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What is the simplest strategy your business can adopt to increase your profits by 25 percent this year?
You can keep your current customers happy.
According to Fred Reichheld, a fellow of Bain & Company and author of Loyalty Rules! How Today’s Learners Build Lasting Relationships, suggests that across a wide range of businesses, when customers stay with a company, that company benefits from increased profits.
In fact, in some sectors, a 5% increase in customer retention translates to more than a 25% increase in profit.
The strategy works because return customers tend to buy more from a company as time passes. As they do that, your operating costs to serve them declines. Not only that, if they are really comfortable dealing with you, they will often pay a premium to do business with you rather than risk switching to somebody they aren’t sure they will be comfortable with.
But keeping your customers happy may require a change of thought patterns that fly in the way of what most of us have been taught about operating businesses in the digital age.
Speed is not the most important factor in customer service
Gallup Group research discovered that customers were nine times more likely to feel engaged with a brand when they evaluated the service as “courteous, willing and helpful” as opposed to “speedy” which only made six percent of customers feel more engaged.
In fact, customers felt closer to businesses where staff was actually willing to take a little more time with them. While this may fly in the face of what we would have considered in this age of speed and perpetual busyness, but people scored service much higher when they felt they weren’t being rushed.
Customers also appreciated and felt comfortable in businesses where they and their preferences were known and cheerfully anticipated and accepted.
This supports a case of ensuring your employees know that while speed matters, so does building a connection. To maximize the investment of spending longer with each customer, train your staff and even yourself to steer the conversation to the customer and try to pick up important conversation points you can use in the future, as in whether or not they have a beloved pet, their favourite hobbies and sport teams, a classic car they might own, travels they are taking or just returning from etc.
Don’t be afraid to stand for certain broad values and show proof of your support
Today’s customer is also keener than ever before to believe that the businesses they support have the same value systems that they believe in.
That is why it is not only important to make it obvious what you stand for, but to illustrate proof of it.
For example, let’s say you are a shoe store owner and you want people in your community to buy local and support you. You say you stand for community.
That rings well for many modern customers, but they want to know how you do that. Imagine how impressed they would be if you had a wall of photos of local soccer teams that you have sponsored over the years.
Match your promotions to your values so they ring true.
Remember that you don’t always have to brag. You can tell the local soccer coach that if they have a good player who just can’t afford the sneakers they need for the season that if they bring the child to your store, you will outfit them.
Word about quiet acts of value spread faster in most communities than foot high messages splashed across billboards.
Constantly reassure your customers that they are getting good deals
Either by choice or necessity, the bulk of your customers are going to be loath to part with their hard-earned money. Everyone wants to feel that they are getting a deal and even preferential treatment.
Reward repeat business but providing regular customers with bonus values and special offers. Bundle goods and services together in attractive packages.
In all your promotions, use words that reassure your customers that they are appreciated and getting a good deal as a result. Words like “sale,” “reduced,” and “super value” all add up to a good feeling for the customer.
If you can find ways to surprise your customers with unexpected gestures of appreciation, you will score even more points. Remember that it is not the amount of discount you give that matters as much as that you occasionally give them something unexpected. I am mindful of those little things when I remember a study I read once in the Journal of Applied Social Psychology that shows waiters and waitresses could increase their tips by up to 23 percent simply by returning to the tables they served and giving the patrons a second set of after dinner mints. 🙂
Set up a loyalty program for your customers
There are other ways to make your customer feel special, and one of them is offering a good loyalty program. But these have to be well considered, since it is often difficult to get people to embrace them in the beginning, and they have to see a real advantage to getting involved.
Part of that is the number of cards people are already carrying around from other incentive programs and their reluctance to get involved in anything that will take more of their valuable time, unless they can begin to see immediate value.
Customers who were given a reward program and had it activated by the giver and the first hole punched, for example, were more apt to use it than those who received an application and had to finish filling it out on line in one study.
They also have to perceive that there is value to their involvement in the program. To invite them to be a “gold member” of your loyalty club, for example, at a time where there is not much of a distinction between being a gold or silver member, will not excite them enough to want to jump a category.
If you are thinking of a loyalty program, best to think it through thoroughly before you launch it.
Thank you for taking the time to read this post. Until next time take good care.
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