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How To Retain More Loyal Customers

Increasing customer retention by 5% increases profitability up to 75%, according to one study, BUT it’s getting tougher to retain customers. Another study found that customers consider many more vendors now than they did 10 years ago.

If you want to keep more customers, DON’T start with a loyalty program.

The number one reason customers leave is due to poor service, not lack of a loyalty program. Oracle found that 89% of customers go to competitors after a poor experience. Start by building a customer-oriented culture and use that foundation to improve service, products, and processes.

Create a Customer-Oriented Culture


The best way to deliver outstanding experiences is by building the right culture within your organization.

Step #1 Hire the Right Employees


Hire employees not just for technical skills only, but for how they serve customers. Use these interview techniques to dig into candidates’ ability to serve customers and discover how employees will act and react in different situations.

Step #2 Train for Excellent Service


Incorporate customer-orientation into your service training for both experienced and new employees. Consider developing a step-by-step guide for customer interactions; here’s a template to help you get stated. Give participants the ability to role play and practice these steps as well as the empowerment to make the right decisions for customers on the front line.

Step #3 Reinforce & Celebrate


Share both positive and negative customer feedback during employee performance reviews and identify ways to make service even better. At company meetings, highlight employees who have delivered great service, either through extra effort or innovative thinking. Publicly celebrate specific customer stories — unique awards that sit on desks are a great way to keep the momentum going.

Provide Outstanding Service


American Express found that customers are willing to pay 10% more for great service.

Step #4 Communicate Regularly with Customers


Some account managers have a bad habit of calling customers only when it’s time to renew or upsell. Instead, create a plan to communicate regularly with customers when it’s most beneficial for them, whether that’s 14 days after purchase or once a quarter.

Put communication activities on a calendar and assign follow-ups to specific account managers. As you contact customers, capture additional customer information so that future communications can be personalized and meaningful. (There’s nothing worse than contacting a company just to find they didn’t listen the last time you talked.)

Many companies, large and small, use Customer Relationship Management (CRM) to centralize customer information in one place and help managers stay on top of accounts.

Step #5 Personalize the Experience


Creating a “personalized feeling” during restaurant visits increases waiters’ tips by 23%, according to a study published in the Journal Applied Social Psychology. How’d they customize the experience? The only thing the waiter did differently was to return to the table with a second set of mints.

Customers love talking to real human beings who pay attention to their specific, unique needs. Use the information you gathered in CRM and use it to create a personalized experience. Ask for updates on issues specific to the customer (e.g. “How are sales for your newest product?”) or even ask about hobbies (e.g. “Have you had a chance to go fishing lately?”) Whenever possible, use that information to delight customers with low-cost or no-cost surprises, such as bringing their favorite cookies to the next meeting.

Tip: Did you know that customers will open the “Happy Birthday” email more often than any other personalized mass email? For more tips, see our article on writing phenomenal emails.

Step #6 Eliminate Service Pain Points


McKinsey & Company defines the Moment of Truth as an interaction that is important to customers and “emotionally charged.” If customers are delighted and ecstatic, the moment of truth works to your advantage. However, if customers are upset, frustrated or worried, then they will leave your organization. Seek customer feedback and identify steps that are painful or annoying to customers. Find ways to eliminate these pain points, preferably by changing the process. If a step cannot be avoided (e.g. due to regulatory issues), tell customers what to expect ahead of time so they are prepared.

Step #7 Solve Problems Quickly


More than 80% of customers who leave say they would have stayed loyal, IF their issue had been resolved at the first contact, says Accenture. Strive to handle all customer issues quickly, when the customer first complains. If the issue cannot be resolved during the initial contact, give service reps the power to create and act on a follow-up plan. Allow time in the day for service reps to update the customer on how the resolution is progressing. If a customer has to complain a second time, they are MUCH more likely to switch.

Deliver Value


Step #8 Offer Great Products


You’re in constant contact with your customers, so you have a good idea of what products and services they need. Use the customer feedback you gather throughout the sales and servicing processes to continuously improve your product and service offerings. As you seek input to improve existing products, ask broader questions to look for additional problems that you can solve for customers:

  • What challenges are you facing?
  • What problems are we not solving for you right now?
  • What do you spend the most time working on right now? How can we make that process more efficient for you?


Some of these ideas will lead you to your next successful product.

Step #9 Find the Right Price


The value equation has two basic parts, what customers receive and what customers pay. Customers receive not just a product, but all the benefits of using the product and service. On the flip side, customers pay a price for purchasing your product, which goes beyond the actual cost to include time and effort to use the product, maintenance, accessories, etc.

When thinking about your price, keep in mind the expense of doing business with you, and price your offering so that the benefits outweigh the costs.

Inspire Loyalty


Step #10 Develop a Loyalty Program


The results are mixed; some studies show that loyalty programs are effective, while other studies show no impact on customer retention. For this reason, you should focus on providing great service first. If you’re already delivering outstanding customer experiences and want to go a step further, then start a loyalty program.

Here are a few things to keep in mind:

  • Membership: Make sure customers feel special by joining the program, whether it’s a bonus at sign-up or additional services later.
  • Communication: Reach out to customers periodically to keep your brand top of mind. Include exclusive information and promotions in your communications to give your customers a reason to read your communication.
  • First to Know: Extend the feeling of being part of an exclusive group by making sure your loyal customers are the first to know about new products and events.
  • Rewards: Give your customers incentives to purchase more as well as referring your business to their friends, families & co-workers.