The importance of customer retention for the growth of small businesses.
In a market crowded with numerous companies offering similar products or services, customer loyalty is a precious asset. It is especially valuable for small businesses trying to pick their way through the competition. Loyal customers provide them with a chance of having a stable revenue as well as leveling up the business reputation.
According to research by Bain & Company, a five-percent increase in customer retention provokes an increase in profits of up to 95%. And if we add the fact that loyal customers spend 33% more than new ones, it’s not surprising that small businesses commonly focus on keeping existing customers instead of attracting new ones.
However, long-term customer loyalty is not easy to achieve, and your customers’ behavior is directly affected by the way you treat them. Apart from the price and quality of your product or service, your customer service and support system play an important role in keeping customers loyalty. Hence, it’s not surprising that poor customer service is the main reason for 66% of customers to switch brands.
So, what exactly should you do to stop your customers from leaving? And why is customer service crucial in this process?
Customer Retention And Customer Service: The Value Of Loyalty
Customers build their trust through familiarity, comfort, and convenience that your company may offer. This means that current market conditions go way beyond the traditional sale of goods.
Practically, it’s not just about product and services but about making your customers feel appreciated and special. Your customer service may be the number one factor in the process of making this connection.
What Happens If Customer Service Fails To Deliver Great Results?
Simply put, every bad decision made in customer service may dramatically jeopardize your customers’ loyalty. If they start to doubt the quality of products, services, and information that your employees provide, they won’t feel safe.
According to Brainsins, companies lose 71% of customers due to poor customer service. And this may lead to a large number of issues, including:
- A major financial loss
- A decrease in the market share
- Weakened business reputation
- Demotivation of employees
How To Manage Customer Service To Provide Higher Customer Retention Rate
Well-managed customer service is a starting point in the process of gaining the trust of your customers. Only if you provide a quality support system, your customers will feel safe. This means that, apart from accurate information and high-quality products and services, good customer care should also be based on the following aspects.
#1 Professional customer support agents
Professional customer support agents should be able to build a friendly environment that will let the customers open up about their issues. Not only should the agents have easy access to an updated knowledge base to provide the right answer, but they should also be trained to deal with all types of problems.
And with the ever-growing network of IT solutions and different HR applications, this process is significantly simplified. Not only can your agents learn online, using software for employee training, but they can also learn whenever and wherever they want, using their mobile devices.
#2 Real-time interaction based on clear and precise information
According to the Huffington Post, 84% of customers feel frustrated when agents don’t have the information they need. To make a team of great support agents, it’s necessary to have them learn and pass relevant tests from online training software or another type of training course.
However, that’s just the beginning of your customer-oriented journey. You also should provide your agents with accurate insights and access to all sectors of the company. This way, if they can’t fix the problem on their own, they will be able to quickly redirect the customers to the relevant representatives.
#3 Personalized approach to each customer
Did you know that 68% of customers churn because they think you have an indifferent approach to them? The truth is, a generic and robotized attitude lacking friendliness is what can make your customers leave in no time. Rather than having a rigid system using automated messages people want to talk to a real person and feel understood.
They’ll certainly feel more relaxed and appreciated if they know that someone is solving their problems and demonstrating empathy regarding their issues. You can create this effect in numerous ways:
- having a pro-active role in your communication
- addressing them using their name during the conversation
- having a history of conversations with customers to get to know their background with your business quicker
- getting informed if they’ve overcome issues before
Last but not least, an appropriate support tool is an essential aspect of customer communication. This means that you should think thoroughly about the best way of providing a real-time response to your customers. Keep in mind that 77% of potential customers won’t purchase your product if you don’t offer live chat support.
Although call centers have been a popular way of interaction for a long time, live chat support software has taken over as the most popular and least frustrating means of communication.
Why Should You Focus On Customer Retention If You Run A Small Business?
When it comes to efficient yet affordable ways of growing business, customer retention brings some major benefits. On the one hand, nurturing your relationship with loyal customers lets you build an even more profound connection, while, on the other hand, having a network of customers that rely on you can only help improve your reputation.
Not only is it less expensive to keep a customer than to acquire a new customer but it also leads to an increased return on investment – loyal customers on average tend to spend more than the new ones. Moreover, customer retention can also lead to indirect customer acquisition since the satisfied customers will spread the word about your brand, attracting new prospects. Finally, customer retention doesn’t require dramatic investments like customer acquisition, since the only additional costs you’ll have are the costs of reliable software for employee training and a good live chat support system.
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