If I were to ask you what your main business goal is, what would you answer?
“Duh, my main business goal is growth. That’s obvious.”
That’s a reasonable answer. But if I were to ask you what does business growth really mean, what would you answer?
You know, when considering business growth, many entrepreneurs think that turning leads into paying customers and increasing their customer base is key to success.
Although attracting new customers is paramount to the success of your business, you also need to be aware that your current customers are a huge asset, so you need to nurture them and look after your existing client base.
I am not saying that customer retention is more important than customer acquisition (the difference between customer acquisition and customer retention is a wide topic that is not meant to be covered in this blog post).
What I am actually saying is that you must not overlook customer retention in your marketing strategy while focusing on the expensive venture of customer acquisition (according to the old rule of thumb, acquiring a new customer can cost five times more than retaining an existing customer).
So, let’s take a closer look at the benefits of nurturing your customer relationship and the best practices for boosting your start up’s customer retention rate.
Table of contents:
1. Benefits Of Customer Retention For Startups
There are a bunch of reasons why you may want to actively invest in customer retention and convince them to return again and again (rather than just staying laser-focused on customer acquisition).
So, let’s go over the most significant benefits of customer retention.
- Retention is more affordable than acquisition
As mentioned previously, the old adage says that it costs 5x more to get a new customer than to keep an existing one.
Although this rule may not be applicable to every business (especially because in the digital era, the selling world is much different than it was), there is no doubt that retention is more affordable than acquisition. This is because the barriers to entry require higher costs for top of funnel prospects as they are typically reluctant to buy from brands they don’t know or trust.
With new customers, you need to start from scratch to engage them, while with existing customers, you don’t have to fight against too many consumer barriers.
- Happier customers boost word of mouth
Word of mouth (WOM) marketing is one of the most effective forms of advertisement or promotion – not to mention that it’s completely free. According to Forbes, referrals are the most valuable form of marketing.
In a world where more and more people are becoming wary of advertisements and turn to their friends for recommendations, loyalty has become the most valuable asset in your customer journey.
- Loyalty has better returns
Not only is customer retention cheaper, but it also generates more significant returns and increases the Customer Lifetime Value (CLV). Think of one of your favourite brands. How often do you buy from them, and how much do you spend per transaction?
In comparison with other brands that deliver the same type of products or services, I’m certain that you buy from them more frequently and spend more per transaction.
So, when your customers stick around, they become more profitable than new customers – not to mention that loyal customers are more likely to explore your brand and try different products or services.
One caveat, though: Don’t take your customers’ loyalty for granted. Keep your customers happy with quality products and services, and be cautious on hikes.
- Loyal customers provide market insights
The purchasing patterns of your existing customers provide you with valuable information on the audience groups you are targeting (and this valuable information helps you make better decisions).
As a result, you will learn more about how to turn leads into buying customers. Furthermore, your existing customers’ purchasing patterns will help you identify your ideal customer profile, which is a great tool to determine the strength of a prospect.
In other words, your loyal customers provide you with important market insights that help you set up your brand for greater success.
2. 5 Ways To Boost Your Startup’s Customer Retention Rate
Now that you clearly understand the benefits of customer loyalty let’s look at 5 ways to boost customer retention for successful growth.
- Deliver more than you promised
Customers are greedy for promises. So, as a business owner, you need to have that wow ability (the ability to consistently impress by exceeding expectations) that allows you to go the extra mile. Lou Holz once said, “Don’t ever promise more than you can deliver, but always deliver more than you promise.”
“Underpromise and overdeliver” is a popular brief bit of business philosophy. The idea is that you need to go above and beyond the call of duty and “wow” your customers by exceeding their expectations.
Now, I’m by no means telling you to deliver your products or services for free (or give your time and talent for free). But, I am encouraging you to delight your customers by giving them more than you initially promised and make them feel special and valued.
Some people may tell you that there’s no payoff in underpromising and overdelivering. Nevertheless, I’m firmly on the side of underpromising for two reasons.
Firstly, overdelivering makes your customers happy and leads to more business and referrals. Secondly, if for whatever reason you are not able to deliver on time, your customers may be disappointed and re-evaluate their expectations of you (so, if you underpromise, you are safe as this strategy allows you to avoid delivery delays).
