This is the second in a series of articles on the four ways to grow your business.
There are two components to expanding your customer base: customer acquisition and customer retention. In my first article, I focused on strategies for improving customer acquisition. In this article, I’ll explore some specific strategies for reducing customer turnover.
It amazes me how little most businesses do to retain the customers they already have. When you look at the high cost of acquiring a new customer, it makes sense to spend a small fraction of that cost to keep those customers you presently serve.
The following are a few strategies that will help you establish stronger relationships with your existing customers to ensure that they remain customers for life.
Meet with your customers on a regular basis to find out what is important to them and identify ways you can improve and add value. This feedback is best accomplished through customer advisory boards or one on one meetings.
Make sure you exceed your customer’s expectations in everything you do. Find some way to add high-perceived value to your product or service. Look for inexpensive ways to make doing business with you a special experience. Develop and implement a “customer service strategy” that is practiced by every member of your team.
Frequent personal communication
Write a personal letter to your key customers on a regular basis. Let them know you’re thinking about them and their business. Share with them your thoughts and observations about their industry. A well written, personal letter can strengthen your relationship and keep customers loyal. Write a thank you letter for your customers who pay their bill on time. This will blow them away!
Educate and inform
One of the best ways to increase perceived value is to let customers know about what you do that enhances the quality of your product or service. Even if other competitors do the same things, you’ll be perceived as superior because you said it first.
Measuring Your Success
As I’ve said many times, what you can measure you can manage. If you want to be successful at increasing your number of customers you need to track the results and evaluate the effectiveness of the strategies you implement. There are 5 steps in the monitoring process:
1. Get the numbers – Determine, as precisely as you can, the following:
- Your total number of active customers
- Your new customer acquisition rate (the number of new customers during a month or year divided by the number of the total customers at the beginning of the period).
- Your customer attrition rate (the number of lost customers divided by the total number of customers at the beginning of the period).
This sounds basic, but many owners have no clue what these numbers are.
2. Determine your profit improvement potential – In other words, determine the impact of your bottom line if you were able to achieve improvement in your acquisition and attrition rates.
3. Set goals for improvement in customer acquisition and attrition rates.
4. Measure your performance and evaluate what’s working and what’s not. Discuss the results with your team members.
5. Modify your strategies to improve the results
When you break your business down to it’s key components it really helps you focus on developing, implementing and monitoring the strategies that will allow you to achieve your goals. Don’t worry if some strategies don’t pay off immediately. Keep testing and tracking and you’ll eventually zero in on the ones that will be successful in your business.
Once you find a really successful strategy, milk it for all it’s worth. Don’t keep jumping from one idea to another. Be creative. Take the general strategies mentioned in these articles and adapt them to fit your target market.
LSL is committed to helping our small business clients succeed. That’s why we created the P3 Group. The P3 Group of accountants and advisors want to be your Peak Performance Partners by providing, compliance, performance and strategic services that will help your business reach its full potential and run smoothly with, or without you. Call us to schedule a free consultation and business performance assessment at 714.672.0022.
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