Increase Your Retention Rate
In our previous article How Can The Small Business Owner Survive?, we discussed how the business financing can contribute to a business success. Today, we will go in detail on how to use psychology to win back customers and increase your retention rate. Customer retention is one of the biggest factors in the success of any business owner. Though it is impossible to please everyone all of the time, keeping your customers happy will keep most of them coming back to you, time and again. Even with exceptional customer service, every business owner experiences customer loss. While it may seem easier to write off a lost customer and say that there are “other fish in the sea,” research shows that it is easier to win back customers than it is to sell your product or service to a brand new customer. Armed with that piece of knowledge, the success of your business can grow by developing a customer outreach program that will win back your lost customers.
When business owners lose customers, there are many possible causes. Most business owners immediately assume that most customers leave their company due to price issues, however that is not the case. When asked why the stopped buying from a particular company or using a specific service, a vast majority stated that they left because they were treated poorly or indifferently. Taking the time to find out exactly why people have stopped returning to you for products and service is the most important step in winning back customers.
Address Former Customers On a Personal Level
One of the first things that you should address within your business, in order to retain customers is being certain that you understand the needs of your customers. Talk with your customers on a regular basis to get inside the heads of those whom you are servicing. Ask them why they choose you over your competitors. Find out what they like best and least about your company. When you make customers feel like they are welcome, they are likely to comeback because we like experiences that are familiar and pleasant to us. At Wide Merchant Group, we have learned that treating as if they were members of our family can make the difference between a customer that leaves and the ones that return. Even when there’s an issue, or complaint, this should be seen as an opportunity to improve and strengthen your business. Get suggestions and ask about how things can be done and what needs to be added to your business. When you lose a customer, follow up with them and find out what is was that caused them to go elsewhere for services or products. Many times, you will find a solution to the problem, just by reaching out.
“Customer satisfaction is obtained by providing customers with what they want. For small business operating on the Web, it would be a mistake to neglect to ask your customers what they want.”
Additionally, all people have a need to feel important. It has been said by various psychologists that feeling important is one of the strongest urges felt by humans. If you choose to treat a former customer as an important client, they will be much more likely to want to deal with you again. When dealing with a customer on this level, making them feel as if winning them back is the most important task of your day and that your business will just not be the same without them. By appealing to this human need, they will be more open to your approach.
In order for this strategy to work, you need to keep as much information as possible on hand about each of your regular customers. You should know who your regular customers are, have contact information for them, and keep a record of what they purchase and how often. Not only will this allow you to provide better customer service to your customers, you will also be able to see if a customer’s loyalty pattern has changed. This information will be beneficial in retaining customers, winning back those you have lost, and marketing to both of these groups.
When following up with a lost client, it is important to get as many details as possible. Ask exactly what lead to them leaving your company. If there was a specific incident that caused them to walk out the door, find out the who, what, when, and why of what happened. If you find that there was a fault on the part of your company or an employee, be sure to accept the blame and apologize for the incident and any inconvenience you may have caused. Above all, listen and provide feedback when the customer is sharing their story with you. If a person feels you are sincere in wanting their business and are truly apologetic about anything that may have caused them to look elsewhere, they are likely to be forgiving and give you another chance.
Example: A well-known women’s clothing retailer has implemented a program in which sales associates keep a file card on each regular customer. They record contact information, as well as information on what the client purchases during their visits and the dates of these purchases. Management regularly goes through these cards and pulls those of customers who have not made a purchase in some time. They can then contact that customer and determine if there was a problem that needs to be addressed, or if there is an unrelated reason that they have stopped shopping with them.
Make Them Feel Part of a Family
A look at Maslow’s hierarchy of needs will show you that after safety and survival, socialization is the next need that must be fulfilled. They want to interact with others and to feel as if they are a part of a group or family. This can easily apply to your own customer service approach. By treating customers as if they are a part of your family or circle of friends, they will feel more comfortable and included and want to keep coming back.
By developing the atmosphere within your own business to fit this need, you will be able to win back those you have lost without as much effort.
Customers walk into a business wanting to feel at home. They want to feel as if they are buying items or receiving services from friends, not a bunch of robots who do nothing but point to a shelf when asked where an item is. Connecting on a personal level with each and every person who walks through your door, or even calls on the phone, will build your reputation as a business that cares. Customers who feel a personal connection to your staff will likely choose you, over a provider who provides a cold, unfeeling atmosphere. In cases like this, even if you offer the lowest prices around, more often than not, customers will pay a bit more for what they want to get service that is enjoyable.
