Customer Retention Strategies Quick Tips To Make A Positive Difference

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1 Customer Retention Strategies Quick Tips To Make A Positive Difference Brought to you by and Improve your workforce with learndirect Business

2 Customer Retention Strategies Quick Tips To Make A Positive Difference This document is a condensed version of the information provided in Peter's Retention Strategies video. It's offered to guide you through the key points, and to direct you to ways you can make a difference in your business today by taking some clear actions. This is document is based on a module from Peter Thomson International's Accelerated Business Growth System. Document Contents KEEPING HOLD OF YOUR CUSTOMERS 1 CREATE WOW CUSTOMER SERVICE 2 PRACTICAL STEPS TO TAKE 5 MAKING THE CUSTOMER FEEL SPECIAL 8 ACTION PLAN 9 1

3 Keeping hold of your customers Having done all the hard work to get your customers in the first place it makes sense to use them to increase your sales, before spending money on acquiring new customers. To make your customer really valuable to you, you need to get them to: buy more and buy more often This simple strategy can make a clear difference to your bottom line. Imagine if you increased your retention rate by just 1% - how much more profit you d make because you had 1% more customers buying Similarly imagine if your retention rate dropped and you lost 5% of your customers this could have quite a dramatic effect on profit. So, our first suggestion to you today is that you take the time to calculate the retention figures that relate to your business. What is you current retention rate? What would be the effect of this percentage rising? We think you'll be pleasantly surprised at how much it is and therefore - how important increasing the retention rate is to your business. OK So, how can you can retain more customers? Here are a few pointers to consider To look into this in more depth let Peter talk you through some figures in the accompanying video. 1

4 Create WOW Customer Service We re not just talking about training up the customer service personnel but everyone who deals with customers. Having developed this idea of WOW customer service several years ago, Peter has seen it implemented in so many businesses with a positive effect on customer retention rates. Looking at in simply, we have 3 possible ways of affecting the customer with service 1. Wow We can give WOW! Service to our customers so they are really delighted with something that happens. It's out of the ordinary. 2. How We can How the customer - in other words the service provided was exactly how they expected it to be. There are no surprises - positively or negatively. 3. Oow The third impact is to Oow the customer the result of the service they received made them go Oow! This means there s something they didn't like that something went wrong. So how to make it a 'wow' not a 'how'? Walk through the processes of your business consider all the points where the customer deals with your company - from lead generation, to sales contact, to delivery, to paperwork, to after care service. Find out where the Oow s are in your organisation regarding the contact with the customer. Involve everyone in this. Then take action to, at the very least, turn those Oow s into How s. 2

5 An Example from Peter I remember having this conversation about WOW service with a client. I said to the director team: Have you ever driven up to your business - as a customer? No - they said. OK let me tell you what it's like. The car parking spaces nearest to reception are all labelled with directors' names or initials. The visitors' spaces are A) Not well signposted B) At the far end of the car park. What are you saying to your customers? It's OK for you to get wet when it's raining and you have to park your car a long way from the door, but - the directors aren't going to get wet because they've reserved the spaces nearest the door. Is that what you really want? When they looked at it like that - they realised the message they were putting out. This is such a simple idea and yet it helps deliver WOW service when we know what the customer experiences and you start to look at things through their eyes. Making an oww a how - Go the extra mile How can you make something that's ordinary - extraordinary - so that the customer is both surprised and delighted by the experience of dealing with you? If they are delighted, they're far more likely to stay with you and then as a result you'll increase your retention rate. Satisfied or Very Satisfied A study carried out, under the control of Professor John Murphy at Manchester University, established that customers who rate the service from a supplier as "satisfactory" have a loyalty rate or retention rate of 65%. However - those customers who rate the service they receive as "Very Satisfactory" have a loyalty rate of 95%. Yes a 50% uplift in retention or loyalty - from 65% to 95% - just by an increase in perception of service - from satisfactory - to very satisfactory. Now there's something to think about. 3

6 The Challenge When we provide WOW service then yesterday's WOW is today's How. When a customer keeps on getting WOW service - they then expect it and it turns into How service, so we always have to be constantly striving to find ways to give better and better service to keep the retention rate high. So, in a nutshell: Find the Oow s and turn them into How s. Find the How s and turn them into WOW s. Look at the WOW s and see how they can keep being WOW s! Here s a quote that helps see how to approach this. It's from Michael Basch - one of the co-founding officers of FedEx: Federal Express, He says Systematise the process personalise the exception! And what Michael means is that to run a business effectively, we must have systems for dealing with customers - Systems right across the board - from first contact through every transaction. And when things go wrong - then take the customer out of the system and give - personalised service. 4

