Customer retention is on the minds of small and medium businesses across the world. With rising customer acquisition costs, businesses need to get innovative and start taking a proactive role in retaining their clients.

Studies from the U.S. Small Business Administration and U.S. Chamber of Commerce have found that acquiring new customers can cost as mush as five to seven times more than simply retaining existing customers. Considering customer profitability tends to increase over the life of a retained customer, there is extra incentive for business to allocate more resources to sharpening up their customer retention strategies.

Before I go into recommending nine customer retention strategies for businesses, I wanted to highlight three reasons identified in the study as to why your customers may leave you.

  • 68% leave because they were unhappy with the service they received
  • 14% were unhappy with the product or service
  • 9% decided to use a competitor

The following nine customer retention strategies will give you some inspiration and practical examples to help you improve your customer retention rates. They aim to address the above highlighted problems and give you actionable tips you can implement today to ensure you start retaining more customers.

1.  Set customer expectations

The best thing you can do to start building better customer retention is to set client expectations early. Don’t wait to set the expectations, the earlier the better.

Shannon Kohn from Datto wrote a great article on MSPmentor which highlighted the importance for companies to set expectations through service level agreements (SLAs).

A great way to foster loyal customers is to “under promise and over deliver” on the expectations you originally laid out in the SLA. For instance, Datto states in its customer SLA that any ticket submitted with an “urgent” priority will be replied to within one hour. In reality, the response time on those tickets is closer to five minutes.

By setting expectations early, you are able to eliminate any uncertainty as to the level of service you need to be providing to ensure your clients are happy. This clear vision enables your company to build KPIs around specific expectations and ensure you are always over delivering.

It’s important to know that clients tend to remember negative experiences. So if you have over delivered in the past 20 occasions but that one time you undelivered – your client will no doubt quote that negative experience as a reason to cancel their contract with you.

Let’s take a look at an example. R & G Technologies, a successful Australian IT Company uses a service based model and are in the top 15% of all managed service providers where it comes to speed of response as measured by Client Heartbeat. They have implemented strict SLAs which work tightly with their employees KPIs. Jason Neville, General Manager of R & G, explains that his employees are incentivised by meeting specific KPIs that exceed client expectations.

All Service Desk staff have 10-15% of their salary tied to delivering on our Service Level Agreements. If we break more than 1 SLA for the month, the entire service desk receives no bonus. Similarly, each individual service desk team member receives a bonus which is tied to the number of tickets they close for the month – so we encourage both individual and team based performance to achieve our goal.

 2.  Be the expert

Small and medium sized businesses are becoming more and more dependent on services to run their business. No matter what industry you are in, if you can be the expert in your particular field, you will go a long way to retaining more customers.

Becoming your customers’ trusted advisor will build customer loyalty and reduce customer churn. Let’s revisit the example with R&G Technologies. If you were an IT Company, try to be their guy for all things technology focused. So that means that your responsibilities are not restricted to the bare minimum requirements in your contract. If a customer wants some additional advice on which mobile phone best suit their needs, you better be ready to assist them in choosing a device.

By becoming this trusted source on all things technology, you build that relationship which leads to a dependency. They trust you and rely on you to give them the best advice and become an integral part of their business success.

If you are looking for ways to build trust with clients, take a look at some industry specific problems facing your clients at the moment. Compliance and regulations are big buzz words among small businesses, so as an IT Company, this provides a perfect opportunity to demonstrate your expertise and build trust with your clients.

Give your clients a quick courtesy call – inform them of the upcoming changes and provide some insightful recommendations as to the best plan of attack for them. This proactive, personalized approach will go a long way to building customer loyalty and contributing to your customer retention strategies.

Chris Herbert, Managing Director of Effective IT, another Australian IT Company with some of the highest ‘Partnership’ scores world-wide as measured by Client Heartbeat states:

Being a trusted advisor takes time and a real focus on becoming an integrated part of our client’s businesses. We want to be their one stop technology advisor and that means you have to be comfortable from helping them with everything right from their new mobile phone, to scheduling and running strategic IT meetings. Above all else, I think the reason we have such high partnership scores is our customers trust us implicitly. We always give them unbiased advice even if we don’t make much money in the short term. We know the names of all of the staff that work for our clients. Even something as simple as popping in when one of our team is in the area for a quick, free walk-around builds trust – so they don’t think every time you appear you are selling something or on the clock. If you put their interests first, eventually you are rewarded with trust, and that is the most important part of a long term partnership.

3.  Build trust through relationships

As the age old saying goes, you do business with people you trust. Trust is a big factor in business and building relationships with your clients will go a long to gaining their trust.

A study by the African Journal of Business Management found that as trust increases, commitment tends to get stronger. It goes on to recommend building trust through shared values.

