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What Do We Mean By Customer Retention And Why It Matters
Customer retention refers to the ability of a business to keep its customers over a period. It is an indicator of how well your products or services meet customer expectations and how effectively you nurture customer relationships. High customer retention rates often translate to increased profitability, as acquiring new customers can be five times more expensive than retaining existing ones. So, retaining customers is generally more cost-effective than acquiring new ones. Marketing and sales efforts to attract new customers often involve significant expenditures. Also, when a customer is satisfied, they are likely to recommend your business to others, generating organic growth. In addition, loyal customers tend to spend more over time, thereby increasing their lifetime value to the business. You will often notice that loyal customers tend to provide valuable feedback that can help improve your products and services.Strategies to Improve Customer Retention
Understand Your Customers
The first step to improving customer retention is to truly understand your customers. Knowing who they are, what they want, and how they behave is crucial. Richard Branson, founder of the Virgin Group, famously said, “The key is to set realistic customer expectations and then not just meet them, but exceed them – preferably in unexpected and helpful ways.” This means going beyond basic demographics and digging deeper into psychographics, behaviours, and preferences.Deliver Exceptional Customer Service
Exceptional customer service is probably the most important strategy to retain customers effectively. According to Jeff Bezos, founder of Amazon, “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.” In Nigeria, word-of-mouth and personal recommendations carry significant weight. So, ensuring every customer interaction is positive can set your business apart. Train your staff to be courteous, knowledgeable, and responsive. According to a study by the Rockefeller Corporation, 68% of customers leave because they feel the business does not care about them. Therefore, making every customer feel valued and important is essential. Tony Hsieh, the late CEO of Zappos, built his company’s reputation on stellar customer service, famously stating, “Customer service shouldn’t just be a department, it should be the entire company.”Offer Quality Products and Services
Ultimately, the quality of your products and services plays a crucial role in retaining customers. One of the major fears that most Nigerians have has to do with quality. There is an unchecked dominance of fake products in the Nigerian market if you can distinguish your business as one that deals only in quality and original products, you’ll earn a reputation and loyal customer base for it. Remember, as the saying goes, “A satisfied customer is the best business strategy of all.” So, ensure that your offerings consistently meet or exceed customer expectations. This involves continuous quality checks, innovation, and responsiveness to market trends.Provide Personalized Customer Experience
Humans generally do not like to be treated as part of a group with same interests and tastes, but, as individuals with different interests and tastes. You must recognize that customers expect businesses to understand their individual needs and preferences. A study by Epsilon found that 80% of consumers are more likely to do business with a company that offers personalized experiences. So, find ways to gather important information about your customers and use that information to personalize interactions with them. Doing this can significantly improve your retention rates. You can leverage various tech tools like WhatsApp, SMS, and Email Marketing to send personalized messages, recommend products based on past purchases, and tailor marketing messages to individual customers.Build a Strong Relationship with Your Customers
Building strong, lasting relationships with your customers goes beyond transactions. It’s about creating a connection that makes customers feel part of your brand’s journey. Personal touches, like handwritten thank-you notes, follow-up calls, and personalized emails, can go a long way in building these relationships. Retaining customers is not just about keeping them from leaving; it’s about creating a relationship that makes them want to stay.Sign up for the Connect Nigeria daily newsletter
Educate Your Customers
Providing your customers with education on how to get the most out of your products or services can improve their experience and loyalty. In addition to providing them with education about your products or services, provide them also with education on other important subjects related to what your brand is about. So, let’s say you’re a fashion designer, don’t just talk about how to order your clothes etc, also teach your customers how to choose the right fabrics, style and take care of their fabrics. Provide resources such as tutorials, webinars, and how-to guides. This not only helps customers use your products more effectively but also positions your brand as a valuable resource. Chioma Ifeanyi-Eze is one Nigerian entrepreneur who has mastered this strategy. Through her Facebook page, she has come to earn a reputation. Every morning, her followers wake up to series of educational posts on business, especially what she’s doing and her experiences doing them.Offer Convenience and Accessibility
Convenience is a significant factor in customer retention, especially in today’s fast-paced world. Make it easy for customers to do business with you. Ensure that your business processes are streamlined and customer-friendly. This includes offering multiple payment options, user-friendly websites, and efficient delivery services.Build a Community
Creating a community around your brand can significantly boost loyalty and retention. This can be done through social media groups such as Facebook, WhatsApp, and Telegram. You can also organise physical customer forums or regular meetups. A sense of belonging can make customers more likely to stay with your brand. For instance, when GTBank launched its student account – GTCrea8, it built a community around it, organising events and providing resources to student members. This helped sell the product to Nigerian students.Engage with Customers on Social Media
Social media has evolved over the past decade. Social Media platforms have grown beyond just social networks into powerful business tools. Engaging with customers on these platforms can help build a large following around your brand. Don’t just set up social media pages and accounts and abandon them, regularly post content that resonates with your audience. While you post, also take time to respond to comments and messages promptly. Social media can be a valuable channel for you to gather feedback for your business. To use social media effectively for your business, I will recommend you get training on it or hire an experienced social media manager.Create a Loyalty Program
Loyalty programs can be highly effective in encouraging repeat business. These can include discounts, special offers, or points that can be redeemed for products or services. By rewarding your customers for their continued patronage, you not only incentivize them to return but also show appreciation for their loyalty. Consider the success of companies like Shoprite, which has successfully implemented loyalty programs to keep customers coming back.Solicit and Act on Feedback
Customer feedback is invaluable. It provides direct insights into what you’re doing right and where you need to improve. Regularly seeking and acting on customer feedback shows that you value their opinions and are committed to improving their experience. Also, make it easy and okay for customers to provide feedback to you. Find ways to use surveys, reviews, and direct feedback to identify areas of improvement and make necessary changes. This can significantly enhance loyalty. Steve Jobs, co-founder of Apple, believed that “getting closer than ever to your customers” was essential to innovation and customer satisfaction.Monitor and Reward Customer Engagement
Recognize and reward customers who engage with your brand. This can be through social media shout-outs, loyalty points, or exclusive offers. Acknowledging customer engagement can make customers feel valued and appreciated, encouraging them to continue their relationship with your brand.Stay Transparent and Trustworthy
Transparency builds trust, and trust is a foundational element of customer retention. Be honest and transparent about your products, business practices, pricing, and policies. If you make a mistake, own up to it and rectify it promptly. As Howard Schultz, former CEO of Starbucks, said, “Trust is the foundation of every relationship.” This also includes business relationships. When customers trust your brand, they are more likely to remain loyal. This strategy can be particularly important in Nigeria, where consumers are increasingly suspicious and value honesty and integrity in business.Register to attend the CN Business Mixer
Concluding Thoughts
Retaining customers is just as crucial, if not more so, than acquiring new ones. Improving customer retention is essential for the continued growth of your business. This post has highlighted some strategies that you could start implementing today to build a loyal customer base that not only supports your business but also advocates for it.Got a suggestion? Contact us: editor@connectnigeria.com
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