- Created on Tuesday, August 26, 2014 18:12
- Written by Ryan Bowman
As an independent retailer, it can be tempting –and seem natural – to focus your energies on attracting new customers. And while all business is good business, your resources can be much better spent cultivating the client base you already have.
According to a study by Bain and Co., a mere five per cent increase in customer retention can result in an 75 per cent increase in profitability. Further studies show that, a) up to 80 per cent of your future revenue will come from only 20 per cent of your current customers, and b) attracting new customers will cost you a full five times more than retaining your existing ones.
The bottom line is, one-time customers – no matter how many cans of paint they buy – will not sustain your business. To attain long-term success, you need repeat customers.
We all know how fickle people can be; whether it’s less-than-stellar customer service, an inferior product line or a new competitor opening shop down the road, customers can jump ship for any number of reasons. So if you’re fortunate enough to have them walk through your doors, it’s not enough to simply not give them a reason to leave – you have to give them a reason to stay.
In the name of making the most of what you already have, here are five ways to keep your customers continually coming back for more.
- You scratch our back, we’ll scratch yours. One of the single most important words in a retailer-client relationship is reciprocity. Reciprocity is loosely defined as responding to a positive action with another positive action; in the world of retail, this means rewarding your customers in the hopes that they will reward you back. In theory, ‘Going above and beyond’ and ‘Giving 110 per cent’ may be tired old clichés, but in principle they go a long way in showing customers how valuable they are to you. Whether it’s remembering their names or sending them cards on their birthdays, small gestures can turn customers into advocates and transactions into relationships.
- What gets measured gets managed. Offering your customers the occasional survey has the effect of killing two birds with one stone. Not only does feedback (whether it be by a verbal, ‘What can we be doing to better serve you?’ or a formal questionnaire) show your customers that you care, but it also allows you to gauge what you’re doing well – and not so well. In a world where people are inundated with marketing and advertising all day long, a survey will also keep you at the top of your clients’ minds because they can be part of the conversation. If you decide to use surveys to increase customer retention, ensure they are accessible and not overly burdensome. It may also help to offer some form of incentive for participating.
- Experts are always students first. Big box stores may have lower prices than you, and they may have better locations. But one competitive advantage of the independent retailer is the expertise you can offer. Any time a customer walks into your store – new or returning – it is an opportunity to share your wealth of knowledge. People can buy paint anywhere, but would rather go somewhere they can get handy tips and valuable advice they can trust. No matter how limited your budget is, be sure to invest in extra training and industry conferences for you and your staff. With the ever-evolving trends and countless new product lines, it’s important to stay ahead of the curve.
- Loyalty is returned. One of the easiest ways to keep customers coming back to your store is to give them a reason to do so. Effective loyalty programs – whether they allow customers to accumulate points, earn discounts or enter contests– are a great way to encourage and reward repeat business. If someone has the option to buy the same product for the same price at two different stores, they will choose the one that offers that little extra perk. Loyalty programs also give you another means to track customer data and identify those who are most likely to give you business for years to come. Remember, 80 per cent of your business will come from 20 per cent of your client base – targeting that 20 per cent is half the battle.
- Engage, engage, engage. If the explosion of social media has taught us nothing else, it is that people want to be engaged and connected. Customers want to feel special, but at the same time as if they’re a part of something bigger than themselves. Whenever possible, reach out to your existing clients to remind them they are not merely a transaction number and that they have a voice. Send them exclusive VIP invites for upcoming sales, run contests on Facebook, host community BBQs, respond to questions and comments on Twitter. Whether it’s in-store or online, use every opportunity to dial down your stuffy corporate image and show people the human side of your company.
Granted, some of these strategies require an investment of your (often limited) resources. But at the end of the day it costs a lot less to keep a customer than it does to try and find a new one.