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Customer Retention – A Simplified Approach


Retention is definitely the buzz word for businesses today. Customer retention has business leaders’ attention and leaves many wondering how other businesses are approaching this seemingly complex business function. A web search of customer retention results in thousands of sites all with the real solutions for customer retention. Researchers, analysts, and consultants have developed multiple theories, programs, 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 out there saying much the same thing—a focus on customer retention is imperative. This is absolutely correct! Profits and growth are reliant on both customer and employee retention within an organization. The question is how can today’s small businesses compete with the sophistication of big corporate America? These powerful companies have the capability of hiring teams of retention or relationship experts, installing sophisticated CRM programs, and providing employee training and coaching programs—while at the same time offering lower prices. Its time for small businesses to allow big businesses to keep those customers who are only shopping for the lowest price. There are plenty of customers looking for service above price! The focus for small business should be value.

The reality is a small business, whether retail or service, can have the advantage over big business, if they can understand one logical concept: small businesses have the upper hand in capturing their market share through true customer retention and positive customer experience initiatives.

This is so simple it is 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 product or service. What they are really doing is giving the consumer a personal experience.

Consumers and businesses place value on added service. Who doesn’t appreciate an owner, sales rep, customer service rep, or agent showing sincere interest? So even if a product or service is slightly more expensive, purchasers are 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 simplified approach to retention.

How can a positive customer experience be viewed as a simple approach? This happens when owners and agents do what they do best, pass along passion and vision of their business through service to their customers. So how can a business ensure a positive customer experience? Follow this 7-step personal touch process:

  • Offer only proven and high-quality services or products.
  • Demonstrate customer appreciation.
  • Provide responsive and pro-active customer service.
  • Give instruction on how to get the most use from your products or services.
  • Share customer testimonials with other customers 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 utilizing all sources of communication—staff, letters, phone calls (inbound and outbound), web sites, emails, and event attendance. Customer experience begins during the sales process. Marketing and selling the product and service must sell the expectation of a positive experience. This is where businesses undersell the value they offer: why should a consumer or business buy from them and not from someone else? After the sale it is critical to meet and exceed the expected experience. Service must never deviate from the marketing concepts. Customers should feel like they got their moneys worth.

Customer retention does not have to cost a fortune, however you get what you pay for. Companies are spending extreme amounts of time and money to obtain new customers, but are unwilling to spend a fraction of that amount to keep their existing, paying customers. Customers are a great investment-before and after the sale! When businesses are committed to positive customer experience, retention improves; referrals improve; sales increase. See how simple?

A business should not have to invest more than 1/5 of what it spends in acquiring the customer to retain the same customer. The cost of getting and keeping the customer should be calculated together. The cost of following the 7-step personal touch process costs less than doing nothing. Doing nothing does not create a positive customer experience. Doing nothing results in losing customers. When customers leave, they don’t buy, they share their negative experiences with others, and they certainly don’t recommend the business to their friends, family or co-workers. This negative marketing increases the need to spend even more to keep up with the loss and other related expenses. Imagine the positive aspects of retention. It doesn’t take a rocket scientist to figure out the more customers retained, the more the business will grow! Experts have already proven, over and over, retaining more customers can result in significantly higher profits. They also have proven it indeed costs much less to retain customers than acquire them. All one needs to do is act on this information. If done sincerely and genuinely, it’s money in your pocket!

So if customer retention is so simple, why doesn’t every business excel at it? Here’s another simple answer—time. The many roles of an owner or agent can be quite overwhelming. 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 the products and services, obtaining vendors, and so much more. In addition, many small business owners are the one delivering the product or service to the customer. In order to grow their businesses, owners have to focus on generating new sales—or so they think. 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. Here’s why: The three Rs in business are: Retention, Revenue, and Referrals! Customers are your business and customers are the highest resource for revenue and more customers.

If businesses don’t have time to put a retention program together, they should hire a retention expert; it’s worth it! If businesses don’ t have time to pro-actively follow up with customers personally, outsourcing or hiring someone to follow up on their behalf is a must. 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; it should always be about making sure they are satisfied and allowing their feedback. Businesses do this by delivering an exceptional service or product. When a customer has a negative experience, the business should do everything they can to turn the situation around. Businesses need only put themselves in the customers place to realize the importance of delivering an impressive experience they wont soon forget.

Retention is nothing more than delivering the right customer experience. Its simple when delivered with commitment to the customer. Do what comes naturally with passion and conviction along with a little common sense—and watch your business grow!

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