7 Practical Steps to Take Now let us give you a variety of different ideas, which will help you increase your retention rate. Brainstorm Have a brainstorming session about the various ways in which you believe you can retain more of your customers. Example: Question 1: Why do we lose customers? Question 2: What can we do to prevent it happening or reduce the likelihood of it happening? Peter went through this process for his business and came up with - 67 ideas - most of which he s now tested. Here are a taster of these you can use or adapt for your organisation. Actions to consider 1. Maintain Contact Maintain contact with the customer. Use what's called unconditional contact. This means that you don't only contact the customer when you want to take an order from them- stay in contact - unconditionally. Send them interesting information. Copy them in on the in-house newsletter - if that's appropriate. Call them about news in their industry, just to let them know that we value their connection with us - and not that we just value them for the money we make out of their purchases. Then they'll realise that you re in business with them for the long haul - not just a one - off relationship. 2. Deliver More Deliver more than expected. How can you add something special that will delight the customer? 3. Over - Solve When there is a problem - over solve it and send a gift afterwards. When unhappy customers are made happy - they are far more likely to stay. 4. Add Bonuses Add bonuses to their orders. What can you add that has little inherent cost to you but has a high-perceived value for the customer? 5. Add Blind Bonuses Add blind bonuses - a gift or item or some information sent out of the blue. 5

8 Something that the customer didn't even know they would receive. Again this tells our customers that we do think of them at times, other than when we want their money. 6. Ask for Referrals Ask them for referrals or personal introductions. If you ask a customer for referrals and they give them to you - then they must be pretty satisfied with the service or product they get from you. Otherwise they wouldn't give you referrals. Having given you the referrals and if you do business with those people - the customer is far less likely to stop buying from you if their referred colleagues are buying from you. On the other hand if the customer is somewhat reticent to give you referrals then it may be that you've created an opportunity to uncover a problem the customer has. Then you can solve it and retain that customer. Either way - it makes sense to ask for referrals as a barometer of how the customer feels about your relationship. 7. Obtain Coupons Obtain coupons and vouchers from other suppliers. Can you get discounts by way of coupons or vouchers or arrangements - from other suppliers, for your customers? And if you can you become a source of help to them as well as a supplier. If you have a vast number of customers where their average yearly spend with you is fairly small - you might even be able to offset the whole of that yearly spend with a variety of discount from other people. In that way, why wouldn t your customer stay forever, if - in fact - it costs them nothing to buy from you? 8. Create a Personalised Welcome Letter A letter that's sent to every new customer welcoming them to the fold. A letter explaining how they can get the best from their relationship with you. Perhaps setting out your level of service - in fact containing anything you think that a new customer would want to know. Think what a new customer would need to know - and give them that information. Here are a series of other simple ideas that you can test. Each of them needs little or no explanation: - Add a personalised message to your invoices. Employ a telemarketing person to contact the customers on a regular basis just to see that everything is OK. Undertake customer satisfaction surveys - because you'll get to hear of any problems and have the opportunity to solve them. Do a list of companies that will give discounts to your customers. In effect create an affinity group. Send testimonials from other satisfied customers, or case studies, of how other customers have used your products and services and subsequently experienced so many benefits. One of the ways in which people are prompted to regularly say yes - is to meet regularly in a positive environment. Arrange a day at the races or other sporting or cultural or theatre events. Another Thank you for becoming a customer letter, sent seven days after first delivery. 6

9 Our suggestion would be for you to test whichever of them you believe would work in your business. Sometimes, even though an action is not usual in our line of business - if we are the first to do it - whatever it might be - we get a tremendous advantage. Let us now share with you a few simple ideas that will make your customers feel special and increase their feeling of satisfaction - which in turn will increase your retention rate. 7

10 Making the Customer Feel Special 1. Staff recognising the customer's voice. This is so simple, where people call regularly and creates such a warm feeling in the customer. They feel they are recognised and valued. 2. Knowing the customer's name when they walk into the business. 3. Knowing how to spell the customer s name and making certain that it's spelt right - every time. 4. Knowing customer's preferences. The typical use of this idea is in a bar or hotel - where the bar person says: "The usual John?" Customers love it - when we know what they usually have or want. 5. Having the customer's phone number on screen for incoming calls -so that rather than saying - if a message is to be taken What number shall I ask her to call you back on? The customer service person can say Shall I ask them to call you back on and then quote the number. 6. A fast response to everything is a very little thing that can make a tremendous difference, where your people are going to take the action anyway - but they could take it sooner and surprise the customer with speed! 7. A smile - a little thing for sure - but what a difference Summary So there we have it, numerous customer retention strategies that we know you ll be able to adapt to your business. Now it's time for you to start making progress on addressing some of these things for your business. We hope the following worksheets will help guide you in this. 8

11 Action Plan Find out your current retention rate and what each percentage point is worth to you in turnover and profit. What actions will be taken when and by whom? Have a brainstorming session, perhaps using some of these ideas as the base to come up with even more strategies for customer retention. What actions will be taken when and by whom? Make sure you know how the majority of your customers view your service as wow, how or oow...find ways to ask them how can you turn the oows into wows? What actions will be taken when and by whom? Test these ideas that you know can make a positive difference in your business. Perhaps even testing each idea in a small way to see what works for you. What actions will be taken when and by whom? Measure the results you achieve so that you know for certain which actions - increase customer retention. What actions will be taken when and by whom? 9

12 So this is just a brief look at the importance of increasing your customer retention rates. This is such a powerful tool in business that is pretty straightforward to improve. We hope you ll put some of these tips into practice very soon, to make a difference in your business. Wishing you every success Peter Thomson and learndirect Business 10