Retaining More Customers

Develop strategies for building - and maintaining - relationships

By Frances Sharpe, freelance writer/editor

If you're like most business owners, you keep your eye always on one large yet elusive grand prize: new customers. The reality, however, is that your business is buttressed not by new sales, but by repeat shoppers. In fact, between 10 and 20 percent of your customers likely generate 80 to 90 percent of your revenue, according to experts. And it costs a whole lot less to hang on to existing customers than it does to find new ones. It pays, then, to retain your regulars. Do just that by giving customers what they want:

Answers
Attention
Convenience
Comfort

Calculate a customer's value

Customer relationships are among your company's most valuable assets. Determine the value of retaining them by calculating an individual patron's Customer Lifetime Value (LTV), which will tell you the amount of profit an individual customer can create for your business.
Try: See How to Compute Your Customer Lifetime Value or automate the task by downloading a special LTV spreadsheet file for Microsoft Excel from the Database Marketing Institute.

Create connections

The No. 1 reason that businesses lose customers is that they lack contact with them. Touch your customers often with media and marketing messages that say, "You matter."
Try: E-newsletters — featuring everything from coupons and product offers to useful news and how-tos — are a great way to maintain frequent and meaningful contact with your customers. Build your own e-newsletters at eNewsletters Online or Constant Contact.

Deliver a positive customer experience

Customer retention is easy when people like to do business with you. Put cleanliness, courtesy and customer service at the core of your business to make it as pleasant as possible for customers and clients.
Try: Does your customer experience need work? Making changes can easily impact profits; find out how with Harris Interactive's Profitability Simulator, which shows how simple changes in facilities, services and prices can affect your bottom line.

Manage your customer relationships

Practicing customer relationship management (CRM) is a great way to formalize a customer retention effort. While CRM is common with big companies, more and more small businesses are adopting the same strategies.
Try: Sites like CRMBuyer.com and SearchCRM.com post articles and guidance on the cost of Web-based CRM solutions versus the installed versions.

Hire help

Customer retention should be a top priority for every business. It takes time and energy, though, to truly track your customers' tastes. Consider hiring professionals to create a customer retention strategy for your business; the returns will be worth the investment.
Try: If you're ready to invest in a customer retention expert, try Integrity For You, which helps its clients craft fully operational retention programs for their business.

Measure ROI

Retention leads to revenue. Monitor your retention efforts closely to make sure they're working hard for your bottom line.
Try: Customer relationship management (CRM) software can help you maintain — and measure — relationships with current customers. Microsoft Dynamics CRM 3.0 includes tools for tracking responses to your retention efforts, as well as financial results.

Customers terminate relationships for a variety of reasons - because they move or pass away, because they're dissatisfied with your products or because they've been courted by your competition. If you're losing customers, find out why and address the problem immediately.
Consider implementing a loyalty program to boost retention with rewards; the perception of added value that customers get from loyalty cards is invaluable to your bottom line.
Chances are, your corporate competitors will always win when it comes to low prices. Hold onto your customers, however, with something that the big boys lack: exceptional service.
If you've still got a taste for new customers, take comfort in knowing that if your current customers are satisfied, they'll tell their friends; word-of-mouth marketing is free, and it works!