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The complete customer retention strategy for local businesses

Written by Andrew Gibson
Posted on May 16, 2018

Why is customer retention so important? Studies show that it is five to 25  times MORE EXPENSIVE to acquire a new customer than it is to keep your existing ones happy.

I think most local business owners would agree that it’s much harder to convince a new potential customer that your services are worth their hard-earned money compared to the customers who already like your product or service. You just need to make sure these loyal patrons have continued customer satisfaction! 

What’s the best way to keep your customers coming back you ask?  Well, let’s first look at the top three reasons that customers leave businesses.

They had a bad experience

Statistics show that 68% of customers leave a business because of poor attitude or indifference on the part of the service provider. This can range from a single bad experience from one rude employee to a company-wide failure to incorporate customer satisfaction as a priority within the company culture.

A single bad customer experience may not seem like enough to make a difference, but it’s more than enough of a reason for your customer to take their business elsewhere.

The fix for this is pretty straightforward: Train your employees that the customer always comes first, and do your best to better your customers’ experiences before they leave. Despite your best training efforts, there may still be a time where a customer has a bad experience. Offering a discount or free options on their next purchase goes a long way in these situations.

Their loyalty isn’t rewarded

Loyalty programs are incentives and rewards that are designed to encourage customers to come back into a business for repeat visits. The average American household is involved in 29 of these programs but only actively use 12 of them. This is great evidence that the loyalty program itself isn’t enough to keep your customers coming back for returning business. 

Rewarding customer loyalty is paramount to keeping that loyalty. Product or service discounts, access to try out new products before releases, and throwing in an extra service for free once in a while go a long way toward making a customer feel like they are truly valued and appreciated.

Adding a personal touch to your rewards is a great way to increase the impact and conversions of your loyalty program. Customers want to be more than just another number in your system. 

They find a better deal elsewhere

It’s fair to assume that if your customers find a considerably cheaper or more convenient offering for a similar product or service elsewhere, they are likely to take it. Can you blame them? Who doesn’t love a great deal? It’s important to ensure your deals are at the forefront of your customer’s mind. This allows your offering to be easily accessible in the times that your customers are making their decisions. 

Business text messaging is a fantastic way to do this, as customers are always on their phones engaging with friends and family, seeing whats new, and researching their next purchases.

In 2012, the CFI group found that texting is the highest-rated contact method when it comes to customer engagement. A quick “update” text message to your customers should be enough to keep your customers engaged – and with a 98% open rate, you’re pretty much guaranteed your message will be seen.

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 a few dollars into your customer engagement program, but it will still save you money you’d otherwise have to spend on new customer acquisition.

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. A happy customer is a loyal customer, and now that you know why customers leave businesses, helping your loyal customers bring in more and more happy customers is a walk in the park.

How personal relationships increase customer retention

Every business needs customers in order to survive, which is why every business focuses to some degree on customer acquisition and retention. While customer acquisition may seem like the better investment, plenty of statistics show that focusing on retention is actually a better way to spend your valuable time, money, and energy.

With that being said, one of the best ways to retain customers is also relatively easy and not all that expensive – just build and maintain personal relationships with them. It may be somewhat of a lost art in today’s business world, but that shouldn’t stop you from beginning to form relationships with your customers to keep them coming back for life.

What ever happened to the “personal touch”?

Back when the internet wasn’t yet conceptualized and before the first big box store ever opened its doors, business was a personal affair because it had to be. You sat next to your butcher in church; your kids played ball with the banker’s kids; every year you got a handwritten Christmas card from your mechanic. Business owners were part of your community and they knew about what was going on in your personal life just like you knew what was going on in theirs. They were more than just business owners – they were acquaintances. Or better yet, they were friends.

As technology improved and the world got bigger, these relationships became harder to build. Suddenly you could buy clothes online or place an order with the local pizza parlor via text. You didn’t need a butcher because the local grocery store had everything pre-cut, and you didn’t even have to hand your money to a cashier because you could just check yourself out. Opportunities for businesses to form personal relationships became fewer and farther between.

Obviously self-checkout lines have been a massive success, with the technology spreading from grocery and department stores to restaurants, movie theatres, and even airports. The argument could be made, then, that de-personalizing the shopping experience has been better for profits… But let’s look at Trader Joe’s, a grocery store which is devoid of self-checkout registers yet remains famous for its customer service.

While most companies are struggling to keep their numbers up on the American Customer Satisfaction Index, Trader Joes has remained in the top two for the last three years with scores of 85, 83 and 86, respectively.  

