Customer retention is one of the most underrated aspects of business today. So much of marketing and business strategy is directed towards brand awareness and increasing customer base, that the value of improving relationships with existing customers is dramatically overlooked. It is estimated that bad customer service is costing US business $83bn a year; internationally, each lost customer costs a company $243. These are substantial figures – and they are figures that you don’t want your company to be a part of.
Customer service, like any relationship, is vulnerable to decay over time. “Familiarity breeds indifference,” as Aldous Huxley told us. Today, sometimes it feels like businesses have become indifferent towards their existing customers. The glamour of the viral campaign and the temptation of the apparently infinite potential customer base online finds us always grabbing for more, instead of taking care of what we already have.
Public opinion backs this up. American customers say they are willing to pay 86% more for a better service. In other words, they are tired of being treated like just another customer. Retain a customer, and you save on lost transactions. Treat that customer as a loyal and cherished client, and you can substantially increase the value of those transactions.
Do you have a serious customer retention strategy in place? Most businesses will have at least a basic customer service response up and running, but increasingly we see that these are little more than a token gesture. Companies looking to streamline their service are reducing their communication channels in order to deal with customers on the company’s terms, leaving customers frustrated. A customer will rarely persist if they have trouble finding someone to whom to make their complaint. Only 4% of customers actually let businesses know there’s something wrong. The rest take their business elsewhere. Instead of reaching the ears of your customer service team, they will reach the to their personal and online social networks, doing irreversible damage to your reputation.
There’s no one-size-fits-all solution to this dilemma, because your customer base is unique to your business. Likewise, the nature of your relationship with your customers, and what you can and should be doing for them, is unique to the product and/or service you provide. But there are a handful of essential principles for taking care of your existing customers that transcend these differences. How you employ these principles is down to you and your team, but in each case doing so with imagination and integrity is a pretty good start.
One such principle is to open a dialogue. We’ve established that more often or not, your customers can’t or won’t let you know when they’re unhappy. They’ll take their business somewhere else. However, if you’re already engaged in an ongoing conversation with them, they remain engaged: you speak to their sense of loyalty. You can also use this dialogue to identify potential fails before they happen.
Within this principle of dialogue, there are two aspects that need to be addressed. Firstly, is privacy. Customers will not always feel comfortable complaining or providing other feedback in person, or to which their identity can be linked. You need to ensure that not only do your customers have access to an anonymous feedback portal, but also that they are actively invited to use it.
Secondly, human contact. There is a time for anonymity, but there is also a moment for creating and cultivating a personal chemistry between your team and your customers. The personal touch is what helps a customer to identify with your business on an emotional level. That means dealing with specific complaints with a human voice. It means selling – finding consumer solutions – from person to person, and not via robots. Nearly half of people list ‘better human service’ as what they would improve about the customer experience.
Honesty is another vital principle. Businesses have a tendency to run from the idea of openness, when in fact we’ve seen many examples of how an honest approach can help a business to create a unique brand. Companies that demonstrate humor, humility and personality create strong identities for themselves, and establish an atmosphere in which mistakes – should they happen – can be absorbed and processed as part of their brand story.
How can this be done? Once more, it comes back to communication. Share your successes with your customer base, but don’t be afraid to communicate the small stuff. Let them know what’s going on with your firm, and delays or mishaps will have a context when they occur. Flag up potential issues before they strike and – this is a big one – own your mistakes when they happen. We’ve seen the figures on how customer dissatisfaction affects your brand. A mistake is marketing opportunity that you cannot afford to hand over to unhappy customers.
The third principle is collaboration. You and your customers are in this together. Your relationship is symbiotic. You can’t live without them, and their use of your service helps define the way they live. Using the principles of dialogue and of honesty, open up a space in which your customers can become a part of your development. Your customers have a perspective on your business that you can never fully achieve by yourself. They know what they want, and they see opportunities that your team might have missed. Every transaction is an opportunity to figure out the unseen potential of the next transaction. Every interaction is a chance to get a new insight into who your customers are, and what your business means to them.
So ask for feedback not just on where you’ve been, but where you’re going. When you announce a new project, open up the comments section. Dialogue isn’t just for when things are going wrong. It’s for moving forward together.
A new infographic from Headway Capital expands further on how to learn from these principles and make them work for your business. Your existing customer base is the very foundation of your success – so make sure you’re treating them with the service they deserve.