The Science of Customer Retention

You’ve probably heard the old adage that it costs more to get a new customer than it does to keep an existing one. Not only are new customer acquisition costs higher, but successful customer retention helps to strengthen your brand identity and business reputation.

Surprisingly, many businesses don’t have a customer retention strategy. If your company is entering a new market or experiencing high initial adoption of your product, you need a robust customer retention strategy to prevent losing any market share to competitors.

Customer retention is primarily driven by building rapport and deepening the relationship with your clientele – this doesn’t mean your approach shouldn’t be informed by a little science as well.

Here are a few customer retention strategies that are backed by hard data and quantifiable, top-line results:

  • Leverage your sales database
  • Analyze upsell patterns
  • Promote retention-oriented products

Start by tracking your average customer retention in your sales database, then leverage this data to contact these customers before they leave for a competitor. For example, if you have an average customer retention rate of five years, you need to call or contact them before this milestone to ensure they’re still satisfied with your products or services.

Capitalize on potential cross-selling and upselling opportunities with your current customers. Not only does this mean more revenue for your business, but the more of your products and services a customer finds useful, the less likely he or she is to leave you entirely.

Not all of your products or services have the same built-in value when it comes to customer retention. Determine the “stickiness” of a product or service by mining historical data and conclude if those offerings actually caused customers to retain their business relationship with you.

Often, your most sticky offerings are the ones that involve the highest inconvenience in switching between vendors, suppliers or products. When you upsell these offerings to each of your current customers, you retain more of their business over the long-term.

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Increase Your Sales with Small Steps

Keeping the big picture in mind can help you get a larger bottom line. Large sales sometimes happen with little efforts, including asking for referrals, using a team approach to sales and re-purposing work you’ve already completed.

Try implementing these small changes to increase your sales:

Change your sales process. Ask for a referral after every sale and an appropriate period of time. Of course, this means you must do a great job in order to earn the referral.

Put your boss to work. Prospects and customers perceive that they are more important when you bring your manager to a sales call. That makes them more likely to buy.

Think multi-purpose. It’s more efficient when you can use your work over and over again.

When a customer gives you a compliment, that’s an opportunity to get that compliment put into a testimonial letter. When a customer tells you in a testimonial letter that you produce specific results, you get to use that letter when you sell to other prospects.

Remember: you are much more persuasive when other people say the things about you that you would like to say about yourself!

Big goals aren’t achieved in one quick step. Before you can lose 100 pounds, you have to lose the first pound. You won’t successfully run a marathon unless you can complete the first mile and successful selling is no different – it’s the small steps you take that lead you to big sales.

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Revive Your Brand!

The startup world can be rough. Some speculate that 8 out of 10 businesses fail in the first 18 months, while others believe the number is closer to 90 percent.

Surprisingly, many businesses normally don’t fail because of poor products – they fail because they don’t communicate the company’s value clearly and consistently to the right audiences.

Take Apple, for example: what was once nearly a bankrupt company is now one of the most recognizable brands in the world. With the right rebranding techniques, entrepreneurs might be able to save their business.

A successful rebranding campaign requires more than just a new logo and tagline. Rebranding involves crafting a new story and communicating a vision that inspires customers and partners to see the company in a more relevant way.

If you are having trouble getting started, try these best practices on how to revive a brand:

  • Assess strengths and weaknesses
  • Reevaluate the target market
  • Determine how customers benefit
  • Craft a compelling story
  • Secure customer testimonials
  • Get employees on board
  • Build a content factory
  • Communicate widely
  • Be consistent
  • Believe in the business

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Keep the Recruiting Ball Rolling

Recruiting: it takes time, energy and focus.

It may feel like it’s unproductive for the company since it takes a while for the fruits of your labor – the new hire’s training, acclimation and productivity – to appear.

Be careful not to assume that the recruiting process stops when the candidate accepts your offer. Technically, the process isn’t over until after the employee starts with the company, updates their LinkedIn profile and emails all of their friends.

Here’s a scenario that can unfold after your future team member says “yes,” which is the moment you’re most vulnerable to losing them:

  • If they are as good as you think, it is highly likely their existing employer will work hard to keep them.
  • If the person knew they were going to leave their employer and was talking to multiple companies to be sure the next company was the right fit, the moment they notify the other companies that they have accepted another position, they may begin vying for another shot

So what to do?