Why is customer service important?

People want to be noticed. They like going to bars and ordering their “usual.” They love when the owner of their favorite restaurant comes and shakes their hand and calls them by name (especially if they’re with friends or clients of their own). They feel special when their local boutique picks out specific clothing items that match their unique style. They want you to ask about their kids, their vacations, their golf swings.

At Trader Joe’s, they want to have a conversation about their gluten-free, vegan lifestyle with a cashier who gets it… who gets them. They want to be valued for more than what is in their wallet, and they will reward that with loyalty.

How to build personal relationships with your customers

As previously mentioned, it’s not expensive or difficult to form personal relationships with your customers. You simply have to treat them like you would your friends. Get acquainted with them; learn their likes and dislikes and find something in common with them.

It’s important to remember, though, that customers can smell insincerity from a mile away. They know when you’re just trying to butter them up and can tell when you’re asking about their son’s football game just to reach your quota of x personal questions per sales call.

Since we’ve talked about technology, you should know that you can definitely use it in order to maintain the personal relationships that you’ve formed with your customers. Business texting is one of the best ways to do this, as over 80% of American adults text (and they use text more than any other smartphone app).

This doesn’t mean sending a “DON’T FORGET ABOUT OUR PRODUCT” text from a five-digit number, but instead using text as a means to truly connect with your customers. You can certainly send friendly reminders about your latest products and promotions, but why not directly address it to each individual customer? How about sending a follow-up text with some relevant emojis after a customer buys that product or uses that promotion? And how about doing it from an actual 10-digit number?

There are plenty of ways that you can use both face-to-face interactions and technology to really build and maintain personal connections with your customers, and all of them are worth exploring if you truly want to increase your customer retention rate.

Bring back the “personal touch”

Now that you know a little bit more about why personal relationships are so important in a business setting, you could start a movement within your business to really recapture the “personal touch” that has dissipated over the years. It may be simple, but it is truly one of the best investments that you could make when it comes to customer retention.

Consistent communication to resell to customers

You’re a business owner. You’ve worked hard and built your business from the ground up and provided a product or service that meets a specific need. You’ve attracted plenty of customers and made a ton of sales, and things have been looking good…

But one day you notice that your numbers have started to plateau. Your customers aren’t coming back, so you need to start trying to resell them. Welcome to customer retention, one of the most important things to focus on when it comes to your business.  

In order to resell your customers, you have to make sure that they’re loyal customers. Studies show that loyal customers are five times as likely to repurchase, four times as likely to refer, five times as likely to forgive, and seven times as likely to try a new offering. In other words, you should be doing everything that you can to keep your customers loyal! 

So how do you do it? Well, one of the easiest and most cost effective methods is simply by maintaining consistent communication.

Why is communication important?

Without communication, society would not be able to function. Communication is a part of every aspect of life, whether it’s with your significant other, your employees, your friends, or your pets. Catchers use hand signals to communicate with pitchers, babies cry to communicate with parents, drivers use lights (or an occasional finger) to communicate with other drivers.

As a business owner, you communicate through advertisements, the signs on your building, and even in the way you look and talk when interacting with your customers (statistics show that 93% of effective communication is nonverbal). All of these little things communicate to your customers what you and your business are all about.

Communication also keeps your customers informed as to what’s going on with your business. It’s vital to effectively communicate sales and promotions, new products, changes in order status, or even issues they need to be made aware of. Depending on what type of business you run, there is plenty of other information which may also need to be communicated.

Why is consistency important?

To be consistent is essentially to make a promise to your customers that every single time they interact with you they can expect the experience to be better than it would be with your competitors. 

American businessman Anthony Hitt says, “Keep every promise you make and only make promises you can keep.”

Consistency was proven integral when it comes to customer satisfaction by a recent study of 27,000 American consumers done by McKinsey & Company. They discovered that consistency across the entire customer journey increases customer loyalty, trust, and satisfaction because customers need to know what to expect when they deal with a business; if the experience is always positive, then they will continue to come back.

When it comes to communication, you may think that consistency simply means constant, but it’s much deeper than that. Constant communication may keep your business fresh in the minds of your customers, but consistent communication helps build your brand, which will in turn build brand loyalty.

Using a “brand voice” when communicating with customers is one effective way to maintain consistency. The words you use and how you use them go a long way toward giving your business a sense of identity. Knowing your target demographic helps with this – millennials may love wit and sarcasm, but older folks generally prefer a more formal tone.

