In a previous article, The Easiest (and Cheapest) Way to Boost Retail Sales!, I discussed how getting serious about customer retention is not only the quickest, but it’s easily the most cost effective way to boost your sales.
“Customer retention” is usually defined along these lines; “strategies a business may undertake to reduce customer defections.”
Yeah, I get it; it’s more than a bit vague and certainly open to interpretation.
So let me clear things up a bit. In this article which I’ve written specifically for small business owners, I want to discuss the options available to you for obtaining your current customer’s contact data, so you may reach out to them, establish a solid relationship of trust and mutual respect, and ultimately, get them back into your business to do more business with you.
That’s what I’m going to talk about here.
Think about it…
You work SO hard to get a new customer into your business.
But if she comes in, does some business (or maybe just browses) and leaves again… you’re missing out on a huge opportunity if you don’t make a real, concerted effort to capture her contact data. Without it, you may never see her again.
What a waste!
Remember, as a little as a 5% increase in customer retention can result in as much as a 75% increase annual revenue (Source: Bain & Co).
That’s money you’re leaving on the table.
So let’s talk about customer retention tools and strategies…
1. Social Media
You’re probably not going to believe this, but…
Social media SUCKS as a customer retention / relationship-building platform.
Yes, despite everyone and their dog saying otherwise.
In fact, a recent Forrester Research paper entitled, “Social Relationship Strategies that Work” showed that on Twitter and Facebook, only 2% of the followers of top brands were exposed to their content and an even smaller percentage – a measley .07% – actually engaged with it. That includes posts that are being promoted by the business!
Wow. Talk about underwhelming.
This propelled Nate Elliott, vice president and principal analyst at Forrester, to make this recommendation…
Stop making Facebook the center of your relationship marketing efforts.
And remember… we’re talking “top” brands here.
Top brands have staff dedicated to building their social media profiles, something most of us do not have the luxury of doing. How much poorer, do you think, social media fares for businesses that cannot devote full time staff to building their social media profiles, or cannot pay to promote their content to a wider audience?
And hold on to your hat, because I’m not finished yet. Social media – and in this case I’m referring specifically to Facebook – absolutely bites for a number of other reasons…
- If you are focused on building followers to your social media profiles, you are not building your own business, you are building Facebook’s. And when Facebook changes the rules – like they did after they became a publicly traded company and dramatically reduced the number of people your posts would reach for free – there’s absolutely nothing you can do about it.
- You don’t own your contacts’ data. You can’t take your business’ list of “Likes” and go and market to them on a different platform. If you don’t own your customer’s contact data, you don’t control your business. Period.
- Getting people to “like” your business – especially from a brick and mortar location – is tough. There’s no easy way to do it instantly, so instead, you have to hope that they remember to do it next time they’re online. How often have you liked a business after seeing a “Like Us on Facebook” posted? Probably never. Your customers are no different.
- People “like” all sorts of things on Facebook. The process requires minimal effort and investment, and is often spurred by social acceptance which means in many cases, “likes” do not come from passionate brand advocates, and therefore are not particularly valuable.
Your business should be on Facebook (and possibly a few other platforms). Definitely. But you need to recognize that for most businesses, the effort required to update your fanpage more than a couple of times per week won’t bring you greater results. Your time, as verified by the recent Forrester research, is better focused on other, more productive tasks.
In other words…
The verdict: If you want to encourage your customers to “like” or “follow” you on Facebook or any other social media platform, go ahead and do so…
But only after you have obtained other contact data that’s yours to do with as you like.
Don’t build Facebook’s (or Pinterest’s, or Instagram’s or Twitter’s or whatever) business… build YOUR business.
You can only do that effectively if you own your customer’s contact data.
Listen; it’s SO easy to sucked down the social media rabbit hole. I’ve seen this happen a million times. Which social media platform is hot varies day-to-day, and before you know it, you’re spending large chunks of time updating Facebook, pinning images on Pinterest, searching for new contacts on LinkedIn, sending out “tweets”, updating Instagram and getting very little in return in the way of new business.
Focus on getting your customers’ contact data.
That’s what most important.
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2. Email marketing
Email marketing remains an extremely valuable tool for any small business owner looking to boost customer retention.
On the plus side, it’s affordable (my recommended email newsletter resource, Aweber, costs just $19.99 per month), and when used properly is a fanastic resource for relationship building. Plus, you own your contact’s data, so when you are soliciting email addresses from your cutsomers, you are investing in building your own business, and not Facebook’s or any other social media platform.
On the “cons” side…
- The industry average email open rate is 27% (i.e., the percentage of sent emails that are actually opened and read). That means on average, for every 100 subscribers who receive your newsletter, 73 of them either won’t see it, or don’t read it. Not so good. If you happen to publish an incredible, regular newsletter to raving passionate fans of your business, you might end up with a 40% open rate. Awesome; it still means the majority of subscribers are not reading your emails.
- It takes time and a particular skill-set to put together the sort of email newsletters that enage your audience and facilitate the sort of relationship-building that makes people passionate fans of your brand/business.
The verdict: Because email works very well as a relationship builder, is a medium that people use daily and you own your contacts’ data, it’s well worth doing, provided you commit to doing it well, and publishing consistently.
3. Direct Mail
Yes, people still “do” direct mail.
And it still works.
But it’s too expensive, labor intensive and time consuming for it to be a practical option for most businesses. Plus, most busineses don’t naturally lead to the surrendering of a physical mailing address, and I suspect for most of us, it’s not only overkill – but prying this data from our customers would be a thankless and unrewarding experience.
So unless you own a specialized service business (i.e., dentist, veterinarian, furnace repair, etc), this option probably doesn’t apply to you.