2. Optimise your customer onboarding process
Customer onboarding is the process that new customers go through the first time they use your product. Don’t make the mistake of thinking that onboarding is just for SaaS companies. Regardless of your industry, onboarding is paramount to starting a client relationship off on the right foot.
A smooth onboarding process can significantly increase your customer retention rate as it sets the tone for your customer journey.
For seamless onboarding, first impressions are everything. So, if the first experience your customers had with your brand was positive, they’re much more likely to stick around.
Here are a few tips to improve your onboarding process:
- Send your new customer a warm welcome email
- Learn your customers’ needs by anticipating what questions or concerns they might have
- Reach out to your customers to see if they are enjoying your products or services
- Be available at all times
- Use professional office space where customers can visit your business, such as a virtual office provided by B2B HQ (if you’re running your startup without a physical office, you definitely need dedicated office space to polish your business image and impress first-time customers).
3. Reward loyal customers
Studies repeatedly show that customers are greedy for rewards, and these rewards make them more loyal to the business (as they feel more appreciated).
There are countless ways to reward your customers:
- Partner up with another business to offer gifts of reciprocal discounts
- Give away free items with multiple purchases
- Reward introductions and referrals
- Write a thank-you note to show your appreciation (you can also write a hand-written note on a pretty card for your best customers)
- Offer discounts and limited-time offers
- Create a loyalty card scheme
- Give your loyal customers something exclusive (e.g., access to a new product that hasn’t officially launched to anyone else)
- Invite your customers to a special event
- Hold regular prize draws
- Name products after your most loyal customers
- Share your customers’ stories
- Pick your best customers for an upgrade (e.g., an upgrade on shipping, product or service)
- Educate them to get the best of your products or services (e.g., inviting them to attend a free webinar)
- Reward the 2nd (50th, 100th, the first, whatever) customer of the day
4. Provide impeccable customer service
Great customer service is all about making your customer happy, and happy customers lead to more profit, growth, and improved brand reputation.
Furthermore, excellent customer service provides value, creates endorsements, improves company culture, and prevents employee turnover and business failure.
However, making great customer service viable at an early stage of your startup (when you have just a few customers) may seem a task that is not worth prioritising – especially because you may not have the budget to hire a dedicated customer service team. You may want to tackle other operations and processes that require more focus.
Nevertheless, success is about maximising the value and outcome of every customer interaction (since customers are at the heart of what you do).
Even if you’re still learning the ropes of entrepreneurship while running a home-based business, handling business calls yourself won’t help you achieve fast growth.
Providing an ordinary mobile phone number to your customers to reach out to you will make you look unprofessional (not to mention that background noise can seriously hinder communication with your customers. Or, you could miss out on important business calls).
Therefore, crafting an excellent, personalised customer service experience is a critical success factor for early-stage startups. A great way to deliver professional (and ridiculously affordable) customer service is getting a virtual receptionist who provides 24/7 coverage.
5. Build a brand community
A brand community is a group of customers brought together by their common interest in a company’s products or services.
Thanks to the explosion of digital technologies, successful companies are building communities around their brands to improve customer loyalty (rather than communicating with them via advertising).
Especially after the Covid-19 outbreak, a new generation of consumers has emerged. Today, customers have different values. They are willing to build human connections while being part of a brand community.
For this reason, building community around your brand should be a key element of your brand building strategy.
Here are a few tips for building a strong brand community:
- Create educational blog and email content
- Build a value-driven presence on social media
- Develop a social mission and display your social mission wherever you can
- Let your customers be part of your brand development
- Create a brand ambassador program and put your brand’s message in the hands of influencers
- Send newsletters
- Network face-to-face (invite your customers to attend conferences, workshops, meetups, etc.)
Conclusion: Customer retention can make or break your business.
Although bringing new customers to your business is rewarding, remember that the difference between companies that thrive and those that don’t is customer retention. The more customers you can retain, the more likely you are to grow a wildly successful business.
If you’re looking to attract and keep more customers, B2B HQ is what your business needs to stay ahead of the pack. We can provide you with all the necessary tools (professional office space and a myriad of essential services) to help you get new customers and make them stick around. Do not hesitate to contact us! We’d love to hear from you!