Customer retention - a simpler approach      By Terri Schepps (President, Integrity For You Inc.) Published by The Wise Marketer in January 2004. Customer retention has business leaders' attention and many wonder how to approach this often-complex business function. Terri Schepps provides a seven-step 'how to' for effective retention... Customer retention has business leaders' attention and many wonder how to approach this often-complex business function. Terri Schepps provides a seven-step 'how to' for effective retention... A web search for the phrase "customer retention" results in thousands of web sites, all claiming to have the real solution for customer retention. Researchers, analysts and consultants have developed a vast array of theories, programmes, and practices for customer retention. Businesses today readily share their experience in improving customer retention. Most solutions point to business culture, staff training, and sales methodology, along with tracking and responding to customer demographics. In simple terms, customer retention is all about the customer - and the customer's experience. There is a lot of information available saying much the same thing: "customer retention focus is imperative to the business' existence". That's absolutely correct. Profits and growth are reliant on both customer and employee retention within an organisation. But how can today's small business compete with the sophistication of the corporate world? Large and powerful companies have the ability to hire teams of retention and relationship experts, installing sophisticated CRM programmes, and providing employee training and coaching programs, while at the same time offering lower prices. It's time small businesses allow big businesses to keep those customers who are only shopping for the lowest price. There are plenty more customers looking for service before price. The focus for small businesses should be value - not necessarily offering the lowest price. The small advantage The reality is that a small business, whether retail or service, can have the advantage over big business, if its management can understand the idea that small businesses have the upper hand in capturing market share through true customer retention and positive customer experience initiatives. This is perhaps so simple that it can be easily overlooked. The personal touch of a small business positively affects customer retention. This is why so many larger businesses have chosen franchising, direct marketing, or network marketing to sell their products and services. What they are really doing is giving consumers and businesses a personal experience. Consumers and businesses place value on added service. Who doesn't appreciate an owner, a sales rep, a customer service rep, or an agent showing sincerity and interest in them during the sales process and customer life cycle? Even if a product or service is slightly more expensive, purchasers are generally willing to invest in value added to the product or service. We expect more when we pay more. The key to success is a positive customer experience - the simple approach to customer retention. Seven steps to the personal touch So how can a positive customer experience be viewed as a simple approach? This happens when business owners and agents do what they do best - passing along the passion and vision of their business through service to their customers. To So ensure a positive customer experience, here are seven steps of the 'personal touch' process: Offer only proven and high quality products and services.   Demonstrate customer appreciation.   Provide responsive and pro-active customer service.   Give instruction on how to get the most use from products and services.   Share customer testimonials with other existing and potential customers.   Educate the customer about the industry or market, and about the value of the business.   Invite customer opinions and feedback on products and services. Small businesses can deliver a positive customer experience by make use of all channels of communication: staff, letters, telephone calls (inbound and outbound), web site, e-mail, and event attendance. Customer experience begins during the sales process, and marketing and selling the product or service must also sell the expectation of a positive experience. This is where so many businesses undersell themselves, and the value they offer: why should the customer buy from you instead of a competitor? And after the sale it is critical to meet - and even exceed - the expected experience. Service must never deviate from the promise put across by the marketing message. Customers should feel that they got their money's worth. Not a fortune Customer retention does not have to cost a fortune, either. However, it must be pointed out that you only get what you pay for. Many companies are spending huge amounts of time and money to acquire new customers, yet they seem unwilling to spend a fraction of that amount to keep their existing paying customers. Customers are a great investment - both before and after the sale. When businesses are committed to providing a positive customer experience, retention improves, referrals improve, and sales increase. As a rule, a business should not have to invest more than 20% of what it spends on acquiring a customer to retain that customer. The cost of acquiring and keeping a customer can therefore be calculated together, and the cost of following the seven step 'personal touch' process is certainly less than doing nothing at all. Doing nothing doesn't create a positive customer experience - it results in losing customers and, when customers leave, they don't buy, they share their negative experiences with others, and they don't recommend the business to their friends, family and co-workers. This kind of 'negative marketing' increases the need to spend even more to compensate for its losses. It doesn't take a rocket scientist to understand that the more customers you can retain, the more the business will grow. Experts have already proven that retaining more customers can result in significantly higher profits. They also have proven it costs less to retain customers than to acquire them. All a business needs to do is act on that principle and - if done sincerely and genuinely - profit and growth will surely follow. Where to begin So if customer retention is so simple, why isn't every business already good at it? Well, the many roles of an owner or agent can be quite overwhelming, and they may not have the staff or the time to keep in touch with their customers. Managing a business includes hiring, firing, accounting, marketing, producing products and services, obtaining vendors, and more. In addition, many small business owners are the ones delivering the product or service to the customer. In order to grow their business, they believe they must focus on generating new sales. But what must be kept in perspective is the balance between getting new customers and keeping current ones. Keeping current customers should be a business priority. Customers are your business and customers are the best resource of revenue, and also of more customers. If a business doesn't have the time to put together a retention programme, it should hire or appoint a customer retention professional. If there's no time to pro-actively follow up with customers personally, outsourcing or hiring someone to do the follow up is a necessity. Businesses should only hire employees, contractors, and vendors who share the same passion for a positive and beneficial customer experience as the business. The focus of following up with customers should never be about selling them more (even though this will occur naturally) but it should be about making sure they are satisfied, and about providing the opportunity for feedback. When a customer has a negative experience, the business should do everything it can to turn the situation around. Businesses need only put themselves in the customer's place to realise the importance of delivering an impressive experience that won't soon be forgotten. Retention is nothing more than delivering the right customer experience. It's simple when delivered with commitment to the customer. Do what comes naturally with passion and conviction, along with a little common sense, and watch the business thrive. Loyalty marketing... for real facts, figures, research, case studies, best practices, practical how-to's, technologies & examples, The Loyalty Guide 4 is the world's most complete report (1,000+ pages) that covers it all. Costing less than a conference pass, details of this electronic report's contents, chapter samples, pricing, and ordering details are online now at www.TheLoyaltyGuide.com. For more loyalty marketing feature articles: http://www.thewisemarketer.com/features   CUSTOMER LOYALTY & ENGAGEMENT: all you need to know in one 1,000+ page report...   Click here to tell a friend Copyright 2004 Terri Schepps / The Wise Marketer     About the author... Terri Schepps is the President of Integrity For You, Inc, located in Dallas, Texas. IFYI was co-founded in October 2000 as a vision to provide proactive customer service to businesses that sought growth through customer contact. Currently, more than 45 employees make up the IFYI team. She also serves as a board member of IFYI. Before joining IFYI, Terri gained experience by working very closely with other businesses on a consulting basis. Prior to consulting, she worked with a leading natural gas supplier and was focused on accounting and customer service management. Terri can be contacted at IFYI, through http://www.integrityforyou.com   Looking for permission to reproduce this article?   We are usually pleased to permit the reproduction of our Feature Articles in other trade journals (but not 'blogs'). 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