  1. Acknowledge that recruiting doesn’t stop until the employee has joined your company.
  2. The moment you get a yes, have all of your key employees email, call or even grab lunch/drinks/coffee with the new recruit to welcome them to the team.
  3. Create an even stronger emotional tie by making public announcements, where possible.
  4. Give some evening homework to the new employee.
  5. Get your investors involved, if it’s a reasonably senior position. Set up calls for VCs to welcome them to the team.

If you put in a Herculean effort to get employees and then lose them after you’ve crossed the finish line, you will waste enormous energy.

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Managing Your Employees’ Social Media Use On and Off the Clock

With the pervasiveness of social media, it’s likely that many of your employees are connected to a variety of social media outlets during work and personal time. This leaves business managers with concerns regarding how they should manage their employees’ usage of social media at work, what potential issues could arise from their actions, and how to mitigate their risks.

Establishing ground rules for social media use at work will help protect the reputation of your business.

Here are a few things to think about before drafting a social media policy:

Should you allow social media at work?  Is allowing social media a necessary or realistic consideration at your company?

Know your current policies.  Review company policies regarding employee usage of company electronic equipment (computers, telephones, and smart phones), technology, and the internet.

Consider both at-work and not-at-work usage. Your social media policy should consider not just how employees are spending their time at work online, but also how they might be describing their work life and your company when they are online outside of work hours.

Set clear expectations.  If you permit at-work networking, you will need to define what you consider appropriate online activity. Clarify for your employees that what they post online is public information and as such, you expect that they will represent your business in a professional manner, including not making negative comments about competitors or posting opinions on controversial issues.

Avoid lawsuits.  Don’t forget that any posts made by your employees become new sources of discovery in any litigation action.

Be sure to get appropriate legal advice about any applicable legal implications of your social media policy. When complete, ensure that your employees are well versed in it.

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Business Success in Just 5 Easy Steps!

Personal touches, like sending a follow up thank you note or a small gift via snail mail after a purchase, go a long way toward customer loyalty.

Whether you’re at the head of a large corporation or a small, but sharp neighborhood operation, try these ideas on for size to increase customer loyalty and put the building blocks for success into place:

Always keep three business opportunities on your desk.  This might sound difficult, but it’s not once you get started and keep the opportunity list top of mind.

Nothing matters much until money changes hands.Nothing happens until we get the check,” is a mantra that can save you from having a lot of leftover inventory.

Follow the 2-2-2 Rule. Every day, do two things that will pay off in two weeks, two things that should pay off in two months, and two things that might yield results in two years. The beauty of this idea is that it sets up a success cycle, even in rough economic times.

Communicate regularly with current customers without selling at them. Send thank you notes, holiday cards, newspaper clippings, and emails with links that might help them in their businesses.

Figure out which customers will be good for your business and which ones won’t. This is not an easy task, but one that will save you time and money down the road.

Bonus Tip: Find experts who can actually help you with your business. Splurge on the best accountant, insurance person or business advisor you can find. They will help you in ways you would never expect.

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Online Customer Reviews Gaining Momentum

With the popularity of online reviews, most shoppers these days peruse what other shoppers have to say before committing to a purchase.

The way consumers make decisions has dramatically changed over the last decade. While standing in a store, we can now compare prices and access buyer feedback using our Smartphones.

With reviews already such an important part of the buying process, it’s easy to see how reliance on them will only increase in the future. According to Nielsen’s latest Global Trust in Advertising report, online consumer reviews are already the second most trusted source of brand information and messaging, with 70 percent of global consumers indicating they trust online reviews, an increase of 15 percent in four years.

Over the next few years, we can expect to see the anonymity of reviews fade away and instead become linked to shoppers’ real identities on Facebook, Twitter or other social media channels. This will be beneficial for both retailers and consumers, adding a layer of credibility vs. anonymity.

Here are several predictions retailers will need to fully understand in the near future, in order to be prepared for evolving consumer buying:

  • All reviews will eventually be linked to social networks
  • Shoppers will turn to their friends’ reviews first
  • Reviews will be aggregated by reviewer
  • Reviews will be personalized
  • All formats will become compatible

Chances are that you already rely heavily on reviews in making your own purchase decisions – you can make a good bet that your customers are already doing the same.

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