Customers are the foundation of business. Attracting and keeping existing customers is a top priority for any business. Ironically, these are also the top challenges most business owners quote once asked what’s holding back their business.
Customer churn rate plays a crucial role in today’s business practices. According to McKinsey, even loyal customers (about 13% of your buyers) are frequently lured by competitors’ attractive offers.
So why do consumers leave? What motivates them to switch, and ultimately abandon a brand they already know and do business with another brand? It’s high time you looked at why your company might lose customers and how to fix that. Here are three common factors that hinder customer retention, and three effective ways to help them stay.
3 Reasons Customers Leave
1. You Don’t See Them as Individuals
Customers may feel you see them as dollar signs, not as individuals with unique needs. The era of customization demands better service.
Research shows that over 40% of consumers will work with a brand again after a customized shopping experience, nearly 50% of consumers will buy a product or service they weren’t initially interested in because of customized recommendations, and 40% of customers spent more than they intended to because of customized marketing and communication.
However, to understand how to prevent customers from leaving, you must take customization to the next level. Thus, it’s essential to note that customized marketing and communication shouldn’t just happen in email marketing campaigns.
Your contracts, invoices, and any communication with customers must include personalized data and information. Generic mass communication is no longer effective.
It’s not just about using a client’s first and last name, it’s about segmenting your target audience, communicating on the mediums your customers prefer, and making the best possible recommendations based on purchase histories.
2. You Focus on Price, Not Quality
Price is what a consumer pays, and value is what the consumer gets from your products or services. When considering whether to buy a specific product, consumers don’t always choose the cheapest version.
Consumer preferences have nothing to do with price and everything to do with the value your products or services are conveying. Thus, when potential customers say that their buying decision is all about the money, that’s actually the consumer code for “show me the value.”
This is primarily one reason Apple continues to dominate the market with smartphone profits. In the third quarter of 2019, Apple garnered 32% of the global revenue in the mobile industry and 66% of all profit in the handset industry. Consumers buy Apple products because they believe iPhones provide more value, despite their higher price. Thus, one of the primary reasons customers leave your brand could be that you’re focusing too much on price, instead of showing the value your product offers.
3. You Ignore Their Needs
Why bother keeping an eye on your existing customers if there’s a pool of prospective new customers ripe for picking, right? Although there could be a short-term gain in attracting new customers, a strategy that primarily focuses on acquiring new customers instead of keeping current customers will lose in the long run.
Focusing on customer needs is the first step in building customer brand loyalty. Establish a buyer base who frequently chooses your company over competitors, no matter the price. Thus, ignoring your customer needs can hurt your efforts to build a loyal customer base, ultimately hurting your bottom line. After all, it costs seven times to gain new customers than it does to keep existing customers.
Ignoring customer needs hurts your customer retention efforts. Customer retention is a more profitable pursuit than customer acquisition because it enables you to make the most of what you have by ensuring what you have works for you.
3 Reasons Customers Stay
Regardless of the size of a business, consumer loyalty is crucial. Repeat clients spend nearly 67% more than new clients. Also, it’s 7X more expensive to gain new customers than it is to retain customers already doing business with you. Keri Keeling notes that “rather being sucked down the customer happiness rabbit hole, track loyalty. It’s a metric that you can act on and run your business by.” Thus, if you’re looking for ways to make your customers stay, consider implementing these three strategies:
1. You Have Special Offers
Businesses can get caught in offering enticing discounts to new customers, but to make existing customers stay, you must offer them special offers and enticing perks. Thus, special offers and discounts are crucial in making sure that current customers feel valued. It may seem daunting to keep existing customers happy, but offering them special offers and discounts is a simple way to show them you value their worth. Most studies report that special offers and discounts are the top reasons for customer loyalty. That’s because rewarding customer loyalty provides a good customer experience and is beneficial for both brands and their customers, meaning that consumers don’t feel the need to leave your brand and shop around.
If you want your customers to stay and continue doing business with you, your customers must be your top priority. Thus, it’s crucial to conduct customer feedback regularly to make sure that you fully understand what your customer base needs. Doing that will give you the best chance to keep customers in the future.
2. You Know Their Needs
Knowing your customers’ needs and expectations is crucial in ensuring customer happiness and loyalty. If you don’t know your customers’ needs or if you’re indifferent to their expectations, they will switch to your competitors. However, it’s crucial to note that consumers have unique needs and expectations. And thus, assuming what a consumer wants based on previous customers can drive customers away. Thus, it’s essential to have the right tools to help you know who your customer is and their needs and expectations. The more you know who your customers are, the more you’ll understand their needs and expectations and you’ll find the right ways to offer them exceptional customer service.
Knowing your customers’ needs and expectations entails conducting deep research across your niche and asking your clients tons of specific questions. Often, customers aren’t clear regarding what they need or they don’t really know what they need. Understanding customers; needs and expectations results in happy customers, and happy customers are less likely to have reason to leave your business and do business with your competitors.
3. You Meet Their Expectations
One primary reason customers stay is because they know what to expect from their favorite brands. Typically, as a business owner, you want to stand out from your competitors and offer the best customer service or price. However, you must be realistic if there’s a chance that may not deliver on your promises. Because once customer trust is broken, it’s challenging to get it back.
For instance, think about next-day shipping or delivery. High-traffic periods and National holidays can delay next-day delivery, the same way disasters, such as floods, can limit a courier’s ability to meet the delivery date. The best way to avoid these incidents is to avoid building expectations unless you’re sure you’ll deliver.
If a client wants a solution presented in two days but you don’t think it’s possible, don’t lie to them. Tell them it’s impossible to get everything done in two days, but you’ll solve their problem in four days at the latest.
Making sure your customers know what to expect from you means your clients won’t be disappointed by a promise you were unsure you could fulfill. Being honest with your customers tells them what to expect from your brand, which ultimately improves customer trust and improves customer retention.
Customers switch to competitors when they feel you don’t see them as individuals with unique interests and needs. Also, customers may switch to competitors because your brand focuses too much on price, not the value they’re deriving from your products or services. Customers stay when a business offers them special offers and discounts. This makes them feel valued and appreciated. Further, knowing your customers’ needs and expectations can help you improve customer satisfaction, ultimately improving customer retention.
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