Every successful business is aware of the importance of customer retention since it is the lifeline to any company. However, learning how to cultivate ongoing customer relationships can be challenging, especially for startups.
With the Internet and all of the opportunities to interact on social media sites, today’s customer is less forgiving when they receive poor customer service. After all, the Internet makes it really easy to take your business to another competitor. This is why it is important to get things right the first time around, especially when you are just starting out.
Why Do Customer Relationships Matter?
Regardless of your industry, customer relationships are what drive your business forward and sustain it for the long term. For many years, marketing experts have claimed that it takes ten times more effort to acquire a new customer than to retain existing customers. This is the main reason why businesses of all sizes are proactive toward customer retention.
When you do the math, a company that has been in business for about a decade with a customer turnover rate of 5 percent will be 45 percent more profitable than a company with a turnover rate of 25 percent. This means that when you fail to build relationships with customers, it can cost your business a lot of money.
Although solid ongoing customer relationships may or may not help you acquire new business, they will definitely help you to retain loyal business. Strong customer relationships really do matter to sales and the future success of your business.
Strong customer relationships are all about finding the people that believe in your product or service. These are customers that become familiar with your specific expertise and your product or service. Then they become excited about the knowledge and quality of service you offer and start buzzing about your new company. If you strive to maintain a relationship with this group of customers, they will refer their friends, family, and even strangers to your business.
The alternative is you can do all of the recruiting work yourself and spend tons of money on marketing, but this is the equivalent to trying to push a huge rock up a steep hill. Although you are striving to get the ball rolling with your new business, each step represents a major effort that is difficult and often very expensive.
Instead, redirecting your energies to build solid customer relationships is a much less painful, inexpensive, and profitable way to bring new customers to your business. It is similar to creating a large group of supporters that realise your value and are willing to naturally get the word out about your products and services.
Regardless if you are starting a brick and mortar operation on the street or an online business, solid customer relationships do not happen the first time around or by simply exchanging business cards. Instead, you have to have a solid strategy in place to make the connections work for you. Depending upon how you choose to go about it, this is not as difficult as you may think.
How Can You Cultivate Strong Customer Relationships?
The main tool for cultivating strong customer relationships is the ability to develop an art of building positive relationships with your customers. Depending upon your industry, the depth of relationships with your customers may vary. But we are not talking about going out of your way to make every customer your best buddy that you hang out with every week.
Instead, we are referring to building a professional relationship that places you in the position of authority on your niche topic and makes you the “go to” person for a specific product or service. Here is an example of how it works:
You go to your local mechanic to get your car repaired, walk in, tell them what’s wrong with your car, and get told it will take about 30 minutes or so. The person behind the counter offers you a coupon for a free coffee and doughnut at the local nearby coffee shop.
In 30 minutes, you return to your mechanic who explains exactly what they had to do and shows you the work that has been done. They continue to ask you how your last repair held up to initiate a conversation with you.
As you talk, the mechanic takes an interest in what you do and says he knows someone that is looking for your type of product or service. When he asks for your business card, the mechanic immediately calls his friend and then tells you the friend is expecting your call.
After he is sure that you are happy with the repairs that were performed and tells you he appreciates your business, you receive a message from him providing you with the friend’s phone number, along with a few tips on car care.
How would you feel about this business owner? He didn’t have to spend any money but he went out of his way to provide great customer service. Instead of simply discussing the weather, he an interest in you and provided you with some type of value.
This means it is likely that you are going to send more business his way. When you think about it, what is the Return on Investment here? The fact is, you cannot even track it but it is the relationship that matters to the future of your business more than it is the ROI.
5 Tips on Cultivating Solid Customer Relationships:
1. Create A Network.
Start building a network of individuals by creating a scenario similar to the example we provided above. A network can consist of business colleagues, suppliers, professional association members, community acquaintances, friends, family members and more. It is also very important to establish an online social network; LinkedIn in particular is a fantastic business networking resource.
As you build your network, keep in mind that this is a long-term investment. To make it pay off you must add some type of immediate value to the relationship, similar to the example we provided above. Making contact one time and hoping the person will remember you six months down the road will not work. Instead, you must make the time investment and be sincere in your actions
2. Always Follow-Up.
Meeting a person one time and exchanging business cards will not help you get your business off the ground, regardless of how enthusiastic or knowledgeable you are. Relationships can have a very brief shelf life which is why it is important to follow up by sending a short “it was nice meeting you” message to the person or by adding them to your mailing list and including a complimentary copy of your latest newsletter.
By keeping in touch with a newsletter full of useful information, you can convince the person of your expertise and keep the relationship warm. When the person comes across a need for your product or service, they will think of you first. If your newsletter is distributed online, you can accomplish this step very inexpensively.
