Bringing in new customers is hard,
but losing them is easy (and costly).
That’s why customer retention is critical.
The difference between a business that sustainably grows long-term, and one that flames out and dies, often comes down to just three words.
CUSTOMER LIFETIME VALUE
Customer lifetime value (CLV) represents the total dollar amount that a customer is worth to your business, taking into account their purchases from the first day they buy from you until their very last transaction. Customer lifetime value is a massively powerful metric, and here’s why: tiny increases in CLV can lead to huge gains in overall revenue. If your customers pay you $50 per month, and the average customer stays with you for 10 months, then your average CLV is $500.
With 1,000 customers, simply increasing that average to 12 months — just 20% — would add $100,000 in revenue to your business. It’s pretty clear that customer retention — the things your business does to keep your customers from leaving — can pay off in a big way.
Keeping Customers Happy
As Bill Price, Amazon’s first VP of Global Customer Service, says: “customer satisfaction is everything.” If you can keep your customers happy, you will keep your customers.
Most customers who have a problem with your product won’t tell you about it.In fact, one study from Lee Resources International suggested that on average for every customer who complains about an issue, there are 26 who don’t say anything; they simply leave.
One way to find those issues — and solve them before they turn a customer into a former customer — is with proactive customer support emails sent to customers whose usage appears to be slipping:
CUSTOMER SERVICE SURPRISES
For happy customers, great customer service needs to be the norm (more on that below), but exceeding expectations is a powerful way to get your customers talking (after all, one American Express survey found that Americans tell an average of nine people about good customer service experiences).
To go above and beyond, surprise your customers with small customer appreciation gifts, handwritten notes or even a personal email to say thanks.
REINFORCE YOUR VALUE
You work hard to deliver big value for your customers through your products or services. And if you’re doing your job, then your customers should see that.
But a small reminder never hurts.
It all comes down to a psychological phenomenon called reciprocity. The idea is that if someone does something nice for us, we’ll probably do nice things for them (and vice versa).
One study found that when restaurants waiters brought candy when they gave diners their checks, tips went up. And when the waiters came back afterwards with extra candy — delighting the customers — the tips got even bigger.
Delight your customers with “candy,” either through surprises like the examples in the section above, or simply by reminding them of the value you deliver.
REDUCING CUSTOMER EFFORT
The Harvard Business Review published some findings which suggest that the single greatest factor in customer loyalty isn’t “WOW’ing the customer” as so many support blogs love to preach. Instead, it’s reducing customer effort.
Make life easier for your customers, and they’ll have a great reason to stick around.
- Making It Easy to Reach You
When a customer wants to get help or ask you a question, they’re already having a less-than-perfect experience. Don’t make it any worse by forcing them to work to figure out how to get in touch.
Make it ridiculously easy to reach you, either by prominently displaying instructions for getting in touch, or with a support widget on every page that’ll let the customer get help from anywhere.
- Customer Education
Jay Abraham is one of the most sought-after business consultants in the world. His work has generated billions of dollars in revenue for his clients, and he’s published some of the best books on growth and understanding your customers that you can buy.
One of the most valuable takeaways that he teaches is the concept of becoming a trusted advisor to your customers.
“You must understand and appreciate exactly what your clients need when they do business with you—even if they are unable to articulate that exact result themselves. Once you know what final outcome they need, you lead them to that outcome—you become a trusted adviser who protects them. And they have reason to remain your client for a lifetime”. – Jay Abraham
By being a trusted advisor and educating your customer on how to succeed in whatever field you’re in — for example, if you make help desk software, you might do well to publish a blog and help educate your customers to succeed in customer support — you deliver additional value on top of your product and give them even more reason to continue doing business with you.
DELIVERING EXCELLENT CUSTOMER SERVICE
There’s no question about it: customers will do more business with companies who deliver good customer support. In fact, on average, customers will spend 13% more with a company that they feel delivers good support. When we’re talking about lifetime value, that 13% can be a significant win for your business.
USE THE RIGHT WORDS
Words matter a lot, and subtle shifts in language and tone can have a big impact on how your customers hear (or read) what you’re saying.
I’ve shared six customer service phrases that you can use to deliver awesome support. Check out that post for more in-depth analysis, but here are the six phrases that I recommend you start using today in your support interactions:
Six Essential Customer Service Phrases
- “I Don’t Know, but I’ll Find Out for You.”
- “I’d Be Frustrated Too.”
- “I’d Be Happy to Help You With This.”
- “I’ll Send You an Update by [Day or Time].”
- “I Really Appreciate You Letting Us Know.”
- “Is There Anything Else I Can Help You With?”