An air-tight customer retention strategy is the secret sauce you need to increase your customer base. But trying to increase customer loyalty without first understanding the reasons behind why customers leave small businesses is like trying to eat your tomato soup with chopsticks. You may be getting a little taste, but chances are that you’re not really catching any of the good stuff.
So why is customer retention so important? Well, for starters, there’s an old business rule that says: “It’s six times more expensive to acquire a new customer than it is to keep an existing one.” This means you need to invest way more time, money, and effort to acquire new customer than you do to keep a current customer.
It’s a heck of a lot harder to convince a new potential buyer that you’re worth their money than your returning customers who already like your services. You just need to make sure they continue to like it!
How do you do that? Well, let’s look at the top three reasons that customers leave businesses.
Bad Customer Experience
Approximately 68 percent of customers leave a business because of poor attitude or indifference on the part of the service provider. Maybe a technician talked down to the customer, a front desk rep seemed a little annoyed, or the young salesperson totally ghosted when you texted in a question.
To your employees, this may be just one random customer who they’ll likely forget about by tomorrow. But you can bet that your customer will remember that experience the next time they think of scheduling with you.
The obvious remedy is to train your employees that the customer always comes first and to not let them walk away (figuratively or literally) unless they’re happy.
Despite your best training efforts though, there may still be a time where a customer has a bad experience. In this case, it’s best to immediately remedy the situation by listening to the customer and making realistic assurances that it won’t happen again. Throwing in a discount on their recent service (or a future service) goes a long way in these situations. The quicker you do this and the more receptive you are to their feedback, the more likely the customer will be to give you another chance.
But then it’s up to you to make sure that situation doesn’t happen to anyone again. It may require additional team training or providing resources for how to handle the situation. This is one reason Skipio customers love to have communication happen in the platform — it’s easier to train on what to say and when to say it. You have oversight over your team communication and it happens from a real business number.
Customer Loyalty Isn’t Rewarded
It’s no secret that just about every business has a loyalty program that rewards customers for repeat visits. It’s worth noting that the average American household is involved in 29 of these programs. But did you know that they only actively use (earning or redeeming just one point per year) 12 of them?
What does that tell you? That the loyalty program itself isn’t enough to keep your customers coming back for more.
Rewarding customer loyalty is key to keeping that loyalty. This may include:
- Sharing discounts
- Letting them try new services early
- Throwing in an extra service for free
- Giving out freebies or trials
Any of these can go a long way toward making a customer feel like they are truly valued and appreciated.
But what about adding a personal touch? Customers want to be more than just another number. Developing a sense of community with customers will not only increase their loyalty but also gives them a reason to brag to their friends all about your business.
Customer retention AND word of mouth advertising? Now that’s a two-for-one deal that’s just too good to pass up.
For example, say you’re a gym owner. If you reward members with free gym swag or give out “bring a friend free” coupons when members attend regularly, you’re more likely to develop genuine relationships with your members.
Customers Find a Better Deal Elsewhere
Let’s face it, a customer can be completely satisfied with your services, but if they’ve had bad experiences or don’t feel loyalty, it won’t make sense to stick with you. If they find a considerably cheaper or more convenient deal for a comparable service elsewhere, they are likely to take it… and customers are always looking for the right deal.
This means that you need to ensure that your customers understand the real value of what you provide. It should be painful for a customer to consider another service just because it’s cheaper.
Staying in touch with text messaging is a fantastic way to do this. When you keep them updated on the business, service options, and what they can expect from you, you’re going to stay top of mind. And texting is generally the highest-rated contact method when it comes to customer engagement.
Consistent follow-up that proves to customers that you’re thinking about them, their preferences, their goals, etc. will make most people think twice about switching to a different local service. They already know that they like what you offer, and with the occasional discount or deal, they’re less likely to leave. In the business world we call this a “no-brainer.”
Customer Loyalty Is the Gift That Keeps on Giving
At the end of the day, it’s much harder to acquire a new customer than it is to keep an old one. Sure, you may have to invest more time and money into your customer retention, but it will still save you money you’d otherwise have to spend on getting new people in the door.
One of the biggest benefits of having loyal customers is that they will spread the word about your business to friends, coworkers, and family members. This means you’ll start seeing new customers come in without having to spend a dime attracting them. Save money on marketing to new customers AND generate more customers from your loyal ambassadors? Talk about a win-win situation.
A happy customer is a loyal customer. And now that you know why customers leave small businesses, helping your loyal customers bring in more and more happy customers can be your next goal.
This post was originally published April 2, 2018 and was most recently updated for December 10, 2024. Each section includes new advice and insights for retaining customers and there’s more of a focus on HOW to keep customers rather than just explaining WHY customers leave.