Do you want to build a strong base of satisfied customers for your small business? If YES, here are 7 sure ways to retain existing customers and build brand loyalty.
Having loyal customers is an essential foundation for success. Experience has shown severally that it is easier to retain new customers than to acquire new ones irrespective of if you are running a big or small business.
Benefits of Having a Strong Loyal Customers Base?
A common saying is that people are more likely to get divorces than change their banks. While this may not be true in the united states of America, there are a lot of huge banks that are built on the backs of loyal customers. Another good example of brand loyalty can be seen in the case of car manufacturers. They know that with the right branding and reputation, an opinion that was formed in youth will persist and last a life time.
Evidence of loyal advocates are also plentiful in the technology sector also. Consider Google for instance, almost every time they launch a product, it goes into closed beta testing by invite only. Not only are the early testers and brand fans giving them reliable feedback, they also help to spread the word about the great product that is coming. Word of mouth marketing cannot be bought with money and that is what fans and loyalty can do for your business.
Aside from the aforementioned anecdotes, why would a business want to build brand loyalty? For starters, reliable data has shown that it costs five times more to acquire new customers than to retain an already existing customer. So from an investment point of view, you are far better off focusing on retention than acquisition.
Aside from that, it is a lot easier to sell to existing customers than to new ones. Typically, you have almost a 70 percent chance of selling to someone that has bought from you before while the chance of you converting someone who is new to your brand is about 5 percent. These numbers come to play when you look at the profitability of a business.
Customer churn is the rate at which customers leave a business. Reducing customer churn by at least 5 percent can result up to a whopping 125 percent profit for your business.
When considering loyalty, it is important to understand which of your customers that you need to work hardest on to retain. It is quite normal for 80 percent of a company’s revenue to come from only about 20 percent of their existing customers.
Aside from all the bonus of brand loyalty, it is also worthy to note the wider implication of having disloyal customers. By their nature, a customer that leaves will probably be an unhappy one. While happy customers may tell one other person how great you are, dissatisfied ones will complain to about ten people. Add all these facts together and you will come to realize that customer loyalty should be at the heart of your business.
So How Do You Measure Brand Loyalty?
Before you even consider how to improve your customer loyalty, it is important to measure where you are now. If you know how you are performing now, you will have a better chance of improving later on. The first thing you should focus on is collecting data from your customers. The key bit of data that you will need is your businesses net promoter score (NPS). It is a measure of the likelihood that your customers will recommend you to others.
The survey has a single question and it can read thus, “on a scale of one to ten; where ten is very much and one is not at all, how likely are you to recommend our business to others?” Customers who respond with anything one to six are called detractors, they are more than likely to say bad things about your brand or product and even go as far as persuading others not to buy from you.
Customers who respond with a seven or eight are the passives. They are satisfied with your service but are unlikely to recommend you to others. Those who are nine or ten are active promoters. These are your fans and they will actively recommend your service to others. These values are then turned into a percentage of promoters to get a final score.
Another important metric for measuring brand loyalty is churn rate. By knowing the percentage of customers who leave you every month, it can give you a clear idea of how hard you need to work on acquiring new customers. To calculate churn, just count the number of customers that left or leave you each month and then divide that number by the total number of existing customers you have.
If you have a small business with only few customers, then it makes sense to do a calculation every 6 months and then divide it by 6. If for instance you have a churn of 10 percent, what this implies is that you will lose about half of your customers in 6 months. If you have a churn rate of 3 percent then you will lose less than one-fifth every 6 months.
Ask you self the questions-: how many customers do you acquire every month? Are you carrying out enough marketing to compensate for all the ones you are losing? Would your efforts be better spent reducing churn rather than acquiring new customers?
Granted, it may not be easy to give a standard bench mark, but generally speaking, a church rate of about 2 percent is a good target. This means that a typical customer might stay for 4 years and that is not too bad by any standard. The key point here is to measure you churn and try to track it over time. Then you will see the impact that your activities have on the rate at which your customers leave.
Another key thing to focus on is the percentage of customers you win through recommendations. This of course will be closely tied to the NPS but it will give you a definite picture of how recommended your business is. This is always better than a theoretical calculation of whether your customers are singing your praises.
The best way to find out about this information is to ask your new customers how they found out about you. Record that information against your customer record and then calculate your recommendation rate. If it is hard to ask that question, then you will need to take away the impact of your marketing activities.
Look in your Google analytics to see what impact your ad campaigns, Facebook advertising, SEO and email are having. The amount that is left is often people that find your through branded search or through direct type ins.
Another way of cause is through a general customer survey. Here you will simply ask the customers, “How did you find out about us?” This will not give you feedback from every customer but it will help to give you a representative picture of what is going on.
