Shape Your Business logo
Follow Us:

How to Retain Good Customers

Tuesday, March 08, 2011   By Mike Reddy


When times get tough, the cost of sales goes up. Potential customers are less likely to want to talk to a salesperson because they are in a fiscally conservative mindset. In recent months you may have heard the phrase “retention is the new acquisition”. This simply means you're doing well if you can hold onto your customers. And of those, make sure you hold on tightest to the best ones. But how?

The best customers are the ones that appreciate your skills and service and are happy to pay willingly and promptly. It also helps if they have a recurring need for your services; most successful businesses build a base of regulars to guarantee cash flow and bring predictability to business plans.

The best way to retain good customers is not to offer them a better price each time (although discounts for repeat business are always welcome). If your strongest connection is only price, you leave yourself open to a competitor undercutting you - say with a loss-leading marketing drive - and there is little else to hold back customers from trying someone else.

The boom in loyalty programs that began in the airline business and has spread to nearly every gift store, supermarket and gym shows the importance of creating a database of regular customers that you can target with promotions. However, these require some investment in marketing resources to run and maintain. Loyalty programs themselves are not the best way to hold onto your valued customers.

Instead offer your best customers better service, something that is clearly beyond their expectations for the price they are paying. If you can meet their needs 110% then your customers will feel greater loyalty towards your business and be much less likely to consider alternative suppliers.

Better service starts with doing what you have said you are going to do. Business shouldn't be taken casually. Every deadline you meet and target you hit reinforces the trust with your customer and strengthens the relationship.

Another relationship-building tactic is to communicate regularly with your top customers. Regular contact through email newsletters, for example, tells your customers you are actively working in their interests and keeping up with the pace of change.

And don't forget to give your customers a chance to give feedback. Showing them you can listen and respond to their opinions makes them feel valuable to you.

Even if they feel you charge a slightly higher price, the value of better service ultimately means greater efficiency for the customer, and that has a clear financial value. Customers who shop around find it is much easier to compare prices than levels of service.

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.