Why Customer Retention is Important?
If you run a business you know how hard is to bring in a new customer. You have to rely on advertisement and existing customer valuable feedbacks to grow your customer base. While every business owner plans to bring in new customers a highly knowledge one will work on ways to retain the existing customer. It is far cheaper than bring in new one.
Why a business has to concentrate on retaining customer than bring in new one?
As per stats it’s 5 times costly to bring in a new customer than retaining the existing one. A successful business will be profitable if it can retain their customer base. Customer retention is crucial in this fast paced world. Some call it art and some call it science, But I truly believe it’s an emotion. As a business we need to tweak the right emotions on the customers to retain them.
Key Factors for Business Growth
The key factor for any business to grow is determined by the 2 main non tangible factors trust and customer satisfaction.
Let me share my real time experience on these. The first key factor is Trust. 7 years back I was in Ohio, US and wanted to buy a digital camera as there was plans to go on a vacation on the upcoming weekend. Since ordering online will take time to deliver. I was also not sure if the camera gets delivered before the start of my trip. I decided to buy it from BestBuy retail store. The obvious question here is, Though there are lot of electronic stores why did I choose best buy?. The simple and straight answer is Trust. The store promises the buyer they are offering the product for the best price. And if at all we prove the same product is available somewhere cheaper they will match slash the price to match it. I went in bought a Sony 12 megapixel digital camera after testing out all the models in my price range. The trust that the customer gets is that he is buying an item for a price nobody else can offer. This is what makes a customer to return in the future as well. After that purchase and due to the trust I had on BestBuy I later bought 2 LED TVs, a GPS, iPad and Pen drives. That is the power of trust.
The second key factor is the customer satisfaction. Again let me share a personal story. Before 5 Years in Plainsboro, NJ. I entered into a super market on a special day. It was my spouse birthday and directly went to the pantry section and saw the cakes on the display. I chose one of them and asked the baker to write the birthday wishes too. She asked my favorite color and wrote the message. She packed it neatly in a box and handed it over to me. I took it with joy, billed it and marched to the exit door. Somehow I lost my balance and dropped the cake upside down. I was totally disappointed how our carelessness can turn the moments of joy into moments of agony. I collected the box from the floor and opened it to find out that the cake was totally messy. I went back to the pantry and met the same bakers and asked if there is another piece of the same cake I bought before. She enquired why am I buying it again. That’s when I explained the fate of the old cake. The point to note here is that since it was my mistake I didn’t ask for a replacement. But the Baker was so kind and she took the cake back and offered me a new one without billing it again. I thanked here so much and that act of kindness flashes me every time I go out to buy a cake for any celebrations. I head straight to same shop again and again for buying cakes.
Any business can flourish only with a returning customer. Trust and Customer satisfaction top my list when it comes to retaining them. As per Pareto principle 80% of business comes from 20% customers. If we have the knowledge to sort that 20% customer and able to retain them any business can be successful.
Know More about Factors that drive Customer Retention
I would like to quote to classic examples of PayTM mall and Amazon for retaining their customers. PayTM does that through cash back offers where as Amazon gives a % off on regular monthly buy outs. Amazon also is a classic example for underpromising and overdeliver. You might have ordered a product from Amazon and delivery time mentioned was 3-4 days at the time of order but you received within 2 days.
Final thoughts: Happy Employees = Happy Customers
Most of the time business overlooks its own employees. They forget that only when employee is happy he/she can keep the clients happy. Business should treat an employee as good and as important as its customer.