When startups invest in marketing, they usually devote most of their energy to finding new customers. This makes sense: after all, fresh sources of revenue allow a business to grow, so why not try to court as many customers as possible? However, true as this may be, it’s important to remember that acquisition is simply one side of the marketing coin—and the other is retention. It’s significantly more expensive to sign a new customer than it is to keep an old one, so it’s crucial to find ways to keep your rate of churn (i.e. the frequency of customers jumping ship) as low as possible. Retention is no easy task and it begins with your very first interaction with the customer. In order to make this process a little smoother, check out the tips below.
1. Bring customers into the design process
The best way to increase your customers’ willingness to do business with you over a long period is to act on their wants and needs, which you can accomplish right from the beginning by bringing them into the product design process. Go to their place of work and show them your product in its earliest stages (see: minimum viable product) and garner feedback. Ask focused questions that will help tailor your product into something they truly need. For more insight into customer interviews, check out this excellent series of videos from the Lean Launchpad. Ultimately, when customers feel like they’re actually helping to create something, they’ll develop the kind of attachment that will increase the chances of repeat business over time.
2. Never neglect customer service
When money gets tight, customer service is often the first thing businesses scale back—which is exactly what you don’t want to do if you’re hoping to keep these customers for the long haul. Consumers crave fast, friendly, personalized attention; if they don’t feel like they’re getting it from you, they’ll likely take their business elsewhere. As a result, make sure you provide channels for customers with questions or concerns. You can accomplish this with large-scale efforts such as building a social media presence and small but useful details such as a “Contact” email form on your website. Remember, listening to your customer is only the first step—you also need to be willing to act on criticisms in order to really provide a fully rounded customer service experience.
3. Reward loyalty
Customers will go wherever they feel they’ll get the most value, and a major component of that is cost. As a result, you need to give them a compelling dollars-and-cents reason to stick with you for the long haul. There are two main ways to reward the loyalty of existing customers. First, you can introduce a loyalty program. Whether you’re offering rebates over time or points that customers can collect for future purchases, you’re giving customers a strong financial reason to stick with you. Second, you can offer discounts to customers who are about to split. By documenting your retention rates over time, you can determine how long customers tend to do business with you before churning. The timeframe you identify is when you should be doling out cost-saving incentives. This method tends to work best for businesses with severe retention issues and can help steer them on a path to success.
4. Keep the lines of communication open
Finally, be sure to communicate regularly with your customers in order to develop a healthy, amicable relationship. Blogs, newsletters, brief email updates and surveys can all be great ways to maintain open lines of communication with customers. Additionally, don’t just focus on existing accounts—be sure to direct your efforts to customers who are on their way out the door. If you don’t understand the specific reasons behind your churn rates, you won’t be able to improve satisfaction in the future. As a result, when your customers cancel, ask for the reasons for their departure and follow up on this feedback. If you’re quick and personable enough, you’ll not only learn something but you also might even be able to rescue an account.
If you want to learn more about customer retention, check out these resources from Forbes and Entrepreneur.com. For more information on UBC’s commitment to helping local and area entrepreneurs, check out what our partners are doing at Entrepreneurship@UBC.