Business Owners: How to Keep Your Customers
by Ronald C. Manalastas Every business, regardless of its size, needs to keep customers. There is no other alternative than to excel in this discipline because it is the customer that gives life to the company. Without the customer, the company ceases to have any basis for existence. The company cannot reach its desired future. Every business owner, therefore, must exercise extraordinary vigilance to prevent customer churn. It must strive to convert each occasional customer into a loyal customer that repeats purchases and stays with the company for life. Customers are generally objective and logical in their buying decisions. But they are humans who are also highly sensitive to how they are being treated. They value self-respect. And the clincher to their preferential buying decision in favor of any company is the combined impact of the intensity of delight and quality of experience that they have with that company. There could be thousand of ways to keep customers to the point of loyalty, delight, and advocacy. But the most compelling and effective means of keeping them requires a systematic disciplinary process that must be implanted across the organization. The following 12-Point Customer Retention Program presents and prescribes the steps to take to keep customers over their lifetime.
1. Treat your employees well.
Every employee is the company's ambassador of goodwill to the customer. If they are disgruntled with the way they are being treated in the company, their discontentment will be reflected in their behavior while talking with or serving the customer. Employees must be motivated and delighted so that they will work in a predictably pleasant manner during moment of truth encounters with the customer. You must ride on the value of employee retention before taking a fast trek to customer retention.
2. Train and empower your employees.
Provide employees with comprehensive training on product and people knowledge. Let them learn every facet of the company's products and services, including the protocols and imperatives of human relations. Once they are fully charged with new competencies, you can freely delegate authority, minimize interference, and make employees' job content much more meaningful. The endpoint of empowerment is giving employees the autonomy to decide for the customer, and the customer will like it.
3. Know your product and market.
Complete mastery of the product-market scope is of enormous value, a must for the business owner and the employees. It is mandatory that every one in the organization knows by heart the features, applications, advantages, and benefits of the company's product. This internal capacity leads to deeper and greater understanding of the key markets and their relevant niches.
4. Establish your customer's profile.
Knowing your specific markets and niches unravels who and where your customers are, giving the company indicative insights as to what are the customers' needs, wants beyond the satisfaction of their needs, the relationship they are most passionate about, and the values they expect from their relationship with the company.
5. Do market segmentation.
Market segmentation is a systematic "drill down" of your target market based on your customer's geographic, demographic, psychographic, and behavioral attributes. It is part of intelligent marketing initiative. It enables you to size up your potential business for each segment of the market, telling you which customer group can possibly deliver the biggest volume of business, or will most probably respond favorably to your product or service offer. In short, it enables you to stratify your market so that you can better focus your sales and marketing effort to the right customers in a cost-effective manner.
6. Choose the customer you want to do business with.
After market segmentation, decide which customers you are willing to serve and pour your best resources in. In this exercise, never miss to determine the annual value of each customer to your company. Your customer's annual value is equivalent to the average amount of each purchase multiplied by the number of purchases in one year. If you want more sophistication in your approach, you can instead use the customer lifetime value (CVLV), which can be expressed as: average value of each purchase x number of purchases in one year x expected number of years with a customer x average percentage of gross profit per purchase. Whichever approach you adopt, you will have a basis for ranking your customers by their comparative revenue contribution values. With an indicative ranking, you can best judge which customers you might wish to do business with.
7. Make a plan for and invest in your best customers.
Craft a plan for each customer segment, or even for the most valued customer that you wish to do business with. Decide on the reasonable level of investment that you can earmark for acquiring or maintaining an account. This discipline ensures that no marketing dollar is wasted for any non-performing account. Give your best to your best customer, and they will reciprocate to give you their loyalty. In this exercise, be aware of the importance of the Pareto Principle, which states that "80% of your business comes from 20% of your customers." See whether this guide can help in filtering prospects or dropping some customers based on pre-determined revenue and profit thresholds. It also pays to remember the unbroken rule of thumb that "it costs five times more to gain a new customer than keep an old one."
8. Build a technology-based customer database.
There is no substitute for having a technology-supported customer database, one that provides you with fingertip-level availability of updated information about each customer. The database should be a repository of information on who your customers are, the nature of their business, their dominant needs and wants, their plans and projections for the business, and who the owners and key contacts are. The database must include other customer details such as their: contact information, website address, branches, buying process, purchase cycles, revenue and profit contribution history, principals, affiliates, suppliers, and bankers.
9. Install customer-focused service processes and standards.
Being the business owner, this exercise can be a lot easier because you can decisively lead the organization as you reckon with the factors of change, culture, attitude, and leadership normally associated with evolving a responsive customer retention program. First and foremost, remove barriers to communication in a manner that makes it convenient for customers and prospects to reach your company. Be personal in approach. Eliminate automated email, voice response attendant, and long log-in procedures in your website. Think and set up dedicated phone lines with warm bodies to attend to customer calls. If necessary, build a topnotch customer service team. Enrich the content of your program by internally imbedding the basics of a winning customer care platform such as: genuine smiles in every customer encounter, calling customers by their first names, greeting customers' on their birthdays or special occasions, following or excelling on a standard customer response time, exerting your best effort to deliver value in the way the customer wants it, projecting impressions that you care, investing in customer satisfaction surveys, and running and renewing a user-friendly website.
10. Partner with the customer.
Be a part of your customer's success. Invite customers to join a customer panel or advisory board. Let them interact among themselves. While they will discuss things that are central to their interest, your company, however, will be the key subject of that forum. Many will join, share, refer, and buy more on account of their participation. Take the cue and act on what they have to say, it pleases them and builds their loyalty. Generate referrals and turn in sales leads to your customers for their business growth. They will like it and will remain with you forever as you continue to champion their interest. They will do the same to you.
11. Communicate with the customer.
Apart from making independent surveys, ask your customers directly what they want. Customers appreciate being asked of their views and values. It sends the signal that you care, and updating them on relevant developments within and outside your organization is a double confirmation of your concern. It projects your transparency in dealing with them. You can also give transactional feedbacks to demonstrate that you are on your toes in serving them.
12. Recognize and reward customers.
You have to acknowledge and reward loyalty and longevity of patronage. Hold special events for valued customers, without even going to the extent of launching formal loyalty programs. Reasonable discounts, special services, fine dining functions, hotline links, or company-sponsored travels, all grounded on favorable financials, can serve the purpose. Holding of an annual customer day in a memorable venue is a highimpact option that captivates customers, stretches relationships, and develops highticket sales portfolio for your company.