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10 Customer Retention Strategies For Small Businesses

Marketing a small business can be tough, and expensive. However, a lot of that expense is in finding new customers – retaining them is much cheaper. So, as a small business owner with a limited budget, it makes sound financial sense to keep as many clients as you possibly can. Bear in mind that many companies of all sizes lose a lot of customers every year. The average loss is around 20 percent, but you can quadruple that figure in particular sectors.


Marketing a small business can be tough, and expensive. However, a lot of that expense is in finding new customers – retaining them is much cheaper. So, as a small business owner with a limited budget, it makes sound financial sense to keep as many clients as you possibly can. Bear in mind that many companies of all sizes lose a lot of customers every year. The average loss is around 20 percent, but you can quadruple that figure in particular sectors. If this builds up over time, you can see how easy it is for business growth to slow – and even reverse. It is essential, then, to look into better ways of keeping your customers. Here are ten strategies for you to explore – so take a look and see if you can fit them into your business planning.

1. Embrace complaints

Customer complaints can be tough to deal with – but they will happen. Often, a business will be judged on how they handle those complaints rather than the original issue itself. So, to get started with your retention strategy, look into ways you can make your complaint response a lot better. You should also try and find a system to find complaints, as it is a well-known fact that many unhappy customers will stay silent. If you can reach out to them before they go home and brood on the incident, it might just give you a second chance. Just because a customer doesn’t tell you about a bad experience doesn’t mean they don’t occur. And, there is a strong possibility that they will mention it to others in their social circles. That means your customer base could dwindle, and you end up losing more than just one client form one poor experience.

2. Plug the leaks

Take a good luck at your customer service and identify areas that are causing you to leak customers. All companies will lose some, of course – it’s part of the business landscape. But, the simple fact is that after spending so much time and money building up core support, many companies become complacent. They let things slip, and before they know it, their customers start to go elsewhere. It means they then have to refocus their efforts – and money – into finding new clients again. A thorough customer service audit every month will be a good step towards identifying where your standards are slipping.

3. Understand the customer’s value

All clients have a lifetime value. If they buy one product from your store, say, then that figure won’t amount to much. But, if you keep getting repeat business from that person over several weeks, months and years, it’s easy to see the value of retaining them. And, it will give you a good indication of the amount you can spend to keep them – and still maintain a profit. A good way of working out customer value is to introduce loyalty cards or programs. We’ll go into that a little later, but in essence, it has a lot of benefits. It can give you a clear picture of your customer’s buying habits so that you can make more accurate estimates of their lifetime value.

4. Start promoting aftersales

Aftersales are a great way to get more from each customer, and also to keep that vital relationship going. Let’s say you are a stone flooring firm. You sell a set of tiles for a kitchen floor, and the customer pays you to fit them. It might seem like the end of the transaction, but if you can get them on an aftercare or maintenance plan, it will give you far more opportunities. You will end up back in your customer’s house a year or so after the sale to professionally clean the tiles. By that stage, they might be thinking of upgrading their bathroom floor – and you will be on hand to offer your services. Marketing and advertising are all about tiny reminders and simple ways of keeping at the forefront of your customer’s minds. As a small business, you don’t have the benefit of billboard and TV ads, so this aftersales technique is a clever way to keep yourself in focus.

5. Have principles

The modern consumer has many different choices. And, people are beginning to be a lot more critical when it comes to choosing the companies they buy from or use. A good example would be the rise in prominence of green businesses. With so much focus on climate change, plenty of consumers are selecting eco-friendly firms. It’s these types of principles that can make you stand out from the competition. Your respect for the environment is something you share with your customers. Played right, it should lead to a longer-term relationship.

6. Reach out

Reaching out to your customers on a regular basis will help you stay at the forefront of their minds. There are a few options available. After sales calls work a treat, just to check up on their satisfaction levels. And, of course, you can use email to send out newsletters and special offers based on past purchases. According to this info from Market Motive, email marketing can help you retain customers. And, it can help build up your customer’s lifetime value. It is a valuable tool that is often forgotten by many small businesses – avoid including your company within their ranks.

7. Create a customer calendar

Of course, reaching out is all well and good. But when should you contact your customers? We’ve already mentioned after sales calls and letters. But, you can also send things like birthday or seasonal cards, event invitations, and pre-sales offers. Not only will you get a good response, but people will be happy that they are in your thoughts. It makes them feel valued and reinforces those reasons why they chose to do business with you in the first place. So, try creating a customer calendar. Highlight special dates, and use it in combination with your marketing to get the best results.

8. Train your employees

All employees who come into contact with customers need the right training. Each of them represents your business, and carelessness or a bad attitude is going to cost you, clients. There is no such thing as perfect customer service, of course. But, with training, you will be able to bring your clients up to speed with your expectations and create a level of standards. There are a few basics of customer service that work well for retention. Immediate responses from emails or phone calls is a good place to start. You also have to deliver what you promise – every time. Finally, use your small business status as an advantage. Treat your customers like friends rather than clients. It’s something they won’t get from your bigger, corporate competitors.

9. Loyalty programs

There is a simple reason why big superstores and retailers offer customers loyalty cards. It’s because they work. Once people start getting rewards for spending money, they are far more likely to return – and the results can be astonishing. Not only can it give you loyalty from customers, but you can also use these programs to find out more about their shopping habits. It provides you with an enormous insight into the products they like, for example, or the rate at which they buy them. So, you can then use this critical info to design an attractive package to encourage them to return time and time again. Loyalty programs don’t have to mean cards, though. You can track each customer and reward them for every year they have been shopping with you, for example. Or, you can offer special discounts after they have spent a certain amount at your store or on your services. There’s a lot you can do – and the only thing stopping you is the limits to your creativity.

10. Measure everything

Our final point is a critical one that you can’t ignore. You won’t know how successful your new methods are unless you have a way of measuring them. You will need to define your retention rate – for each week, month, or year. You can do this in several different ways, but the simplest method is as follows. Take the number of customers you have served by the end of the specified period. Work out the number of new customers you have picked up, and subtract it from your original number. Finally, divide the result by the number of clients you started with. That should give you a percentage of the people that are still using your services. Once you have that figure, it will be easy to see where your new improvements are working.

As you can see, there are many different ways that can help you to improve your customer retention rates. Try putting the into action for your business, and with a little luck, you should start seeing positive results. Let us know your thoughts in the comments section below, and feel free to leave any tips if you are willing to share!

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