So what are shared values? These are areas where you can share an interest in their business. It means you actually need to take an invested interest in your clients. Do some research into their business, understand how IT plays a role in there day to day activities and use this to strengthen your relationship. A good way to start is by asking one simple question
next time you stop by for a quarterly check-up. Ask your client – what differentiates them from their competitors. Once they tell you, remember that and make a note to do some extra research and find ways that you can assist them with strengthening that point of differentiation through the IT services you provide. Give them a follow up call the next week and let them know what you came up with, this shows you have a shared value and are genuinely interested in their business.

It’s no longer good enough to just provide a service – as competitors enter your market; you need to start building these shared values with your clients and showing you have an invested interest in the success of their business.

This leads me onto my next point, implementing a relationship marketing strategy. You’ve probably noticed that relationship marketing has been thrown around a lot in the past couple of years. This is of particular importance to you because you are a service based business.

To get you started, here are two quick ideas you can do to start relationship marketing:

  • Implement a monthly email marketing campaign

This is a lot easier than it sounds. Basically, you want to be emailing your existing customers once a month. Touch base with them, inform them of any recent news or services, and share a couple of great articles you think will help them with their business. You should also link to your articles (see below) as a way to drive your customers to your blog.

  • Start a blog

Write a weekly article on something interesting you did that week. Something that you feel your customers would value. Maybe it’s a new product that can help save your clients 20 minutes a week, or maybe it’s a whitepaper that provides great insight into employee management. Be consistent with your blog and start using it as a way to build relationships with your customers.

4.  Implement anticipatory service

Anticipatory service is a proactive approach to customer service. Instead of waiting for problems to occur, a company who implements anticipatory service can eliminate problems before they happen.

Aspect wrote a white paper, Four Reasons Why Proactive Customer Care Means Customer Loyalty, which explains the science of customer relationships as being simple – the value you get is proportionate to the value you give.

To achieve and maintain this harmony, today’s companies must establish a dialogue with customers that shows an awareness of their information needs and respect for their communication preferences. The more contacts made with a customer, the “stickier” that customer becomes. When customers are consistently given valuable information, this stickiness can form a durable bond of loyalty.

Let’s take a look at two examples of anticipatory service:

  • A major airline proactively texts customers to advise them of flight delays
  • A corporate billing department alerts customers when an invoice is nearly due

In both of these examples, the company is taking a proactive approach to what could end up being a problem that results in a negative experience. With the airline, no one likes to arrive at the airport and find out their plane has been delayed for 50 minutes. Likewise, with the corporate billing department, you don’t want to be hit up for reminder invoices and late fees when these reminders could have been sent prior to the deadline.

You should be looking at ways you can stop problems happening by being proactive. A good idea that you can implement today, is a quarterly or half yearly, on-site check-up.

Let’s see how it works:

So you have a client that hasn’t had any problems for four months, everything is running smoothly, your tech guys setup was perfect and there have been no dramas since. Instead of just playing the waiting game, you should schedule in an on-site check-up. Have one of your guys check in with your client, see if everything is running smoothly and double check the processes you setup earlier are all still in place.

By being proactive – you can save yourself a lot of reactive problem fixing in the long run, as well as building the perception of ‘anticipatory service’ with your customers.

5.  Make use of automation

Automaton tools allow for the time-consuming tasks requiring manual intervention to be standardized into repeatable processes. Companies who leverage automation are able to focus more time on minimising downtime and keeping clients networks performing at their best.

Companies are typically bound by SLAs that guarantee their services and make them accountable to clients. By leveraging automation tools, and streamlining repeatable processes, companies can better meet their commitments.

If you are a IT Company who has not yet found an automation platform, here’s a great article which will give you some insight into whether you need one and the differences between them.

Kaseya research found that the more automated a company can become, the more efficient and reliable its services get. Kaseya did a case study on Adaptive Technology, a IT Company based in Mill Creek, WA, which recently implemented an automation tool. Here were the benefits Adaptive Technology realized from automation:

  • 30% increase in efficiency
  • Ability to compete against larger service providers
  • Better control over operational costs
  • Standardized delivery of services
  • Quicker time to resolve a ticket
  • Increased customer trust and loyalty

From a customer retention perspective, this shows a clear relationship between automation and increased customer loyalty.

By standardizing your processes and setting expectations for service levels, you can increase customer loyalty which will lead to improved customer retention rates.

6.  Build KPI’s around customer service

A great way to improve customer retention is to improve customer service. As outlined at the beginning on this post, 68% of your customers leave because they were dissatisfied with the service.  The team at R&G Technologies, was facing some similar numbers. They set out to rectify the problems right from the source.

R & G implemented customer service KPIs built around their SLAs. This way, every R&G employees performance was being measured and incentive’s based on their level of service which was closely tied into the clients SLAs goals.

