How to Improve Customer Retention

Customer retention is absolutely essential to growing a business.

Customer retention is one of the most underused terms in business today, because more and more, businesses seem to prefer high volume/high turnaround to paying for the health care of a properly trained customer service representative.

It's a tragedy, but for those businesses who want an actual reputation and a shot at being more than fly-by-night locals, you need customers for life.

1. There is a customer service metric!

   First step to customer retention: Learn the customer retention metric.

   (Total number of customers - number of repeat customers) divided by total number of customers

   This is a number to be calculated quarterly and increased. Don't worry about what the first number is; just use that as your benchmark, and look to increase it every quarter after.

2. Start keeping ways to contact your customer base electronically.

   Once you have your benchmark, you want to start actions that your current customers will appreciate.

   The rule of thumb is -- contact them at all NEW NEWS.

   If you don't already, make sure you start gathering an email and phone list of your customers. This data is also absolutely essential if you ever hope to sell your business -- these names is what a buyer pays you for!

3. Contact your customer base with all new news.

   Keeping with the theme of NEW NEWS, send out updates for all happenings to your customer base. These events can be events within your business, or just a Merry Christmas kind of thing.

   Point is, the more you become a part of people's regular lives, the more top-of-mind you are when they need what you offer. Also, research says that it takes 12 instances for an ad to really stick in a consumer's head, so this is also a way to whittle down that number. Make sure your logo and contact information is across the top and bottom of every email sent.

4. Train a good customer service rep.

   Train a competant customer service representative.

   I used to work for this guy, small business, CD reproduction, that actually told us to hang up on disgruntled customers. Needless to say, that business is in disarray, and one or more of his four kids is in danger of not going to college. Drastic, but true.

   Training a naturally nice person on the rules of your business and having them, at the very least, as a comforting voice on the other end of the phone, will do wonders for your reputation within the community, and your customer retention will skyrocket.

   Which means your profits will skyrocket.