In order to retain your existing customers and build brand loyalty, here are a few things to keep in mind:
7 Ways to Retain Existing Customers and Build Brand Loyalty
1. Under promise and over perform: in a bid to try to convert new customers to your brand, there may be the temptation to present your brand in a state that is better than what it truly is. Always ensure that you do not overstate your products key differentiators in an attempt to make your packaging and marketing more powerful. If you cannot deliver on any promise, then don’t even make such a promise.
Also going above and beyond is something that when well implemented is very sure to get the attention of your clients. Always understate your services and manage their expectations well and then over perform. By doing this, you will be able to exceed your client’s expectations and get great reviews and possibly even referrals.
However, you should not understate your abilities to the extent that you will lose your customers. There is a difference between managing expectations and numbing down your abilities.
2. Do not cut corners: in the year 2011, Blackberry’s entire network suffered a malfunction due to the company’s refusal to invest in new system upgrades so as to not incur additional costs. This bad decision ended up costing Blackberry 10 percent of its market share in that same year. This just goes to show that trying to cut corners in your business can cost you your good name, market share and customers.
3. Keep your brand simple: in today’s fast paced world where attention spans are ever reducing and the virtue of patience is eroding by the second, anything that is not simple hardly ever gets attention.
Products and services that require extensive learning curves or that require putting in a lot of effort in order to figure out how they work will be given up on by the customers. Always endeavor to keep whatever product or service you have to offer as simple as possible.
4. Customer service is everything: even if your competitors copy everything about your business, they will find it almost impossible to replicate your customer service. A business’ customer care should not just be a foreign speaker who cares less about their problems, as this will definitely cause your customer to be annoyed. When it comes to customer service, you should provide over the top services all the times.
5. Use social media to your advantage: These days, social media has become an indispensable tool that every business owner must take advantage of in order to grow their business and brand.
From Instagram to Facebook, Twitter, Pinterest and all the way to Google plus, there is a wide array of opportunities that exist for any entrepreneur who takes his time to carry out a carefully managed social media campaign. In fact, 82 percent of small business owners are already using one form or of social media site or the other to help grow their business.
Having a dominant social media presence can help to tremendously grow your business but yet, for you to get to that level, you will first have to cultivate a large number of followers and learn how to dish out content they will crave for.
In order to properly harness the power of social media, you will have to incorporate some certain ingredients such as listening to your audience, sharing relevant messages that your audience will appreciate and also getting others to share your message. Having engaging and relevant content will allow people to share such a content and as such will widen your audience to a lot of subscribers, potential fans and customers.
6. Engage through mobile: engaging your customers via their mobile phones is one medium of communication that is guaranteed to work well. This is because at least 90 percent of American smart phone users have their phones within arm reach at every second of the day; so you cannot go wrong with using this medium.
Marketing content channels need to be optimized for mobile. The mobile platform also offers other advantages such as greater personalization through location, integration of purchasing, and also deeper interaction using social media.
7. Encourage your customers to share reviews and success stories: customer reviews have a way of reassuring new customers when they first come in contact with what you have to offer. Also, by displaying them on your online channels, it offers a greater sense of transparency and boosts trust and loyalty. Customer success stories also help to humanize your brand.
8. Have an ear of good advice: when a customer is disgruntled or unsatisfied with what you have to offer and then he/she tells you, you should try your best to hear him out. Resist the temptation to cut off the customer half way even if what they are saying may come off to you as unreasonable.
If you cut them off, there is always a tendency that the situation will escalate and they will in turn feel like you are not prepared to hear them out. Focus entirely on their complaint and try to listen raptly to what they have to say. If they are making the complaint over the phone, you should repeat the salient points to them and then proceed to resolve the issue that they have raised.
A customer who complains should be encouraged because most people will not complain directly to the business owner about lapses in his brand, rather they will cease to patronize the brand. Therefore, you should be proactive about feedbacks, processing it and adjusting your operations so as to counter whatever issue that the customer has raised up.
In the list of strategies that should be employed in order to retain existing customers and build brand loyalty, it is good to note that continuously reducing your price is not a very good idea.
If you feel that you can use price reduction as a competitive advantage in your business, you will put yourself in a position where you will be vulnerable to other business owners who will be able to have a lower price than you. If your customers believe in your brand or the quality of the service you have to offer, they will be more likely to pay more money for your product.
While continually offering discounts for your products and services will offer your business a quick boost, you will come to realize later that once you get into the price wars, it will be very difficult for you to back down and demand for full price.
Trying to “bribe” your customers to stay with your brand is not really the right move for building brand loyalty, because they may just take the bribe you offer but they won’t still feel attached to your brand to make them want to come back later.
The key to brand loyalty does not lie in price reduction, rather it lies in knowing what your customers want and offering them something that will add value to their life.