Did you know that attracting new customers is up to five times as expensive as converting your existing users? This is why many small businesses favour customer retention over traditional customer acquisition. What does customer retention involve and how can you use this strategy to grow your small business?
Although most marketing strategies focus on acquiring new customers, small business customer retention focuses on turning first-time shoppers into repeat buyers. Returning customers are often easier to convert into loyal clients. Moreover, they tend to spend more per visit than their newly arrived counterparts. Better still, repeat customers are more likely to spread the word and help generate even more business for you.
Although you likely have a rough idea of how much turnover your business has, there is a customer retention rate formula that can give you deeper insights:
When you have these figures, plug them into the following equation to determine your customer retention baseline:
((E – N) / S) x 100
Note that whatever answer you get is simply your starting point. Below are six time-tested customer retention strategies for small business owners to help you improve this rate over time.
Although everyone likes low prices and great products, shopping is also emotional. This means you should invest some effort into making the buying experience as pleasant as possible – complete with stellar customer service that makes users feel appreciated. Some customers will even pay a premium if they feel your business truly values their needs, wants, and desires.
How do you know what your customers’ wants and desires are? You actively solicit feedback from them. Many small businesses are reluctant to do this – because they lack the resources or because they don’t want to invite negative criticisms. That said, the better you understand users, the easier it becomes to match and exceed their expectations. Even brutal feedback is helpful – provided you take corrective steps to address the underlying problem.
Offering deals and discounts is an effective strategy for getting new users through the door. When done correctly, it can also keep loyal customers coming back for more. This is particularly true when each promotion is personalized and sent via that user’s preferred communication channel (i.e., email versus SMS versus snail mail).
With a loyalty program, you can reward repeat customers for their continued business. Every time older users buy something, they earn points or perks that they can apply to future purchases. At Clover, our POS solutions have the option to use advanced loyalty program management through the Clover App Market to help you get the most out of this conversion-driving strategy.
Many small businesses use their existing customers to spread the word. Some even codify this strategy with referral incentives in which users receive perks and benefits every time they send someone to make a first-time purchase. The beauty of word-of-mouth marketing is that your customers are doing all the heavy lifting. Since the recommendations are coming from them (instead of from an ad), the offer seems more legitimate.
The more payment types you accept, the more sales you’ll make. Choose a POS system that can securely process all payment methods – whether your users prefer paying via credit card, debit card, gift card, cash, mobile wallet, or some combination of the above.
If yours is a brick-and-mortar business, you should also look into contactless payments, since social distancing is now an integral part of the in-store user experience. In fact, many shoppers might avoid your business if too much unnecessary physical contact is involved.
At their core, most customer retention tips are about listening to your users and responding quickly to their needs. Fortunately, there now exists a range of tools to help make this exchange easier to manage. At Clover, for example, our POS systems come with customer engagement capabilities through the Clover App Market to help you automate many of the tips outlined above, including:
To learn how our POS systems can help improve customer retention, save time, and grow sales, schedule a free demo with a Clover Specialist today.
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