How texting helps with consistent communication

Whether they’re on the young or the old side, though, one of the best ways to communicate with customers is through text messaging.

American adults check their phones 150 times a day, and 78% of them wish they could have a text conversation with a business

And yes, the older folks do text – adults over 55 send and receive an average of 491 texts per month!

Your brand voice is more important over text than it is with just about any other method of communication since customers can’t hear your tone of voice or pick up on the other nonverbal methods of communication discussed earlier. This means that your words and even your punctuation must be chosen carefully in order to properly convey your message.

Texting consistency also means sending texts from the same 10-digit number every time you communicate with your customers. Random texts from different five-digit numbers are often ignored or even deleted without being opened, but using the same number every time will often lead to your number getting saved in your customers’ phones!

How consistent communication resells customers

So how exactly does consistent communication resell customers? Well, we know that there is a plethora of information you need to be communicating with your customers. By alerting them of new products and promotions, you are piquing their interest and inviting them to come back to your business. By giving them changes in order status or making them aware of any problems, you’re proving that you’re upfront and honest so that they know what to expect when dealing with you. By sending a simple “thank you” or “happy birthday” text, you’re showing them that you care about them for more than their money.

Most importantly, by doing all of this in your unique brand voice, you are building a relationship with your customers that will have them returning to your business for years to come.

Understanding customer retention strategies

As a business, you need customers to survive. Customer acquisition is one of the highest priorities of just about every business out there today, and entire fields (such as marketing) are dedicated to it. Unfortunately, many businesses don’t do a good job keeping the customers that they acquire, and that’s where investing in customer retention comes in.

One recent study showed that businesses which started investing more in customer retention had an almost 200% higher chance of increasing market share vs. businesses who spent more on customer acquisition.

Knowing how important customer engagement and retention is, you should be implementing customer retention strategies into your business plan as soon as possible. To help you get started, here are a handful of customer retention strategies that will help keep your customers coming back for more:

Build personal relationships

It doesn’t matter if you’re selling coffee or fighter jets; building personal relationships with your customers is vital if you want them to remain loyal. Just think of the concept that TV’s “Cheers” immortalized: People want to go where everybody knows their name. Customers like to feel important and special, and it requires very little effort to ensure that they do.

Find things that you and your customer have in common early, and make sure to bring those things up often (“Caught any big fish lately?” “Which vet do you bring your dog to?” “How did your son do in that big soccer game?”). Depending on the type of business you’re operating and how involved you are with the customers, you could even send a message outside of a business-related conversation (“How was your trip to Vegas? I’m planning one with the family and was wondering which hotel to stay in!”).

You don’t have to invite your customers to Christmas dinner, but they should at least be getting a personalized Christmas card from you. The more care and attention you put into the unique lives of your customers, the more important and special they will feel and the less they will want to leave that relationship behind.

Maintain consistent communication

Keeping an open line of communication with your customers is valuable for a number of reasons. Not only can you inform them about new products, you can also make them aware of any current deals or promotions that you have going on. This keeps your business at the forefront of your customers’ minds. If a customer has a question about a product or service, you should be responding as close to immediately as possible. This decreases the amount of time that they have to take their business elsewhere.

Consistent communication can – and should – tie in with the personal relationships that you’re building. Follow-ups, “thank you” messages, the aforementioned Christmas cards… all of these keep your business fresh in your customers’ minds.

One of the best ways to stay connected with your customer base is through text messaging.

97% of Americans use the texting app on their smartphones at least once a day.

Emergency rooms are allowing patients to check wait times via text; restaurants are texting customers when their tables are ready; and all manner of businesses are sending promotional texts to successfully keep customers interested in their products. If you aren’t already using some sort of business text strategy for customer engagement, there’s no better time to start.

Provide exemplary customer service

It’s funny how “customer service” has become a term that instills dread in so many customers. When was the last time you wanted to stand in the customer service line at a retail store or navigate through phone menus to connect to a business’ customer service department? Customer service has seemingly become anything but

One 2016 study showed that $62 billion was lost over the course of a year due to poor customer service, so it’s clearly a big issue… but that doesn’t mean your business can’t be different.

Solving issues quickly and painlessly should be your highest priority, and the first way you can accomplish that is by training your customer service representatives well. Nothing will turn off a customer faster than by getting connected to a CSR with a bad attitude, even if the problem ends up getting resolved.

