Retaining existing customers is far easier and much less costly than acquiring new ones. However, many businesses mistakenly focus on attracting new customers as their primary growth strategy, neglecting the potential of their current customer base. They invest a substantial part of their marketing budget on this activity whilst ignoring the riches available in their current customer base.

As a result, these businesses often become preoccupied with appealing to potential customers they have never interacted with before. But what about their existing customers? Assuming that customers will stay loyal once they’ve made a purchase is a significant oversight. This assumption can be costly and may be the reason you are not keeping customers.

So, how can you ensure that your existing customers continue to make repeat purchases and even better, increase their spending? The key is to keep your current customers happy, loyal, and satisfied with your services. Particularly, it’s essential to focus on the 20 percent of your customer base that generates 80 percent of your sales – this is the Pareto Principle in action.

For example, 80 percent of your stock might come from 20 percent of your suppliers, 80 percent of your sales from 20 percent of your sales team, and 20 percent of your staff could cause 80 percent of your problems, while another 20 percent deliver 80 percent of your productivity – sound familiar?

Once you convert prospects into customers, the goal is to provide such a positive on-going experience that they become enthusiastic advocates for your brand. Frequent interactions are crucial; you want to be top-of-mind when they need your product or service again. This added value distinguishes you from competitors and helps retain your key customers, as it’s easier for competitors to poach your customers than to find new ones.

 

Market surveys in various retail categories show that customers leave a retailer for the following reasons:

– 1 percent: death

– 3 percent: relocation

– 5 percent: buy from a friend

– 9 percent: competitor offers the product/service

– 14 percent: no longer need the product or find it overpriced

– 68 percent: perceived indifference

The largest reason, perceived indifference – did you hear that? This  underscores the importance of good customer service, which involves building relationships through proactive communication. Don’t wait for problems to arise before engaging with your customers. Take steps to prevent perceived indifference.

Here are some actions to enhance customer service and create a competitive advantage:

 

  1. **Consistency**: Ensure your service is reliable and consistently high-quality – measure this
  2. **Ease of Purchase**: Make it straightforward for customers to make their next purchase from you.
  3. **WOW Factor**: Identify what makes people excited to do business with you and share their experiences with others.

 

Sending personalized “thank you” notes is a powerful way to stand out. Less than 2 percent of businesses send written thank-yous. Reflect on your last major purchases – did you receive a thank-you note? Such gestures make customers feel appreciated and more likely to return and recommend your service.

 

Remember, the customer is always right, except when they’re wrong. It’s a myth that you must comply with every customer demand. Be honest and fair. If a customer complains, acknowledge your mistakes and ask how you can rectify the situation. This approach can salvage 95 percent of unhappy customers. When complaints are unreasonable, remain straightforward and discuss what you can do better. This honesty fosters long-term respect.

Treat your top customers, the top 20 percent, with special consideration. Inform them about new products or updates before public announcements. This educates them about your products’ benefits and offers them the chance to purchase or try new items first. Contact customers around significant times, such as anniversaries of their purchases, to ensure satisfaction and offer extended services or warranties.

Surprise your customers with unexpected gifts or gestures. It doesn’t have to be extravagant – the unexpected nature of the gesture creates a positive impact.

Finally, recognize your “moments of truth” in customer service – the critical times when your service makes a lasting impression. Every interaction with a customer is an opportunity to impress and build loyalty.

To find out more about how you can generate repeat and additional profit from your current customers whilst helping them solve their problems contact jeffwilliams@actioncoach.com for more information.

Learn more business secrets in this fascinating video interview