Let’s hear from Jason a bit further on the details of this initiative:

Customer satisfaction is measured quarterly through Client Heartbeat, and is tied directly to employee KPI’s and compensation. We operate in a model with senior engineers assigned to a group of customers. If they do not achieve 8/10 then they fail to achieve their KPI. This is also tied back into a company goal and bonus structure

7.  Build relationships online

Your clients are online, so let’s start building relationships with them while they are glued to their computer screens. With the rise of social media, it makes sense to start connecting with your clients on these mediums. I would focus my efforts on building social profiles on LinkedIn, Twitter and Facebook. The majority of your clients will have active profiles on at least one of these websites.

Debra Ellis from Social Media Today says that social media is changing the playing field because it provides a venue for the one-to-one connections that create unbreakable bonds.

Connecting with customers takes more effort and time to build your communities than typical social media acquisition strategies.

To get started, I remember taking the following three actions:

  • First, setup a LinkedIn group, create a Twitter profile and create a Facebook page
  • Include links to your profiles in all future communications with clients
  • Now use these channels to aggressively communicate with your customers. Start linking out to valuable and relevant content, share your thoughts on topics and engage with clients who leave comments and feedback

Scott from MSP Business Management recommends IT Companies struggling to find things to post about on their social media channels, could write about the following:

  • Product news updates
  • Short pieces on key IT news such as virus outbreaks or high-profile system outages
  • Case studies featuring your clients
  • Reviews of new software
  • Details of new services that you offer

8. Go above and beyond

Often times, companies overlook how important this is. Going the extra mile for your customers is an easy way to build strong relationships. As a service business, you have lots of opportunities to woo your clients and go above and beyond what is required.

By doing this, you can build some serious long term loyalty. If your clients no you are prepared to do that bit extra, they will stick with you when competitors start knocking on the door.

Here’s a couple of ways you can go the extra mile for your clients:

  • Pay attention to what you customer wants and make their issues, your issues – be proactive in addressing them
  • Go out your way to point out some potential issues and fix them before they become problems

9. Implement customer feedback surveys

Customer churn can be avoided by simply just listening to your customers. Customer feedback surveys are a great way to learn how your service is performing in relation to your clients expectations.

Qualtrics defines customer retention as being individualized and varied across the kind of product or service provided, the kinds of customers served, the number of customers served, the longevity and frequency of customer/supplier interactions, and how you intend to grow your business.

Client Heartbeat has identified three key metrics you need to monitor to ensure you can measure customer retention most effectively:

  • Firstly, you need to monitor customer feedback on an individual level. You’d be wasting time comparing feedback across a wide, broad range of customers. You want to narrow down to a specific client, see what they thought and take action from there.
  • Secondly, you need to trend feedback across a period of time. You need to be tracking feedback survey to survey so you can see which areas have improved and which have suffered.
  • Thirdly, you want feedback from customer surveys to provide intelligence. You need it to provide you with data as to what customers are at risk, which areas of your business need improvement and where your business’ strengths lie.

All this feedback can help you retain clients. By understanding client feedback, you can take action before it’s’ too late and make business decisions based on real data-drive feedback.

Client Heartbeat is a customer satisfaction tool that gives you insights into these three key metrics. It automates the customer feedback process by sending surveys periodically, trends feedback responses over time, than benchmarks your performance against other companies in your region. Reports give you insights into customers at risk, areas for improvement and business strengths.

So there it is, nine customer retention strategies for your company. If you follow my advice and start implementing these today, you’ll not only start strengthening your client relationships, but also see the benefits on your bottom line.

For some further reading, check out these resources:

Tweet This

  • 68% of your customer leave because they were unhappy with the service they received – Click to tweet this
  • To build customer loyalty, you need to become their trusted adviser – Click to tweet this
  • Instead of waiting for problems to occur, use anticipatory service to them before they happen – Click to tweet this
  • By leveraging automation, companies can better meet their commitments – Click to tweet this
  • Customer churn can be avoided by simply just listening to your customers – Click to tweet this

Photo credit: untitledprojects via photopin cc

Updated August 6, 2013.

The Secrets To High Customer SatisfactionLearn how to improve customer satisfaction, reduce churn and boost lifetime value.

Read this eBook to discover proven strategies to help you achieve high customer satisfaction and identify your ‘at risk’ customers.

These strategies have been used by R&G Techno
 to identify over 20 ‘at risk’ customers and improve overall customer satisfaction by 20% in just 12 months.

Gordon Tan

Gordon Tan is an entrepreneur based in Australia who has started and sold multiple technology companies with a combined value of $150m. This included a client satisfaction benchmarking platform which gave him first hand insight into the best practices of over 6,000 businesses. After retiring at 35 he is now a recognised thought leader on winning and retaining clients - His two passions: making clients the heartbeat of a business no matter what the product or service and this blog.

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