13/08/2024 | Press release | Distributed by Public on 14/08/2024 03:28
In small business, retaining customers is just as important (if not more so) than finding new customers. Loyal customers don't just increase the money in your bank account, they become brand advocates who drive organic growth through word-of-mouth marketing.
But not all customer retention practices are effective - and some can actually backfire. Understanding which practices to use and which to avoid can help you build a strong customer base that drives long-term success. Let's look at three customer retention strategies to steer clear of.
Requiring excessive purchases to earn discounts or bombarding customers with constant texts and emails can make them feel overwhelmed and pressured rather than more loyal to your business. Instead, design a balanced program with achievable rewards and gentle reminders. For example, offering a free upgraded service or product after five purchases or $5 for every $100 spent is achievable for most loyal customers.
This is not to say you shouldn't advertise at all. Rather, it means using marketing carefully and personalizing your messaging. Instead of bombarding your entire email or phone number list with every ad, use data from your CRM software to build more personalized marketing campaigns.
For instance, you might send every person who purchased a tent in the last year an email campaign about your new camping supplies. People who bought running shoes might see an ad on social media about your new running shorts. Use customer data to segment your audience and you'll spend less money and see better marketing return on investment (ROI).
But discounts can also backfire. Constantly offering discounts means your profit margins are smaller. Consumers might also assume your product isn't actually worth what you usually charge for it and will always look for a discount.
Instead, offer dollar-off amounts rather than percentages off, like $10 off a purchase of $100 or more, rather than 10% off. Several studies suggest this is more effective at increasing purchases. And don't offer discounts for every purchase -- save them for special occasions like holidays, loyalty program members, or new product launches.
Too often, business owners go all in on strategies with a "more is better" mindset. When thinking about customer retention, aim to deliver value instead. Ask your customers what they actually want and use those insights to build a loyal customer base that keeps coming back.
Connect with an Old National Small Business Bankerfor more insights to help your business grow.
This article was written by Danielle Antosz fromThe Motley Fooland was legally licensed through theDiveMarketplaceby Industry Dive. Please direct all licensing questions to[email protected].