By John Garvey
Should you prioritize customer retention over new customer acquisition? Harvard Business Review reports that “acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one,” citing research from Bain & Company. The same, oft-cited research suggests that improving customer retention by five percent results in a 25 to 95 percent increase in profits.
Focusing first on your existing customers, assuming they’re profitable, is less work and often makes customer acquisition easier to boot. If you retain customers and create exceptional experiences for them, they’ll also become your best advocates.
- Promote time-limited offers. Harvard professor, best-selling author and persuasion expert Robert Cialdini named scarcity as one of his 6 Principles of Influence. In a business setting, one way of harnessing this is time-limited offers. Prospects are more likely to act on an email marketing offer, for instance, when it’s time-limited.
“When our freedom to have something is limited, the item becomes less available, and we experience an increased desire for it,” states Cialdini in the modern classic Influence: The Psychology of Persuasion. “However, we rarely recognize that psychological reactance has caused us to want the item more; all we know is that we want it. Still, we need to make sense of our desire for the item, so we begin to assign it positive qualities to justify the desire.”
- Issue customer surveys. As we’ve noted before, for every customer who complains directly, there are about two dozen customers who are quietly dissatisfied with some aspect of your service. In addition to identifying areas for improvement, surveys can generate testimonials and keep customers engaged.
Customer surveys are often focused on identifying problem areas. While that’s important if you value repeat business, a Harvard Business Review article, The Power of Positive Surveying, suggests that a more positive slant can improve customer satisfaction and retention.
“Beginning a survey with what the researchers call ‘open-ended positive solicitations’ seems to be an easy, low-cost way to increase satisfaction and spending.”
By getting customers to recall and relate positive experiences, you increase their sense of well-being and make them more likely to return. While customers should have an outlet to vent (ideally not Yelp!), surveys that focus too much on uncovering problem areas can backfire.
“Companies should look at the customer feedback process not only as a chance to listen but also as an opportunity to subtly influence customer perceptions.”
- Create the right ambiance. Every introvert has walked out of a cafe, restaurant or store because of excessively loud or grating music, too much ambient noise or overcaffeinated staff. A lot of retail settings are geared toward extroverts because of the perception of the giddy shopaholic, but a third to a half of us are introverts. The reverse can also be true, of course. Lighting and music geared towards one kind of customer risks driving off another, potentially larger group of customers.
Music should also be attuned to your customers. This may seem like common sense, but individual employees may enjoy country music or electronica, which people tend to either love or hate. It may seem like micromanaging to dictate which genres or stations employees can choose, but in many cases it’s good business sense.
Ambience was one of the keys to Starbucks’ success. When Howard Schultz took over the company, he was inspired by the Italian cafe scene. Much like the English pub, these were uplifting social spaces conducive to exchanging news and sharing ideas. Coffee stopped being a commodity and became more of an experience.
- Be ultra-responsive to online reviews … the good and the bad. We discussed this in our March blog, Best Practices for Dealing with Negative Customer Reviews. Responding to a positive shout out–even a trivial one–reaffirms that you value your customers. Not responding to a negative review–even if it’s petty–validates the complaint.
- Personalize your marketing. This begins with understanding your customer personas: their aspirations, their pains, preferred methods of communication and social media habits. Focus on the channels that matter most. If you have someone in charge of social media or email marketing, it may even be good to have that person sign off on messages using his or her first name (under the company label, of course). This can make you stand out regardless of what size your business is.
Telling customer stories is another great way to do this. While beyond the scope of this blog, there are a variety of great ways to do this including social media, case studies and video blogs.
One emotional and vivid customer story is far more persuasive than a data dump in 85 PowerPoint slides. – Carmine Gallo, The Storyteller’s Secret
- Utilize email marketing (Yes, it still pays). Hubspot and Search Engine Journal state that email marketing has an average ROI of 4300% – but that’s obviously quality dependent. Email marketing keeps you top of mind and can help personalize your brand. A point of sale (POS) system with email marketing integrated can segment customers by purchasing history and preferences, allowing you to deliver relevant, individualized offers. Organized customer data is a prerequisite to effective marketing and systems like NCR Counterpoint, which we offer, make it easy.
