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Archive for June, 2011

How good are you at customer retention?

Retaining customers has never been more important than it is today. 

A lot of businesses take pride in being excellent at customer acquisition.  Some business owners even use this as a primary measure of their success.   It’s probably a good time to ask yourself how much time and effort you actually spend in acquiring new customers, formulating marketing strategies, regulating lead generation expenses, finding lead distribution channels, and controlling conversion rates.
 
There’s no doubt that prospect generation is essential in running a business.  But if you think about it, having your best people running around winning new customers does not necessarily differentiate you from your next competitor. They are most likely doing the same things as you – devising new strategies to acquire more customers and converting your existing customers as their own.
 
You have to be wary of just chasing the next best customer.
 
Ask yourself the following:
 
*  Do the people in my company truly understand that their job is to keep existing customers?  Standard customer service isn’t always enough – You have to be certain that your team is dedicated in retaining your existing customers, to help ensure that they continue to do business with you. 
      
If you answered yes, there should be a direct connection between your team’s compensation and the positive or negative outcome of retaining customers – How will they feel the loss if one of your customers cancels their business with you? 

*  Do you have clear-cut retention goals incorporated into your business plan? Have you made these retention goals clear to all your team and how these goals may affect your business if they are not achieved?

*  Do you have a reporting process to determine if your company’s performance meets its goals? Are your managers regularly updated about the company’s performance against the current business plan?
 
Every dollar spent on customer retention generally exceeds the benefits and returns of money spent on acquiring new customers.  This is especially true in today’s challenging economic environment.  However, that’s not to say that you should not invest in customer acquisition as well. 
 
Finally, you need to distinguish the difference between retaining customers and providing customer service.  Customer service is the process of providing your customers’ needs with high levels of competency, efficiency, and customer satisfaction. There is an emphasis on customer satisfaction, which underscores the pleasure to serve rather than being a chore.
 
On the one hand, customer retention is about valuing customer relationships; finding ways to serve them better; or offering something more to ensure their loyalty and satisfaction.
 
How can you enhance the service you’re currently providing your customers?  Do your customers have needs which they haven’t realised they needed? 

If you don’t ask yourself these questions now, you may find your competitors enticing your customers away by fulfilling their needs!

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