A large client base is the backbone of any successful business. This is especially true for small businesses, where the costs involved for winning a new customer makes customer retention extremely important.
It costs less to keep your current customers happy than to gain new ones.
This is not too different from the traditional way most small Indian businesses have maintained relationships with clients. For instance, most residents of Delhi would likely shop for wedding saris at a designated store in Chandni Chowk as a family tradition.
However, the current small business scenario comprises a fairly large number of tech-savvy companies, serving diverse Indian and global clientele. It calls for a more sophisticated and contemporary customer retention approach.
Let us look at five important ways in which small Indian businesses can retain clients for longer terms.
5 customer retention strategies
The importance of customer retention cannot be stressed enough. Here are five practical things you can do to keep your customers coming back.
- Learn the real value of each customer.
- Give them something valuable.
- A customer calendar is in order.
- Watch out for cues.
- Customise your offers for the customers.
There is no need to do all of these at once — select one or two methods to begin with.
1. Learn the real value of each customer
The value of a customer lies not in a single business transaction, but in the combined value of transactions made by them over weeks, months and years. Every rupee that you spend on rewarding your loyal customers will be money well spent, as it ensures a long-term income stream.
Something like a loyalty card that entitles clients to certain benefits on their purchases will not only make them happy but will also encourage a return visit.
Loyalty cards are also a great way of obtaining information about their buying habits, enabling small businesses to make a fair assessment of each customer’s long-term value. Some businesses even offer two tiers of loyalty benefits, with the higher tier providing the greatest savings for the most frequent customers.
2. Give them something valuable
In order for small businesses to ensure that their websites and apps don’t become a magnet for one-time visitors, they have to find ways to engage with them. That can only happen if the business provides value to their prospects and customers.
A real estate development company, for example, could provide a precise geographical overview of their project to potential clients visiting their website for information. An automobile dealer could have an EMI (Equated Monthly Instalment) calculator or a comparative price chart to help prospects and customers make informed decisions.
3. A customer calendar is in order
Another way of retaining customers is by reaching out to them in a manner that helps create an emotional bond.
Having all the important dates pertaining to your clients readily available in a customer calendar, makes it possible to send them:
- Cards on their birthdays and other important occasions
- Invitations and passes to special events
This will help customers feel privileged and special. As much as the quality of the products and services offered to customers, it’s the way you make them feel that will decide whether they stay or move their business elsewhere.
4. Watch out for cues
One way to ensure that no customer ever leaves is to watch out for cues that they are thinking about going somewhere else. One can discern a pattern from things like:
- Erratic purchases
- An increase in the number of customer service enquiries, complaints or returns
- Delay in making payments
There are usually important reasons for a loyal client to act that way. The best approach is to track such incidents of behaviour, identify their reasons and provide prompt redress.
Every so often small businesses overlook issues that matter a great deal to customers on account of their stretched resources. This needs to be guarded against at all costs.
5. Customise your offers for the customers
This is one place where it is easier for a small business to outperform large competitors when it comes to retaining customers. A small business is in a much better position to understand their smaller client base. They can use this knowledge to make special offers that best meet their customer’s requirements.
In an era where business analytics have come of age, there is every reason to tailor your offers.
Customer Relationship Management (CRM) tools can help small businesses study and analyse their customer’s buying history and come up with offers they will lap up.
Importance of customer retention in summary
For small businesses to do well, it is important that they hold on to their existing clientele.
While Indian small businesses have traditionally been great at customer retention, the highly competitive environment of the present times requires them to adopt a strategic approach. They can do this by:
- Recognising the long-term value of each customer
- Using technology wisely
- Keeping track of events of interest to important clients
- Watching out for cues that might indicate a client is preparing to leave
- Customising offers for the most valuable clients
Using these strategies will ensure both stability of revenue and the chances of growth, thanks to the references provided by a loyal clientele.