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 and 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 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. 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 or even ask about hobbies. Whenever possible, use that information to delight customers with low cost or no cost surprises.
Tip: Did you know that customers will open the Happy Birthday email more often than any other personalized mass email?
Step 6 Eliminate Service Pain Points
McKinsey and 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. 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, 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.
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.
- 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?
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.
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.
- Membership
- Communication
- First to Know
- Rewards
