we give our agents a reason to care. This is the human factor, and relationship building will never go out of style. Marketing expert Noah Fleming 4 makes the spot-on comment that “I don’t believe you ‘close’ a sale, you ‘open’ a relationship. The sales transaction is the start of a relationship, not the end. Effective marketing is an equilibrium – it’s the equal balance of getting customers, and keeping them.” So when we treat customers like the people they are and not ‘sales generating objects’, they respond like real people, revealing what their real needs might be. Then we’re in business, as this customer may well come back a second time.
2. Listening superpowers and openness to feedback We listen to hear, not just to respond, not only during the call but afterwards too. Surveys, after-sales calls and requests for customer feedback are intrinsic to Boomerang’s service offering, and in this way we position ourselves to really hear our customer’s needs, and make changes where required. We are not only open to feedback, but welcome it with open arms, and customers respond by reaching out to tell us what we’re doing well and what we could do better.
3. Customer satisfaction Measuring customer satisfaction (CSAT) is an indispensable way to understand how well, or not, we are doing our job. The standard way to measure CSAT is through responses on feedback requests sent after contacts. The information gathered is useful, not only for celebrating the success of getting it right and encouraging more of that behaviour, but also, and more importantly, seeing where we get it wrong. Negative feedback helps us to find and fix any weak links in our customer service chain, and at Boomerang we use this invaluable CSAT feedback in upskilling our agents.
4. We are responsive Especially when it comes to inbound queries, the quicker we are off the crease the better. There’s nothing like a prompt response to get a customer smiling, and we have positive measures in place that ensure we stay on the ball in this regard. Also, agents are trained to do whatever is on their power to resolve issues quickly, to deal with complaints promptly, courteously and efficiently. Customers remember this, and remember bad service even more readily.
5. We delight our customers At Boomerang, we encourage our agents to personalise their chats with customers, to identify emotional drivers and to respond to these needs. In addition, we add value and reward loyalty where we can. A pertinent example would be the 1 Call Assist product we have developed in-house that is offered to customers of our insurance clients. Thanking and appreciating a customer for choosing our service among all the competition out there goes a long way too.
6. Strong employee loyalty Of course, all good things begin at home, and when we treat our employees with respect they go the extra mile for the customers they serve. The way our leadership treats employees, drives how employees treat on another, and how they in turn treat customers. What happens inside the organisation is felt outside. So customer retention starts at the top.
7. Quality products While there are many soft skills that keep customers coming back, we keep a keen eye on the fact that the product or service offered must be up to scratch. And if there are quality problems, to give this feedback to our client so they can be sorted out. So, although optimisation or getting new customers on board may be seen as the sexier aspect of marketing, the bread-and-butter that maintains any business is certainly the way in which it approaches customer retention. The first purchase is just the beginning, the real business value lies ahead.
1. Alan E. Webber, "B2B Customer Experience Priorities In An Economic Downturn: Key Customer Usability Initiatives In A Soft Economy," Forrester Research, February 19, 2008.
2. According to research done by Fred Reichheld at Bain & Company.
3. Paul Farris in Marketing Metrics.
4. Noah Fleming is a Marketing Expert, Consultant and Author of “Evergreen: Cultivate the Enduring Customer Loyalty that Keeps Your Business Thriving“. Quoted on ngdata.com.