Electronic receipts delivered by email, another feature built into our POS systems, also allow businesses to send customer feedback surveys and additional offers with ease.
- Implement rewards programs and exclusive offers. Again, the better your customer data is, the more you can tailor offers to entice customers. It’s a truism that loyalty programs make people feel valued, but also consider throwing out the occasional surprise reward. These can coincide with birthdays or be completely random.
Incidentally, this is another example of Cialdini’s scarcity principle at work. An offer available to few people will be perceived as having greater value than one available to the masses.
- Understand your mission and communicate it across channels. Know your “Why” and weave it into every aspect of your business. Use it to galvanize employees and communicate the value of what you do. This can be a social mission or it can simply be exceptional commitment to satisfying a market need. One of our partners in Fort Collins, Happy Lucky’s Teahouse, has a close affiliation with Sustainable Schools International, a nonprofit supporting education in Cambodia. A portion of every sale goes to SSI and customers have the option to “round up” their payment to the nearest dollar. This provides further financial support as well as generating awareness for their cause.
Shorten buying cycles.
Reduce stockouts.
Improve customer retention.
Our services can help you with digital marketing, inventory management, point of sale and other needs.
On a recent trip to Seattle I was reminded how important it is to keep your business profile up to date. While visiting we went to one of the main attractions in the city. Now, we only had a few days and this particular attraction was only open the first day we were there due to construction, so we knew it was going to be a time crunch. According to their website they would be open till 8pm and the last tour left at 7pm. We arrived at 6:45 with what we thought was plenty of time, only to have the security guard tell us that they close at 7pm. But… we contested, the website says 8pm, he then proceeded to tell us, “well, that’s google’s listing, we don’t control that.” As someone who traveled from out of town and wasn’t sure when he’d be back, this was disappointing to say the least.
If your business isn’t using social media, you are missing out. Even if you feel like your company doesn’t have anything exciting to share on social media, it is an area you need to have a presence. With over 
2) Default to waste reduction options with day-to-day customer service
4) Incentivize alternative transportation
5) Use drought-resistant landscaping
Case in point: Happy Lucky’s Teahouse
The museum’s collections of nearly 50,000 works of art span 5,000 years and feature the Morgan collection of Greek and Roman antiquities and European decorative arts; world-renowned baroque and surrealist paintings; an unsurpassed collection of Hudson River School landscapes; European and American Impressionist paintings; modernist masterpieces; the Serge Lifar collection of Ballets Russes drawings and costumes; the George A. Gay collection of prints; the Wallace Nutting collection of American colonial furniture and decorative arts; the Samuel Colt firearms collection; costumes and textiles; African American art and artifacts; and contemporary art.
Retailers face unique challenges and opportunities each holiday shopping season. Ditto for other peak buying times, as well as cyclical retail sales slumps. Both challenges and opportunities are enhanced by digital marketing, social media and e-commerce. We’ve got to take our hats off to brick and mortar retailers who are putting in extra hours this time of year. For many, key decisions related to hiring, expansion, downsizing, and adapting online sales channels hang in the balance.
Get your marketing ducks in a row well before the holidays. Make sure there’s a convenient, online catalog on your site for pre-shoppers and advertise promotions well in advance. According to NRF, more than half of all customers begin researching holiday purchases in October or earlier. Including links to review sites with your product descriptions will help guide the customer to a decision and make sales more likely.
NCR Counterpoint offers dozens of Smart Alerts, such as low inventory warnings, cash on hand, and real-time sales data for each product line. Because it’s cloud-based, you can choose which ones are most relevant to your business and keep an eye on things remotely.
