Management consulting firm Bain and Company found in a 2013 study that it is 6-7 times more expensive to gain a new customer than it is to keep an existing one.
Smaller companies generally don’t have the resources to reach large markets in the way large multinational corporations do. But there are other, affordable methods of customer retention that have either been brushed under the rug as obsolete or simply forgotten about in lieu of technology.
Direct mail garners a 3.4 percent response rate from customers, compared to only a .12 percent rate for email, according to a report by the Direct Marketing Association (DMA). A direct mail campaign is not only an opportunity to present a special offer, but also a way to thank loyal customers for their patronage. Many companies today use reward cards, which can be offered as loyalty reward cards, membership cards, gift cards and even prepaid cards. When someone feels a card inside an envelope, it piques their interest that much more.
In the long run, 3.4% of customers ads up to a lot of missed sales opportunities. When it comes to building a service brand, every customer counts.
The smallest of gestures, like a $5 discount on their next purchase, lets customers know you appreciate them and gives them incentive to do business with you further. Today, printing plastic cards is less expensive and much more affordable to small and medium-size businesses than it would have been 10 or 20 years ago. And the technology allows users to create completely customized products.
The DMA also found that direct marketing via telephone has the highest response rate of all customer contact methods. The best thing about direct phone campaigns is that you will already have a list of customers’ phone numbers who have shopped with you. These calls, however, should be limited to thanking customers, fielding complaints and informing them about any upcoming specials or sales. Despite the overall effectiveness of direct phone campaigns, it is still telemarketing, a traditional annoyance if not done correctly. When customers give you their numbers, tell them that your company may call them occasionally as a courtesy, but will not try to sell anything in the process. Offer them the ability to opt out. It’s best to limit these calls to between the hours of 9 a.m. and 7 p.m., Monday through Friday, despite it being legal to call between 8 a.m. and 9 p.m.
Promptly and Willingly Handle Complaints
MarketingWizdom.com estimates that 96 percent of disgruntled customers will not voice their concerns to the offending company because they either don’t know how to, or don’t believe it will make a difference. Though you may never hear the complaint, all of that customer’s family and friends will, which doesn’t bode well for your company’s reputation. Complaints should be viewed by business owners as an opportunity to retain a customer.
96% of upset customers won’t ever voice their complaint because they 1) don’t know how to, 2) don’t have a customer feedback method available, or 3) don’t believe it will make a difference.
Give customers options as to how they can communicate a complaint to you. An email address, phone number and mailing address should all be avenues which customers can choose from. You can even show transparency by posting selected complaints to your social media pages (make sure to redact all customer personal information) and respond in a public forum.
Your business cannot exist without customers, and it won’t last long without happy customers. The extra effort you put in will show in your balance sheet and in the smiles on your customers’ faces.