Main Idea
Are your customers loyal? Do they come back to your business time and again? If not, why not? What measures do you have in place to track client retention?
Expansion of Idea
Increasing the number of times a customer chooses to deal with you is an important factor to increase your profitability. Some argue it’s the most important factor. According to Frederick Reichheld (author of The Loyalty Effect), a 5% increase in retention (of the right customers) can produce as much as 125% increase in profit!
How do you retain customers? If you can deal with them on a frequent basis, it is significantly easier to retain them as customers. You have an ongoing connection. Too often, we ignore our existing customers for the new customer. When we focus on our key customers and their true needs, we will find additional ways to serve them. It may not always be a sale, but keeping the constant contact will help sales in the future. This may require a little creativity. It also may cost a little. However, you can compare that cost with the cost of acquiring a new customer. Which is cheaper? The hidden costs of customer turn can get fairly big. Part of your marketing budget should be dedicated to increasing customer transaction frequency. This is probably the part that will pay off immediately.
Suggested Areas to Start
Get a baseline on how often customers deal with your organization.
Compare a loyal customer with one that does not deal with you as often. Brainstorm with your team on how to improve the connections with the customer that deals with you less frequently.
Get feedback from your customers regularly.
Pick one customer and try to improve your personal connection.