One of the best ways to grow your business is to keep your existing customers. Your customer retention rate is an important measure of success since retaining customers costs less than acquiring them and therefore it should become a major component to your company’s bottom line. With this in mind, here are ten techniques with real-life examples from UK companies of how they work in practice.
1. Go the extra mile
Offering something extra is often a good alternative to cutting prices, and it can generate more goodwill, even if it costs you very little. London-based marketing agency Exposure has offices just off Oxford Circus, close to the capital’s main shopping district. It has made use of its own window space to create temporary ‘pop-up shops’ for brands such as Vitamin Water and Kingsmill bread. ‘For us, this was a fairly unique offer that we could tag on to our core marketing programme,’ says CEO Tim Bourne. ‘It was a complete differentiator from other agencies simply because other agencies couldn’t do it.’
2. Boost staff motivation
When customer-facing staff become demotivated, contracts are lost. Charlie Mowat, MD of The Clean Space Partnership, says this is a particular problem in the cleaning industry, which tends to pay low wages and offer scant opportunities for training and development. His solution is to turn employees into franchisees, offering them a cleaning contract in return for a fee (usually around £1,000 to £2,000), which they repay gradually out of their earnings. Mowat claims the cleaners’ hourly wages are around double the industry norm, adding that the franchise model gives workers an increased sense of ownership and self-worth. ‘The attitude of our franchisees is the key to our growth,’ says Mowat. ‘We’ve gone from scratch to £2 million turnover in six years and I put that down to the people on the ground keeping our clients happy.’
3. Keep it fresh… but familiar
Moonpig, which sells customisable greetings cards through its website, relies on the continual development of its product to keep repeat business high. Says founder and chairman Nick Jenkins, ‘We are constantly looking for innovations so that when customers come back there is always something new there. We’ve introduced the ability to upload photos and new ways to write text on the card, for example writing in clouds or on sand.’ But product innovation is only half the story. You also have to figure out what works and make it easy for people to locate it. ‘There’s a balance to strike. Some cards are perennial bestsellers so it’s a case of offering the best of what was there before and something fresh,’ says Jenkins, who has overseen turnover growth of 165 per cent to £20.9 million and a similar sprint in pre-tax profits.
4. Invite complaints
‘If our customers have an experience that doesn’t feel right, I want them to tell us about it so that we can resolve it,’ says Derek Buchanan, CEO of signage and labelling specialist Episys. The concept is simple enough, but the problem is always getting people to complain before they take their business elsewhere. Buchanan’s solution is what he calls the ‘Ever Been Disappointed’ campaign. He sends out packs with ‘happy’ and ‘sad’ cards and pre-paid envelopes so that it’s quick and easy for clients to offer feedback. If the problem is particularly serious, he’ll even get on the phone himself. ‘I don’t want my staff to be scared of making mistakes – the important thing is that when the customer tells you about the mistake, you respond,’ he explains.
5. Remind customers that you’re there
Claire Watt-Smith founded Bobelle, a supplier of eel skin handbags and accessories, in 2007 and quickly expanded from selling on market stalls to wholesaling. She’s a firm believer in frequent communication with customers, sending out newsletters, personalised emails and thank you cards both to individual buyers and the boutiques that stock her goods. ‘If someone has bought a leather handbag, I’ll send them an email or make a courtesy call reminding them to spray leather protector on it,’ says Watt-Smith, adding that with the boutiques, ‘It’s important to listen to them to find out what colours and styles are selling well, so you can tailor the next order to their wishes.’
6. Maintain a human touch
Now that customer service is a discrete business function, often with its own dedicated team, there’s a danger of it becoming over-automated or isolated from the rest of the business. Travel agent Cruise118 has taken steps to prevent this, installing an IT system that recognises callers’ phone numbers and puts them through to the same salesperson, or “customer concierge” as they prefer to call the role, each time – even after they’ve returned from their holiday. ‘Too often, after [travel companies] have made a sale the customer gets palmed off to the administration or customer service team,’ says director James Cole. The personal touch is paying off, with Cruise118 generating sales of roughly £10 million in its first year of business.
7. Lock in clients for longer
Whether you’re selling to consumers or businesses, it pays to structure the deal to encourage customer retention. Moonpig offers users £5 extra credit when they prepay £20 and Cruise118 greets returning holidaymakers with incentives for booking their next break within 28 days, while Episys has moved from working on a project basis to signing up clients to three- or five-year contracts. Buchanan has one word of warning. ‘[Longer] contracts are important but you will not get people to sign up to them unless they feel comfortable with your service,’ he counsels.
8. Monitor feedback
The internet makes it easier to find out what your customers think about you. Charles Tyrwhitt, a retailer of men’s shirts, has signed up to a service that allows users to leave feedback on a third-party website. The idea is that all responses are displayed, both good and bad, giving internet users confidence in the information. It’s also easy to isolate and deal with critical comments. Founder Nick Wheeler says the service has increased conversion rates by a factor of three and boosted repeat orders fivefold. An even simpler way of collecting feedback is through net promoter scores (NPS). Popular in the US with companies such as General Electric and American Express, the NPS metric is based on asking customers how likely they are to recommend you on a scale of zero to ten. Dominic Monkhouse, UK MD of IT services company Peer 1, which uses the system, says, ‘It’s always the nines and tens that stay around and spend more money. We find that managing out the fours and fives actually improves our customer retention in the long term. The unhappy customer is typically heavy work, and often has a misunderstanding of the service you provide.’
9. Offer good after-sales support
Stephen Clarke, MD of phone-based notification service Truancy Call, says the company provides clients with phone, email and online support. For him, having a customer relationship management (CRM) system in place has been vital to make this effective: ‘When a company makes an after-sales call without the support of a CRM system, they lack knowledge about the history of the customer, which could be crucial to maintaining good relations and retaining their business.’ After-sales support is not only important for these reasons – it also provides opportunities for cross-selling and collecting feedback on how products could be improved, observes Clarke.
10. Be your own competitor
Your customers will often want to try something new – but there’s no reason why you can’t be the one to offer it. Cruise118 has only been trading for 12 months, but has already launched three sub-brands: SailFromUK.com, AlaskaOnly.com and SixStarCruises.com. The idea is to capitalise on niches of the cruise market, and encourage customers who have been on one cruise with the company to book again under a different brand. ‘When customers request information about SixStarCruises, for example, we’ll send them a letter with the SixStarCruises letterhead but introduce them to the Cruise118 group, mentioning the other brands as well,’ says Cole. ‘Whichever brand they book under, there is the same ethos in terms of customer service.’
