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Customer Retention Strategies For Small Businesses

Mark and Sharon Spero,
owners of Money Mailer of Fox River Valley, recently shared their
insights into key customer retention strategies. The following
article was written by Katherine Paljug, contributing writer at Business News Daily.

Losing customers costs
businesses billions of dollars per year
. But many small
businesses are so focused on bringing in new customers that they
forget about the ones they already have.

Sharon and Mark Spero, the owners of
Money Mailer franchise
near Chicago, work directly with local businesses to both target new
customers and keep the existing ones loyal. After 20 years in
business, the Speros aren’t just direct mail experts – they’ve also
seen firsthand how important customer retention is for building a
thriving small business. They shared their best tips for how small
businesses can improve their customer retention.

1. Sell to old customers, not just
new ones.

When planning out your marketing
strategies, from direct advertising to search engine optimization,
it’s natural to think about how to attract new customers. But put
some of that effort into your old customers too.

“Old and current customers know us
well,” the Speros explain. “Current customers will
often work with us on larger projects than new customers that are
just testing us out for the first time.”

Creating a sales and marketing funnel
specifically for existing customers is not only key to growing your
business, it’s often a better investment of your time and resources.
It generally costs five times as much to acquire a new customer as it
does to retain an existing customer, according to Forrester Research.
If you spend more of your marketing dollars on old and current
customers, you will see more return on a smaller investment.

2. Understand their expectations.

Customer retention depends on customer
satisfaction. But many times that satisfaction depends less on the
goods or services you provide than it does on expectations. If a
customer wants a one-hour consultation to double their revenue
overnight, for example, they will be disappointed no matter how good
that consultation is.

“One of the most common mistakes

[small business owners make]

is to avoid hav[ing] the conversation
with the client regarding [the client’s] expectations,” the
Speros pointed out. “These expectations can often be
unrealistic, unmeasured, and don’t match what they actually are
trying to communicate.”

As a business owner, it is your
responsibility to initiate that difficult conversation. Customers
should have a realistic picture of what they are buying, including
the cost of their purchase, what it includes, what they can expect as
a result, and any return or refund policy you may have in place.

If all these components are understood
and expected from the beginning of a purchase, customers are much
more likely to be satisfied at the end, whatever that end is.

3. Offer to improve.

If for any reason a customer isn’t
satisfied with their purchase or experience, the best thing you can
do to retain their loyalty is to take responsibility and offer to
improve. No matter where the mistake or miscommunication occurred,
customers expect you to make the situation right – and doing so
enthusiastically can turn even a disastrous situation into a loyal
customer.

“When a client … wants to
cancel, we push back and dive in to why they are canceling,” the
Speros said. Once they understand why a client is unsatisfied,
they offer solutions and improvements that often convince
hesitant customers to stick around.

In fact, offering to improve, and
making your customers a part of that process, can increase loyalty
even in satisfied customers.

In their business, the Speros schedule
reviews for every account to see where they can make customers even
happier. “[We] have an annual review in person with
each client to listen, evaluate, re-examine and refine [their] advertising strategy based on changes in the client’s business.”
This personal attention not only makes clients feel valued and
respected, it can also help you anticipate and avoid future
problems.

If you don’t interact one on one with
clients, you can still offer improvements. An email survey, either
sent to everyone at certain points in the year or to each
customer after a purchase, gives customers the opportunity to offer
feedback and you the opportunity to make changes.

Once you’ve made those changes, don’t
keep them quiet – let customers know exactly what you’ve done
and how that will improve their experience. When they know you take
their feedback seriously, they are more likely to give you repeat
business.

4. Communicate and connect.

Regular, personal communication is key
to creating the feeling of personal connection that convinces
customers to stay loyal to a small business.

Communicate regularly with your
customers through a newsletter or email list, keeping them informed
of changes, developments and special offers. If you are a local
business with local customers, the Speros recommend getting involved
in the community to create strong, personal relationships with them.
“We frequent our client’s business whenever possible, see them
at chamber [of commerce] functions and local charity events. This
allows for conversations not just about business but about them.”

If you are working at a distance, it’s
still possible to create a feeling of personal connection. “Even
if there is not time to meet with a customer in person, a call is
important,” the Speros advise. “It doesn’t have to be
every month, but conversations, rather than just emails, create an
emotional engagement that tells the customer that we are interested
in them.”

If you are able to send them, personal
thank-you notes and other handwritten notes make loyal customers feel
that you are loyal to them in return. You can also create real
connections by responding directly to emails and comments on social
media, posting content that shows the people behind the business, or
finding events such as trade shows where you can talk to customers in
person.

By communicating directly with
customers, you encourage their engagement, which in turn makes them
feel invested in your business, the Speros explain. “Through
communication, a relationship is created, which often leads to a more
loyal, long-lasting partnership.”