If you find that there has been something of a mass exodus from your business, it might be time for a complete overhaul. Often, when many people leave a particular business within a similar time frame, there are major customer service issues that need to be handled. Pay close attention to the service that people are getting when they deal with you and your employees. Are their needs being met? How are complaints and problems being handled? Quality customer service is extremely important in customer retention.
Example: A local supermarket has lost many formerly loyal customers to a large chain store that has moved to the area. Price cuts and marketing campaigns have not seemed to help the matter. Upon surveying some of the former customers, they find that the passive nature of the store’s staff was the reason many were so anxious to make the change to another establishment. The management worked to develop a more customer-oriented atmosphere and invited the entire community to see the changes that had been made, resulting in a large number of customers returning.
Ask Your Customers What They Want
It seems obvious that if customer satisfaction is the underlying principle for marketing your small business, selling what the customers want should be your primary focus. But, it is easy to get so wrapped up in selling the products you have to your customers that you neglect to sell them the products they want. Ironically, for a small business that operates chiefly online, it doesn't take a big market research project, a research and development staff, or a bunch of focus groups to determine what customers want. Various Internet technologies make it easy to ask each site visitor what products they would like to buy at your site.
Start with a List of Sample Product Ideas
You can start by making a small list of products related to your core business. In other words, a list of products you can make, buy wholesale, or have delivered from third parties that are related to the products and services you already sell. Then you simply ask your site visitors or customers which products they would be interested in buying.
It is important that you allow those answering your question to check all of the products on the list that they are interested in purchasing. It is even more important that you allow them to suggest a product you didn't think of including. This is usually where you'll get great new product ideas from your customers, free of charge.
The Where, When, and How of Asking
Your site design, theme, layout, flow, and sales techniques will all determine the appropriate time, place, and technology for asking this question to your customers. It is a matter of deciding whether you want to include a survey window that randomly pops up, a customer purchase follow-up email survey, or an in-line set of product suggestions accompanied by a submit button that appears in one of the columns.
If you don't feel technically inclined enough to create the survey or feedback form yourself, there are many free scripts available that are designed for such tasks. Alternatively, you can go with less complicated methods, such as simply asking the question in a follow-up email or asking the question in email that you send to your mailing lists. The important thing is that you ask your customers what they want and get answers you can use.
The Power of Selling Multiple Products That Appeal to Each Customer
When you compile the results, you'll know exactly what your current site visitors or customers would be willing to purchase, in addition to what you already provide. This is very powerful information. Selling more than one item to each customer more than doubles profitability, it exponentially increases profitability. This exponential increase occurs because you are able to sell two products with only the advertising and promotion required to attract one customer. If your customers provide you with three or four additional products that most of your customers will purchase, you will achieve an even greater marginal profit to promotional spending ratio. In other words, your per customer profit will be much higher.
It Doesn't Matter If You Can't Provide the Products
At this point you may be wondering what to do if you don't have a means of delivering the products your customers are requesting. The good news about doing business online is that you don't have to be able to sell what your customers want in order to profit from what they want. If you find that 60% of your customers are interested in purchasing a certain product, or that 60% of them already do purchase a certain product regularly, you can simply put advertisements on your site that link to third-party sites where your customers can purchase that product.
Linking to these products provides your customers with a valuable tool and enhances the value of your site for all visitors. The bottom line for you, however, is that you can provide these links on a basis of either being paid each time these links are clicked or being paid a commission each time the link clicks results in a sale. The former is generally referred to as pay-per-click advertising. The latter is called affiliate marketing. Both methods are very profitable when they are for products for which your customers have already expressed a purchasing interest.
This ensures you can increase your profitability by asking customers what products they would like to purchase, whether you can provide these products or not.
While winning back lost customers is not always the easiest task you can undertake, by understanding the basics of human wants and needs, you are likely to be able to win back nearly anyone. It may take a bit of time and persistence. If one tactic doesn’t work, try developing another that may be a better fit to that individual. Above all, remember to work quickly. If a customer is dissatisfied or made to feel unimportant, they are very likely to spread the word, causing you to lose even more customers along with them.
Like what you read? Find more helpful articles from Wide Merchant Group here. To learn more about us, and how our merchant financing programs help small business owners like you, visit at WideMerchantGroup.com.