It’s also important to learn when you can be a little lenient with your rules and policies. It’s better to lose a little bit of money and simultaneously resolve an issue than it is to stick to your guns and lose all the money that a happy customer would spend in the future.  

Always show integrity and consistency

Whether it’s through product quality, sales tactics, or your (no-longer-dreaded) customer service department, you must always show integrity and consistency. Your products should always work as intended. You should never have any hidden fees. Every experience that a customer has with your company should be predictably positive.

Customers know when you’re not being honest, and though they may finish a deal with you because it’s the most convenient at the time, chances are they won’t be back. Nobody wants to feel like they’re being taken advantage of, so it’s your job to make the customer feel that they are getting their money’s worth for whatever product or service they give you money for.

Watch your customer retention rate soar

By implementing these customer engagement and retention strategies, you’re taking the first step toward significantly increasing your bottom line. While customer acquisition should always be a priority, it’s more important not to forget about the customers that you already have. After all, a loyal customer is typically your biggest and best advertiser. The word of mouth generated by their positive experience will help you acquire new customers better than any expensive marketing campaign!

Using business texting to increase retention

Despite the fact that 80% of businesses only spend 30% (or less) of their time and money on customer retention, it is statistically proven to be one of the best ways to grow a business. Loyal customers will end up buying more products, are more likely to recommend a business to others, and will give second chances after encountering problems. It’s also much cheaper to keep a customer than it is to find a new one.

The point is that customer retention is incredibly valuable and it should absolutely be a top priority if you want your business to grow and succeed. There are many methods and strategies which will help keep your customers coming back, but one of the best can be achieved through something as simple as texting.

Why texting?

As a business, it really doesn’t make any sense not to text because it is such an easy and convenient way to connect with your customers at any time of day – it’s instantaneous, cost efficient, and effective. The numbers don’t lie: 15,220,700 texts are sent every minute, making text the most used application on a smartphone by far.

When it comes to business, only 48% of companies are currently texting with customers while 78% of those customers wish that they could text the companies.

Texting can be used to confirm and track an order, to set up an appointment, to follow up on a sale, to advertise new products and promotions, to resolve issues… The possibilities are endless, and customers want you to use each and every one of them. Why is that?

It’s quick and painless

Customers don’t want to have to sit on hold or talk to a robotic menu if they have an issue, but they’re willing to send a text. On the flip side, they’ll ignore a call if they don’t have the time to take it, but replying to a text takes seconds. In the modern world, instant gratification rules and patience is no longer a virtue. So the quicker you can communicate with your customers, the better.

In addition, if your customers are busy people (and who isn’t these days), taking the time to talk with you on the phone may seem like a huge commitment. Texting allows you to have a conversation at your customer’s own pace. If they pull up to pick their kids up from school and only have a 30-second window to talk, they’re much more likely to respond to a text than a call.

It’s more personal

Text may not seem personal, but think about how you communicate with those closest to you… over the phone? Occasionally. Email? Every once in a while. Text? Just about every day! Your customers are the same way, and you know how important “the personal touch” is when it comes to business.

With the right texting software, you can send unique texts to all of your customers that include emojis, videos, links… all of the things that you use when texting your friends, family, and kids.

It makes your business mobile

60% of daily web browsing is done through mobile devices. By making it easy for your customers to communicate with you through text, you can become fully mobile to the point where a customer never has to look away from their screen while still discovering your business, making a purchase, confirming an order, and asking a customer service rep a question. This ties into customer retention because your customers know that they have an easy way to keep in contact with you.

How to make business texting work for you

So you want to increase your customer retention rate using texting, but how do you do it? Is it as simple as gathering the phone numbers of each and every one of your customers and messaging them individually? While that would work for a (very) small customer base, your business will hopefully grow to the point where it’s not very time-effective to text everyone individually.

That’s where text messaging software comes in. Software exists that allows you to text one or 1,000 customers at a time to send unique information at key times in order to secure and resecure sales.

You can send links and track them; you can orchestrate a keyword campaign; you can send follow-up texts or “happy birthday” texts… And you can automate all of it while collecting analytical data and integrating the whole process into your CRM, accounting, and web systems. You can even send texts from a loca 10-digit number (because we all know that nobody pays attention to texts from a 555-55 number)!

Start your texting campaign today

There is no better time than now to get started on your own text campaign. As previously mentioned, less than 50% of companies are currently texting with their customers, so you will immediately have an advantage over half of your competition as soon as you send that first text. In addition, you will have a fantastic resource for increasing customer loyalty, which of course increases customer retention!