How to Improve Client Retention

Meeting and exceeding the needs of your current clients will help your business grow.

Clients are the lifeblood of many businesses, especially those that are retail-based. According to Business Insider, customer loyalty is critical to retailers, but only about 40% of retailers make an effort to measure and analyze client retention.

Returning customers are not only crucial for creating lifelong customers, but also for finding new customers through word of mouth recommendations. Word of mouth is vital; 74% of consumers say they consider word of mouth to be a key influencer in their purchasing decisions. Understanding how to measure customer retention—and how to improve it—is critical.

1. Identify your customer base.

The first step towards client retention is to gain an understanding of your customer base—that includes your current audience and your target. If you’re just getting started, this begins with research to find product-market fit. This includes analyzing competitors and taking advantage of the various studies done by the U.S. Census Bureau. Discovering your product-market fit will help you identify your customer base and set marketing goals.

As you grow, an audience dashboard can help you analyze, understand, and expand your customer base. This tool identifies patterns in the traits and behaviors of your customer base, which you can use to organize your audience and send targeted, personalized messages.

2. Communicate with your customer base.

It’s hard to see the gaps in your business strategy without direct feedback from your customers. To gather this valuable customer feedback, you have to solicit it.

Surveys, quarterly check-ins, blog posts, social media posts, newsletters, and focus groups can be great ways to communicate with your customer base. Promote new deals, request feedback, and be accessible. Creating a communication calendar or schedule can help keep conversations with your customers on track. A customer relationship management (CRM) solution will also help you make sense of these important interactions and feedback.

3. Be accessible.

You want to ensure that both your customer base and potential customers are able to get in touch with you. Consider the best ways to communicate with them. If you have a website, make sure your contact information is prominent and easy to find. List your business’s physical address, phone number, and email address. Although you want to be accessible, giving out your personal number or your personal email may not be the best idea.

Not only do you want to share a way to be reached, you want to collect a means of reaching your audience. Make sure your website or landing page has a form to collect email addresses so that you can reach people with future email marketing strategies.

Start the day by getting back to customers that may have tried reaching out outside of operating hours or during holidays. In some cases, you may want to set up automatic responses, like a brief message apologizing for being unavailable, to indicate when you will be available in the future (or offer operating hours), and then prioritize getting back to them.

4. Implement a loyalty program.

You want to reward return customers and make them feel valued. Creating a loyalty or rewards program not only incentivizes purchases, but it may also improve client retention.

Customer loyalty programs should offer some sort of compensation for purchasing and interacting with your business. Customer loyalty programs are not to be confused with giveaways (free offerings for promotional purposes). There are a lot of ways to engage and reward your best customers. Whether it’s offering discounts or hosting special events, you will drive loyalty by showing gratitude to the customers who love your brand.

5. Evolve cautiously.

The goal behind most business plans is to grow and evolve, but it’s important to be thoughtful as you scale. When you grow, changes are usually needed to mitigate that growth. If you grow too fast, you can lose track of the things that people like about your business, or the things that make your business distinct.

There are plenty of best practices and tips for growing your business. But no matter what your strategy, make sure you stick to your core values and maintain the qualities that your customers came for in the first place.

6. Get involved locally.

Getting involved locally can show that you care about your community’s well being, not just because the community supports your business. Investing in your community can take a variety of forms, like:

  • Sponsoring a local sports team
  • Shopping locally
  • Collaborating with other local businesses
  • Contributing to a community garden
  • Organizing a philanthropic event (highway cleanup, fun run, etc.)

7. Operate ethically.

Unethical practices can come back to haunt businesses. They can lead customers to think that you are scheming, or not being completely transparent in your business model, and that notion can decrease profits.

Any of the following can irreparably hurt your professional reputation:

  • Misleading product information
  • Poor employee treatment
  • Bribery
  • Manipulating client or accounts
  • Fraud

When you put an emphasis on ethical business operations, your client retention may improve overall. Focus on ethical principles, like:

  • Honesty
  • Transparency
  • Loyalty
  • Fairness
  • Lawfulness
  • Respect
  • Trustworthy
  • Accountability

8. Reward great customer service.

People expect great customer service. In order to ensure that your customers receive it, set clear expectations for employees and reward them for meeting and exceeding your customers’ needs.

Encourage customers to fill out reviews about their experience purchasing a product or service. This can help your word of mouth marketing by creating content for testimonials, and it will give you data to analyze. When you incentivize stellar customer service, it becomes the standard and can turn new customers into regulars.

9. Keep an eye on competitor initiatives.

It’s important to be aware of what your competitors are doing to stay competitive. Although you want to try to be 1 step ahead, sometimes competitors create viable initiatives that could work well for your business, too.

Most of the time, if your direct competitor is doing something, it warrants your consideration. For example, if your direct competitor is offering free shipping for incentivizing, you should think of something to combat their competitive edge, or even try doing something similar.

10. Measure your retention rate.

Measuring your retention rate is key to analyzing the effectiveness of your efforts and making changes accordingly. There are 3 primary pieces of information necessary for calculating customer retention:

  1. The number of customers during the start of a period (A).
  2. The number of customers acquired during the start of a period (B).
  3. The number of customers during the end of a period (C).

The equation for customer retention rate = [(C-B)/A] x 100.

This number gives insight into the cost of acquiring new customers, as well as insight into whether your customer retention efforts are working.

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