It’s only natural you would want to grow your small business through funding. After all, you can receive various benefits from a startup loan. However, there are some downsides to having a loan for your new company. Focusing on customer retention instead provides long-term possibilities for entrepreneurs they may not get from funding. According to Bain & Company, a 5% increase in retaining patrons can increase your business’s revenue by more than 25%.
Paying attention to keeping customers can help your business run smoother long term. Here’s a closer look at why this is a better strategy than funding.
Customer Retention Costs Less
Suppose you get funding for your new startup and use it to invest in marketing to gain more shoppers. Unfortunately, this form of acquisition doesn’t have as many promising results as most people are wary of which companies they buy from today. This can make things financially painful for your company as a result.
Most companies find customer retention is more cost-efficient — all you need is proper communication with your audience. For example, when you respond quickly to queries, your team can focus on delivering quality post-sale services. From there, it becomes easier to retain them.
Consider using a customer engagement platform that offers affordable and reliable services. Engaging existing consumers and focusing on their satisfaction helps you save time and money.
Funding Can Restrict Cash Flow
When you acquire a business loan, the terms typically require interest and principal alongside your monthly payments. While you need money to start, monthly payment obligations may confine how much you take home and prevent business growth.
Startup funds are restrictive to your company, especially if you have limited cash flow. You have a better chance of growing your startup with significant sales earnings rather than focusing on funding.
Funding to acquire new customers takes lots of consistency, time, and upfront investments. However, existing consumers are already familiar with the experience you provide them. With this in mind, it’s a smarter business decision to get your patrons to repurchase from you.
Acquiring more prospective consumers involves costly publishing and marketing services. Therefore, you must ensure you deliver on your promises to keep existing customers and repeat business.
Free Advertising via Word-of-Mouth
If you keep customers satisfied, it can have immense benefits for your business long-term. That’s because happy people are more likely to share the experience they’ve received with your company.
Essentially, repeat patrons become brand advocates for your business. This tactic works because consumers trust the opinions of people close to them. In fact, 61% of people said they’re more trusting in the recommendations from friends or family when choosing different brands to shop online.
Word-of-mouth is the most cost-effective form of advertising. Therefore, customer retention is more crucial in business than finding funds.
How to Increase Customer Retention
Now that you understand why customer retention is more important, here’s what you can do to increase it.
1. Delight Your Customers
A significant motivator for customer retention is providing a positive experience. Good service goes a long way — and your patrons will keep returning for more of that.
Even if they’ve had a bad experience, you can always turn things around because customers genuinely care about companies listening to their problems. Therefore, responding to feedback and implementing new changes is crucial.
It’s also essential to provide personalized services. A positive experience involves your business offering solutions based on individual needs. When you pay attention to your consumers, the investment pays back and can offer huge dividends for your company.
2. Build Brand Advocates
To increase customer retention, you have to earn their loyalty. As mentioned previously, word-of-mouth marketing is the easiest way to accomplish growth.
Consider creating a loyalty program where customers can earn points for their efforts. Once they receive a high amount of points, they should be able to access incentives to keep their loyalty. These can include coupons, a free item, or reduced shipping costs.
Another way to build brand advocates is by providing incentives for feedback. People are often more willing to send feedback when they receive a reward for their efforts. Plus, this strategy works since you can understand what your customers truly want while keeping their satisfaction high.
3. Provide Customers with the Tools They Need to Succeed
Consumers don’t have the patience to wait for assistance or sit around learning how to accomplish tasks. Rather than providing long wait times for support, give them the resources they need to achieve their goals.
For instance, you can help them by providing tutorials through your newsletters. In addition, you may want to cover details about how to use the latest features in your company’s products or services.
Blog articles are also helpful. Consider sharing a list of them to help finish their specific tasks.
Focus on Customer Retention to Grow Your Startup
You now have plenty of strategies to keep your customers happy. Use them to your advantage by mapping them out and maintaining consistency.
Once you gather results for your business, think of what you can do to improve them. Customer retention management leads to long-term success compared to funding. Therefore, it’s worth your time to focus on the best customer service and reputation you can give.
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