Estimated reading time: 5 mins
A lot of business owners get carried away with the idea of gaining new customers. You see this in things like ‘new customer offers’ that help a company attract more people. However, gaining customers is highly ineffective if you don’t retain them. It’s like pouring water into a bucket with a hole in the bottom – you’re endlessly in a cycle of pouring more and more water to stop the bucket from falling empty!
The same happens in a business with poor customer retention rates. Yes, you make sales from new customers, but you have extra pressure on bringing in more and more customers to exceed your previous sales figures. With a good retention rate, you have a buffer of sales from existing customers to supplement the new ones. This is the only way you will grow and make more money.
We know it’s not always a good idea to think too far ahead, but consider what happens if you fail to retain a good percentage of customers every month. You spend more money on marketing campaigns to drive more new customers, meaning you restrict your profit margins even further. It’s a big issue, but you’re about to find out how to solve it.
Many methods of customer retention exist, but this guide will focus on one category; following up with your customers. Effectively, this is where you reach out to a customer after a sale. The way you do this can help you retain their business, so let’s look at your main options:
A token of thanks
We’ll start with perhaps the most effective way of following up. A token of thanks is quite a vague and broad way of saying that you give them something as a thank you for making a purchase. This is usually most effective when sent a week or two after the purchase. The idea is that your token of thanks encourages them to come back and make another purchase. Typically, the best things to offer are:
- Unique discount codes
- A percentage off the next order
- A gift voucher
- A free gift with the next order
Basically, you give them a reason to come back and buy from you again. It’s a very simple concept that works extremely well. As for how you send this token, email and SMS marketing are the best options. The reason you wait a week or so is also pretty important. You wait, give them time to enjoy their order, then remind them of how great your service was. The best approach is to perhaps use bulk SMS marketing or email and send out your token of thanks to many customers at once. This way, you can expect an influx of returning customers to boost your sales for the month.
Ask for a review
When someone becomes a customer, you should thank them immediately for the purchase. If this is done in real life, a simple thank you face-to-face will suffice. If the business is carried out online or over the phone, then a thank you email or text message works well. This technically counts as a follow-up, but it doesn’t have much of an impact when used on its own. Instead, you could combine it with a request for feedback.
Ask the customer to review your business after thanking them. This has dual benefits in terms of customer retention and acquisition. Firstly, you can retain customers by adding an incentive here. Ask them for a review in exchange for a discount on their next purchase. This can exist alongside the token of thanks you give out in a couple of weeks. After they’ve submitted a review, it boosts your reputation amongst other consumers. In turn, this makes you a more attractive prospect for future customers, allowing you to bring more in. You can see how this starts turning the wheel of success as the new customers provide reviews and are also retained.
Provide help and guidance
A lot of businesses operate on a subscription basis. That is, you have customers who pay you a fee every month for your service. Here, your success is determined by ensuring these customers continue to pay for your service. The difference between this and other business models is that you can’t really offer any incentives or discounts. They’re already paying for your service and you don’t have anything else for them to buy. Instead, the focus shifts on improving the value of your offering.
You can do this by providing free help and knowledge to your existing customers. Let’s say you run an accounting firm and have clients paying you to manage their books every month. Here, you can send out monthly emails that provide financial tips and tricks. It’s free, you add value to your offering, encouraging people to stick around. They’ll appreciate this exclusive guidance and see it as a bonus alongside your service. Knowledge is power, and it can be a powerful ally in retaining customers.
Existing customer exclusives
Lastly, you should make your customers feel like they get some added benefits from being a customer. New customers seem to get all the good stuff, so be sure you reserve some for your existing group. A great way to do this is by following up now and then with some exclusives. Perhaps this can be new information on a product/service that nobody else knows about. Or, access to a new app before anyone else. You could even give them priority when new things are released, allowing them to buy the products first.
This is a great idea as it encourages people to remain your customer, but also encourages new customers to come along as well. Other consumers may see the benefits of being your customer and want to enjoy them. Again, you set the wheel of success in motion!
So, here are four ways to follow-up your customers and improve retention. The secret is using a combination of everything outlined in this guide. Follow-up straight after the purchase, then after a week or so, and then sporadically. This keeps customers engaged and helps you retain their business.