3. Provide Rewards for Loyal Customers.
According to marketing experts, a 5 percent increase in customer retention can increase profits by as much as 25 to 100 percent. On the average, long-term customers spend up to 68 percent more than customers that have just come on board or are thinking about doing business with you. This means that your most profitable clients are the customers you retain for the long term.
4. Segment Your Customers.
Customers have a lifecycle and being able to communicate with them at the level they are at within the lifecycle is another key to building strong customer relationships. This is also known as personalized service and relates to the customer according to the point they are at in the lifecycle.
For example, if you send an email out to all of your new customers, your repeat customers are not going to be interested receiving an introductory message. They already know what you are about. Instead, they want to receive a personalized message that addresses their interests and preferences as a loyal customer.
It doesn’t take much to accomplish this step. In most cases, a simple coupon, invitation to a special event, or the offer of some type of useful information are all effective ways to retain customers. This will also keep them from eyeing what your competitors are offering as well
5. Convert Loyal Customers to Salespeople.
Once you have built a loyal customer following, they will be your best marketing tool. You will never have to ask them outright to get the word out since actions speak louder than words. If you have won their trust, they will naturally create a buzz about your product or service and generate referrals for your business. In the age of the Internet and social media, word can travel quickly which is a powerful way to attract new customers to your business.
How can a CRM software solution help to maintain a high standard of customer service, and strong lasting relations?
As your customer base expands, it can become difficult to effectively manage ongoing customer relationships and excellent customer service. This is where a Customer Relationship Management solution can be highly beneficial to customer retention, saving you tons of time without sacrificing the personalized experience your customers expect.
The primary purpose of a CRM.
The primary purpose of a CRM solution is to help you cultivate and maintain strong customer relationships. The modern CRM platforms offer an advanced set of tools that help to streamline all the important aspects of customer interactions.
This includes testing and monitoring marketing campaigns, managing contacts, handling customer service, meeting specific customer needs according to where they are in the lifecycle, and much more. Many of the tools include automated features that can be set to automatically mail out a special offer to a loyal customer, distribute coupons based on buying habits, provide upsell opportunities, and other customer retention strategies.
Analytics are your friend.
CRM platforms are also equipped with advanced analytics and reporting tools which allow you to pinpoint exactly where your marketing efforts could use improvement. This way you are always on top of what is working and what isn’t by being able to identify trends and patterns that help you gain more control over customer engagement.
Integrated social media.
Most CRM platforms also integrate social media marketing into the mix that allow you to track all aspects of your social media marketing campaigns. The platforms integrate with all of the key networks including Facebook, Twitter, LinkedIn, and Pinterest and help you to stay on top of what others are saying about your product or service and the customer experience.
A CRM solution can help you implement processes to improve customer retention. Here is a basic path to follow which will help you to get started with an initial strategy.
- Survey Your Customers: CRM platforms provide a way to create surveys. Use this tool to find out what your customers want, things they like, things they don’t like, and other types of feedback that will be helpful to building customer loyalty.
- Evaluate Your Customers: Use the CRM reporting and analytics tools to evaluate your customers and discover trends. This ensures that nothing is overlooked in terms of who your best customers are and why. This helps you to customize marketing campaigns to retain your best customers and encourage them to make repeat purchases from you.
- Guide the Customer: Use email and other communications tools in the CRM platform to provide customer stimulation. For example, if you sold them a subscription to online bill pay and they are not using it, it could be because you have not been guiding them through the process. This should be done early on before the customer forgets about the service and moves on to a competitor.
- Set Up Rewards: A CRM solution provides tools that allow you to setup and automate the distribution of rewards for doing business with you. Make sure the reward is something out of the ordinary and unexpected. The little things can really add up to a lot.
- Cross-Sell Products and Services: The modern CRM solutions make it easy to cross-sell products and services. This gets the customer to place more eggs into your basket, so to speak, because it makes their life easier and prevents them from having to search for a specific product or service. This is also known as anticipating the customer’s needs and is a tactic that Amazon uses all the time.
- Be Proactive: CRM solutions provide many tools that allow you to be proactive in retaining good customers. These are tools such as email, newsletters, social media campaigns, and other tools that continue to make your customers feel valued.
Finally, don’t hesitate to become creative. The more creative you are, the better your business will stand out from all of the others. And, when you give customers something to talk about, they will buzz about you to others and influence those people to become lifelong customers.
About the author.
Brian Morton has worked in the IT and software development industries for over 12 years. You will find Brian’s work across all of our company websites, plus many others!
About Our CRM.
Our CRM is a London-based software development company that speciliases in providing small businesses with the original CRM solution for Microsoft SharePoint. We also provide SharePoint Consultancy. Take a look around our website to find out more about who we are and what we do.