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Five top tips for retaining customers

Winning new customers is hard work which means retaining them is critical. Here’s five tips to help you put customer retention at the heart of your business.

Article

6 min read

Businesses need to proactively split their resources across attracting AND keeping customers. Otherwise, any marketing spend will be like pouring expensive bottled water into a leaky bucket!

In better times, while some businesses always knew they ‘should’ do more work around customer retention, many survived even if they put it on the back burner. However, in a downturn, when resources are limited, efforts to acquire customers definitely need to be balanced with retention.

The great news is the key to successful retention is personal connection. Small businesses can achieve genuine personal relationships with their customers much easier than larger enterprises can.

Here’s five tips to help you put customer retention at the heart of your business.

1. Consider who your profitable customers are, or could be

The foundation of any retention plan is understanding what customers you actually want to keep as it’s unlikely that every customer will be profitable. In extreme cases, trying to service unprofitable customers can risk your whole business.

So, start by understanding what customers:

  • are currently profitable for you
  • have the potential to be profitable in future
  • could help you attract other profitable customers through word of mouth

These groups will be your priority in any retention activity that involves time or cost at an individual level.

2. Check if your customers want something different now

With so much rapid change in technology, ways of working and the economy, what your customers used to want might not be what they want now.

The best way to understand what your customers want now, or are likely to want in the future, is to get to know them (where it feels natural and appropriate) and to ask them.

Here small businesses have the edge, as it’s relatively easy to chat directly with individual customers face-to-face, over the phone or by email and ask them for their thoughts and ideas.

And to get a wider sample, you can use your social media pages or email database to run a quick poll or link to an online survey.

Gather feedback to help you answer the following questions:

  • What will give customers a good reason to stay with you? For example, perhaps it’s a more comprehensive product range, a more environmentally friendly and ethical product, or more personal service.
  • Do you need to change your processes, product range or pricing? For example, if you have to introduce a delivery charge to maintain profitability, can you improve the whole delivery service, so customers feel it’s reasonable to pay?
  • Do your customers have any new needs that could provide a new opportunity? For example, does feedback throw up any new features customers want that you could incorporate, or any new complimentary products or services that you could offer?

3. Thank customers (and never ‘guilt’ them)

Most customers appreciate being thanked and this is something else that small businesses can do much better than larger organisations.

Who to thank

You may want to thank different customers in different ways:

  • all customers on every order or transaction
  • regular and long-term customers
  • high value customers
  • those who have supported directly or indirectly e.g. through positive reviews, social media comments, constructive feedback, etc.

How to thank them

While an automated email thank you is still worthwhile, a personal ‘thank you’ has real impact. This needs a little time but hardly any budget. What matters here is authenticity - genuine thought and care.

  • Thank customers face-to-face: Make a point when they’re next at the till, or you’re in a video conference, of thanking them for their support and how valuable it is. It’s also a good opportunity to ask for any feedback as discussed above. Alternatively, a personal video message from the business owner would be a lovely gesture when seeing customers face-to-face is a challenge.
  • A hand-written note: Digital channels are increasingly important but sometimes a real personal touch like this can have more cut-through, especially if the message references something specific to the customer and what they buy from you.
  • Surprise gifts: The key thing here is the surprise - rather than an impersonal offer of ‘if you spend £50 we will give you something’. This doesn’t need to be expensive. It’s about the gesture and ideally something you know the customer would appreciate. E.g. luxury chocolate, a small bag of sweets, some free samples, or an extra item of something your customer regularly buys. If it’s a proper surprise, it doesn’t create an expectation that you do this every time.

To complement the personal approach many businesses also look to build loyalty programmes. These can be as simple as promotions or discounts for regular customers. Basic stamp cards can be very effective, where, after buying a certain number of items such as coffees, greetings cards or pairs of shoes, the customer is entitled to a free item or discount.

Avoid guilt

When customers buy local it can bring great benefits for the wider community and the environment.

But sadly, it’s quite common to hear business owners making comments to customers that they ‘should’ buy local - however this could backfire as making customers feel guilty can alienate them.

Customers do not view businesses as charities and will only stick with them if they offer what they want and need and put them at the heart of the service.

4. Make it easy to do business with you

Even if you offer the most amazing product or service, customers will be reluctant to stay if it’s hard to carry out basic transactions.

Make sure you understand how your customers want to interact with you when they choose and pay for your product or service, whether that’s face-to-face, over the phone or online.

For some businesses moving to online ordering and payments can seem daunting, but Business Gateway has a wealth of support available to help at every step.

Don’t be put off by thinking that big businesses will always have the edge here. Some famous and long established brands have eCommerce sites which are not performing well at all due to complexity and legacy IT systems. Some micro businesses are now leapfrogging these large brands when it comes to user experience by using simple off the shelf functionality for eCommerce or online booking.

5. Ensure staff understand their important role

The key to success is ensuring that all customers have a consistent welcoming experience every time they transact with you. Therefore, every member of staff must fully understand and implement your approach to retention.

Staff will bring valuable insight and ideas to improve customer service so remember to ask them for feedback as often as you ask your customers, and involve them in shaping and owning the overall approach.

A simple way to keep customer retention top of your priorities is by including it as a specific agenda item in every weekly catch-up.

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