Businesses of all sizes spend considerable time and money on attracting new customers. However, the true measure of a company's success is its level of customer loyalty. The challenge of retaining lifelong customers continues to grow as technology life cycles shrink along with attention spans. Maximizing customer loyalty despite these obstacles is one of the best ways to ensure long-term success regardless of the industry.
Why are customer retention and loyalty so important? It costs six to seven times more to attract a new customer than to keep an existing one, and it takes an average of more than three years for recently acquired customers to become profitable. Therefore, retaining current customers simply makes financial sense. Further, 80 percent of the average company's revenue depends on just 20 percent of its customer base. A mere 10 percent increase in customer retention returns a nearly 30 percent increase in a company's valuation. Clearly, the key to long-term financial success lies in maximizing the value of these relationships.
There are many ways to engage effectively with customers and keep them coming back. In a recent article on Help Scout, marketer Gregory Ciotti lists 15 strategies for building and maintaining customer loyalty. He divides them into three categories: communication, selling, and reciprocity.
Communication involves engaging the customer's attention to make them care about your company. This is accomplished not by tearing down your competition, but by persuading the customer of your company's value in a positive manner. To do this, you must get to know your customer and his desires and values. Once you know him, you'll be able to get his attention with messages that speak directly to him, creating a lifelong customer in the process.
Selling to the customer relies on the type of words used in your message. Ciotti cites key persuasive words that tend to cause customers to buy, such as free, new and instantly. Customers have positive psychological associations with these words, causing them to enjoy their purchases even more. Using words like these in the right way at the right time, you can build customer loyalty with even the most fickle consumers.
Reciprocity involves going above and beyond to provide a truly memorable experience for customers. Some examples include placing gift cards under car windshields or offering a free service upon a return visit. Reciprocity doesn't have to cost money to be effective. Small gestures such as calling a customer to follow up on a recent purchase or sending a birthday card can keep him coming back for the impeccable level of service.
Increasing and maintaining customer loyalty is an ongoing process that requires consistent attention, dedication and innovation. Implementing better customer service processes to improve customer loyalty does not have to be complicated. Simply being pleasant, engaging and helpful is sometimes all it takes. If your company continuously provides a higher level of service than your competitors, you will eventually reap the rewards.
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