The verdict: Works, but only ideal for a very specific subset of businesses.
4. SMS / Text Message Marketing
SMS / text message marketing – or delivering your messages to your customer’s phones via simple text message – offers a number of unique benefits that makes it an extremely premier customer retention tool for your business.
What are the pros? In a nutshell…
- Amost all your customers have cell phones.
- The majority of them rarely have them out of arm’s reach.
- Most of them use “texting” regularly and are comfortable with the technology.
- Almost all texts are read.
- With a proper service, it’s easy to manage and very affordable.
- It takes seconds to create, send or schedule your messages.
And the “cons?”
Texts are limited by character size (160 in the U.S., 136 in Canada). And while most services (including our own) will allow you to “string” multiple messages together allowing you to expand your message, it’s really to your advantage to deliver your message in as few characters as possible.
In an age where “I’m too busy” is everyone’s favorite excuse, “short and sweet” serves you very well.
While an email might require an investment of 2-10 minutes of your customer’s time a text message, reviewing a text message takes seconds.
This is a huge advantage!
What’s important to recognize too, is that text messages are not supposed to replace communications like email newsletters.
They are not supposed to be long.
Text messages work very well for…
- Brief “calls to action” (i.e., BIG sale this weekend! Up to 50% off. No Rainchecks!)
- Leveraging other channels. In other words, boost your customer’s interest in your other forms of communication that your customers usually don’t see, by drawing their attention to them on one that they do! (i.e., “Make a gorgeous silk wreath for $15. Tomorrow’s email reveals all. Don’t miss it!).
- Leveraging your advertising, by including a mobile “call to action.” For example, suppose your business puts an ad in the local paper advertising a sale you are having. It might say something like, “This weekend only: Come on by and get 20% off our exclusive new fall inventory.”Now you can hope your prospect shows up for the sale this weekend, or you can give them another option by including something like this; “Or, text GIFTS to 41932 to get an instant 20% coupon you can use anytime.” Now they have another reason to stop by, and you have just obtained their contact data so you can reconnect with them, keep your business front and center in their minds, and promote other specials.
What about the practical element of text message marketing – i.e., the “how to” part?
Solutions like the ones we offer are competitively priced (starting at $34.99/month), and are easily managed – either by you, or by a staff member. Plus…
Our service is specifically designed to be accessible, even if you consider yourself a complete “technophobe” and barely know your way around a computer.
Hey – most small business owners spend their days working in their business. Not playing around on the computer. We get that. We built our service for people like you. Not for techies. Not for big companies with IT departments. But for small businesses. Bada-bing, bada-boom.
We offer a free trial (no credit card required) so that you can check the service out, “kick the tires a bit” and for those of you who see the potential but have no time, a fully managed service. No long term contract is required, and you can cancel anytime.
The Bottom Line on Customer Retention
If you’re serious about increasing your revenue, you have to be serious about customer retention. As detailed in my earlier post, not only is it the cheapest way to boost your revenue, it’s by far the easiest way too, and a large majority of business owners have yet to fully capitalize on the opportunity.
No, it’s not sexy or “cutting edge.”
It requires an adjustment in focus, and a consistent, long term approach. It means that from now on, no person, customer, or prospect ever leaves your place of business without a concerted effort being made to obtain some piece of contact data – a cell phone number or email address preferrably.
It means that your staff have to be as diligent as you in this new approach.
Perhaps. But not a big one. A small bit of training. And a whole lot of “stick-to-itiveness”.
There is a payoff, of course.
It works. Gangbusters.
If you make the commitment to work it.
Rating Customer Retention Strategies
So what should you be using in your business? Well, without knowing you or your business I can only make general recommendations. However, for most business a multi-pronged strategy prioritized this way is going to make the most sense…
- SMS / Text message marketing: Why put this in the #1 spot? Sure, we are biased, but text message marketing is affordable, easily managed and requires almost no time… even if you have no computer skills. Well over 90% your customers have phones and up to 99% of all text messages are opened and read. Oh, and you own your customer’s contact data, which means you control your business’ destiny. Hard to argue with that.
- Email marketing: Still very effective and well worth doing. Unlike text messages, there are no limits on how much material can be shared with your subscribers, which means email offers a lot of flexibility for cultivating real dialogue and building relationships. If there’s a downside to email marketing is that in general open rates are dropping, and you will always be struggling to get people to open and read your newsletters. Additionally, creating engaging email newsletters requires you be at least somewhat adept as a copywriter – and even if you are, well written newsletters that engage your audience take work to put together. Yes, you can bang something together every two weeks that highlights a sale you’re having, but this won’t engage your audience and get them opening their emails from you in a hurry. So while email definitely works, it requires a significant commitment of time and effort to do properly. If you are unable to make that commitment, or you don’t have the necessary skills – or can’t assign the job to a suitable employee – there’s probably no point in going down this road.
- Social media: Despite the fact that I regularly beat up on social media, your business probably needs to have some sort of social media presence. What’s important is that you only work on building your audiences here after you have obtained your customers’ contact data first, and that you don’t get swept up in the hype. You can spend all day every day updating your business’ profile on any one of a dozen platforms and end up with relatively little to show for it. For most businesses, maintaining a presence on a few select platforms and updating your presence a few times per week will get you 80% of the benefits. Any more than that and you are wasting your time.
So there you have it.
I hope that helps, and if nothing else, gives you the fodder you need to think about things just a little bit differently, and hopefully, make the necessary adjustments to your current customer retention strategies.
Paul Crane is founder and CEO of Local Text Marketers. His passions include digital and mobile marketing, his German Shepherd dogs Sheba and Nika, motorcycles and playing guitar.