The easiest and fastest way to grow your customer base is to Reduce Attrition It’s a reality of life: any relationship that is not nurtured eventually dies. We know that reality in our personal lives, but it is just as true in Customer Loyalty the world of business. Imagine two businesses, one that retains 90 percent of its customers, the other retaining 80 percent. If both add new customers at the rate of 20 percent per year, the first will have a 10 percent net growth in customers per year, while the other will have none. Over seven years, the first firm will virtually double, while the second will have no real growth. Everything else being equal, that 10-percent advantage in customer retention will result in a doubling of customers every seven years without doing anything else. The consequences of customer retention also compounds over time, and in sometimes unexpected ways. Even a tiny change in customer retention can cascade through a business system and multiply over time. The resulting effect on long-term profit and growth shouldn’t be underestimated. Most small businesses could easily implement a number of simple customer retention strategies that will cost little or nothing to implement. Here are five key ones: Measure lifetime value There’s a vast difference between the one-off profit you might make on an average sale, which ignores the bigger picture, and the total aggregate profit your average customer represents over the lifetime of their business relationship with you. Once you recognize how much combined profit a customer represents to your business when they purchase from you again and again, over the months, years or decades, you’ll realize the critical importance of taking good care of your customers. And because you’ll understand just how much time, effort and expense you can afford to invest in retaining that customer, you’ll be in control of your marketing expenditure. “According to Marketing Metrics: The probability of selling to an existing customer is 60 – 70% The probability of selling to a new prospect is 5-20%” Reduce attrition Every business loses some customers, but few ever measure or recognize how many of their customers become inactive. Most businesses, ironically, invest an enormous amount of time, effort and expense building that initial customer relationship. Then they let that relationship go unattended, in some cases even losing interest as soon as the sale has been made. Or even worse, they abandon the customer as soon as an easily remedied problem occurs, only to have to spend another small fortune to replace that customer. The easiest way to grow your business is not to lose your customers. Once you stop the leakage, it’s often possible to double or triple your growth rate because you’re no longer forced to make up lost ground just to stand still. Bring back the “lost sheep” There’s little point in dedicating massive resources to generating new customers when 25-60% of your dormant customers will be receptive to your attempts to regenerate their business if they are approached in the right way, with the right offer. Reactivating customers who already know you and your product is one of the easiest, quickest ways to increase your revenues. Re-contacting and reminding them of your existence, finding out why they’re no longer buying, overcoming their objections and demonstrating that you still value and respect them will usually result in a tremendous bounty of sales and drastically increased revenues in a matter of days. These rekindled connections will lead to some of your best and most loyal customers. Sell and then sell again So many people do an excellent job of making the initial sale, then drop the ball and get complacent, ignoring the customer, while they chase new business. Your selling has actually only just begun when someone makes that initial purchase decision because virtually everyone is susceptible to buyer’s remorse. To lock in that sale, and all of the referrals and repeat business that will flow from it, you need to strike while the iron is hot. You’ll need to allay your customers’ fears and demonstrate by your actions that you really care. You should thank them and remind them again why they’ve made the right decision to deal with you … and put a system in place to sell to them again, and again, constantly proving that they made the right decision. “Once you stop the leakage, it’s often possible to double or triple your growth rate because you’re no longer forced to make up lost ground just to stand still.” Extraordinary customer service The never-ending pursuit of excellence is to keep customers so satisfied that they tell others how well they were treated when doing business with you. Moving the product or service you deliver into the realm of the extraordinary by delivering higher than expected levels of service to each and every customer. Key facets include: dedication to customer satisfaction by every employee; providing immediate response; no buck passing; going above and beyond the call of duty; consistent on-time delivery; delivering what you promise before AND after the sale; a zero-defects and error-free-delivery process and recruiting outstanding people to deliver your customer service. Extraordinary service builds fortunes in repeat customers, whereas poor service will drive your customers to your competition.