Catch and keep: The power of retention
Mat Wylie explains how instilling a culture of customer retention and great experiences both empowers your team and boosts profits. There are few things more powerful to your business than delivering an exceptional experience and keeping your customers coming back. In fact, data from Frederick Reichheld of Bain & Company shows that increasing customer retention […]
Mat Wylie explains how instilling a culture of customer retention and great experiences both empowers your team and boosts profits.
There are few things more powerful to your business than delivering an exceptional experience and keeping your customers coming back. In fact, data from Frederick Reichheld of Bain & Company shows that increasing customer retention rates by just five percent can increase profits by up to 95 percent. That’s a solid foundation to get through leaner times, get an edge over competitors, and invest more back into your business.
Having received and analysed more than six million pieces of feedback for our clients at Customer Radar, we know that it’s the customer experience that makes or breaks a business’s ability to retain its customers. And while the last couple of years have certainly taught us that you can’t control everything, a great customer experience that helps build long-lasting customer relationships is something that you can master.
Personally, I’m a big fan of the ‘catch and keep’ approach. After all, if you’ve done all the hard work reeling in a customer, then you’re going to want to make the most of the relationship.
Acquiring customers is hard, and it’s often expensive. If they spend $50 with you once – but it costs $100 to bring them in – then you’re very quickly going to find yourself with empty pockets. What you want is for them to come back and spend with you every month for a decade, creating tens of thousands of dollars of lifetime value.
Add to that the opportunity cost of great word-of-mouth, and great retention is a multiplier that you can’t ignore.
And yet, I’m surprised by how many companies don’t include retention as part of their core growth strategy. It’s a bit like filling a bathtub without checking if the plug is in. You can bring in plenty of customers with good marketing, but if you don’t retain them, then your investment is going down the drain.
To get started, ask your customers what they think of their most recent experience with your business. You need to know how you’re doing based on reliable data.
Then, keep track. Once you start keeping score, you can learn how to win and set goals to motivate your team too.
How can you wow every customer and keep them part of your business for longer?
If you don’t have your customers’ contact details to ask them, start collecting them today as your very first step. What you measure you can manage and customer experience is no different.
Instilling a culture of customer retention and great experiences means your team will be empowered to bring more to the table. Ask them to notice great experiences they’ve had and share them during your group meetings, or bad experiences that make good teaching points. Have them share and celebrate each other’s wins and reward them accordingly.
Learn from your customers
As you develop ways to keep customers coming back, you’ll also want to make sure you have the processes in place to deal with mistakes and complaints quickly and to prioritise the ‘make it right’ approach.
Learn from your customers. Listen to them, make sure they’re happy, and invite them to come back for a better experience.
What processes should change to prevent an issue from happening again? What needs to be improved? What would build relationships and keep your customers hungry for more?
Happy customers that are listened to are the ones that come back more often, spend more with you, and help you reach new customers.
So, what are you doing today to retain five percent more customers – and what would you do with 95 percent more profit?
Mat Wylie is CEO of Customer Radar and a regular contributor to NZBusiness. For more information about how you can make a difference to your customers’ experience and bottom line go to www.customerradar.com