Tag: customer retention

customer churn1

How Reducing Churn Boosts Your Bottom Line

Posted on by Joan Nowak

As a small business owner, you’ve likely felt that sting when a long-time customer suddenly stops calling. We often pour so much energy into finding new faces that we forget the goldmine already sitting in our contact list.

While some turnover is natural—people move, and needs change—most “churn” isn’t just bad luck. It’s actually a controllable part of your business. When you stop the leak of departing customers, you aren’t just saving a relationship; you are protecting your hard-earned profit margins and ending the exhausting cycle of constant acquisition.

By understanding why people leave, you can transform your bottom line by focusing on the people who already know, like, and trust you.

Why Customers Really Walk Away

When a client leaves, it’s easy to blame the economy or a competitor’s lower price. But usually, the “price” excuse is just a polite way for a customer to cover up a deeper issue. Here is what is often actually happening:

  • The “Perceived Indifference” Trap: Most businesses focus all their “love” on the honeymoon phase (new customers). If your long-term clients feel like just another number, they’ll start looking for someone who makes them feel important again.
  • The Mismatch: Sometimes we’re so hungry for business that we take on the wrong clients. If your marketing attracts people who don’t truly value your specific expertise, they’ll always be “one-and-done” sales.
  • The Taj Mahal Promise: If you promise the Taj Mahal but deliver a hut, the customer feels cheated. Consistency and honesty beat a “flashy” promise every single time.
  • Changing Needs: Are your services still solving today’s problems, or are you offering a 2020 solution to a 2026 challenge?

Related: 13 Ways to Make Your Service Business a Profit Sensation

How to Keep Your Best Customers (and Your Sanity)

Reducing churn doesn’t require a massive budget; it requires a shift in focus. Here is how to get your house in order:

#1 – Make Service Everyone’s Job

From the person who answers your phones to the technician in the field, every interaction is a chance to build or destroy your reputation. Give your team the tools and the “why” behind your standards so they can deliver excellence even when you aren’t in the room.

#2 – Just Say Thank You

When was the last time you got a handwritten note from a business you use? This simple, old-school strategy makes a massive impact in a digital world. It proves you value the person, not just the transaction.

#3 – Talk (and Listen) Often

Don’t let the only time a customer hears from you be when an invoice is due. Reach out for feedback, send a holiday card, or share a tip that helps their business. Aim for at least quarterly check-ins to stay top-of-mind.

#4 – Reward Loyalty

If you’re offering “New Customer Specials,” make sure your loyal VIPs are getting something even better. Exclusive access or “insider” offers show your best customers that staying with you has its perks.

Stop losing the customers you worked hard to win.

You don’t have to navigate the ups and downs of business growth alone. If you’re ready to identify the “leaks” in your business and build a retention plan that actually sticks, let’s connect.

Schedule a free 30-minute discovery call today to explore how we can put your business back on the path to consistent, sustainable profit.

LI customer investments

Customer Investments – How To Do It Right

Posted on by Joan Nowak

Make Your Customer Investments Pay Off

Your customers are your source of revenue, so it makes sense to invest money into them. But before you put a plan in place to attract, convert and retain customers, here are a few things you should consider to make your customer investments payoff.

#1 – Look Beyond Satisfaction

Customer satisfaction is certainly an indicator of customer repurchase intentions. Improvements can reduce churn and create new business through referrals. So, it makes sense that businesses invest in this area. But even satisfied customers are not created equal as it relates to profitability. Understand why customers are satisfied. Some factors that impact both satisfaction and profitability include brands, products/services, buying experience, differentiation – and of course, price.

Satisfaction and profitability are not mutually exclusive. If a customer is only satisfied when you give them special deals, do you want them? What about those who pay full price but demand so much that they offset the revenue they provide? Some customers simply can’t be profitably satisfied. So why make the investment in them? Invest resources in your profitable customers.

#2 – Focus on the Lifetime Value of the Customer

How much you invest to acquire a new customer or retain them will vary. But you need to think beyond the most recent or first transaction. Consider instead what you expect to earn from customers on an ongoing basis.

This long-term view considers what products or services they buy, how often and for how long. Seek to understand your customers’ value. When you do, you can look for ways to improve it and decide how much you will spend to acquire and retain customers.

Related:  What Are Your Customers Worth

#3 – Budget and Plan for Retention Too

Marketing costs are typically focused on new business generation efforts. While important, a portion of your marketing budget should be allocated toward nurturing and retaining customers. When you consider lifetime value, it’s a good decision. Bonus: It’s a lot cheaper to retain a customer than to acquire a new one!

Imagine if you took 10% of your marketing budget and used it for engagement and retention? Depending on your industry, these areas come to mind: service, support, and account management. But extra touches and thoughtful gestures are equally important.

How are you going to keep your customers engaged? This is where the plan comes in.  Create a variety of retention strategies or tactics to implement throughout the year.  How often you do it will likely depend on your industry and clients. Get creative. Stand out. Here are a few ideas to get you thinking….

  • Pick up the phone and check in with a customer. Lunch, golf or coffee optional.
  • Create a blog to educate and empower customers.
  • Remember special occasions with birthday or holiday cards. It’s the thought that counts.
  • Turn fast service into quality and complete service. Customers will view you as courteous and helpful.
  • Email special offers just for customers. It’s not special if everyone gets it!
  • Surprise them! Little, kind gestures make an impact. A client left a Hershey kiss with their invoice. Low cost, but memorable.
  • Send postcards for reminders. With so much emphasis on email and text, snail mail gets noticed.
  • Say thank you with a personal, handwritten note.
  • Build a social community online. Choose the platform that is best for your business and customers.
  • Use white papers and eBook guides to demonstrate expertise. Be a resource for your customers.

Remember, nothing happens until you take action. So, decide what you will do and how often you will do it. Then, schedule it so it gets done!

#4 – Track Retention Rate Over Time

What we measure we can celebrate or improve! Do you want to know if your customer investments are paying off? Your customer retention rate, over time, will tell you that.

You can calculate the retention rate for any period you choose: weekly, monthly, quarterly or something else that is relevant to you.  Pay attention to the trends over time! To calculate, you need to know the following:

Retention Rate Formula: ((CE-CN)/CS)) X 100

  • CS – number of customers at the start of period
  • CN – number of new customers during the period
  • CE – number of customers at the end of period

Let’s do the math with a simple example. 

You started the first quarter (January 1) with 200 customers [CS]

You ended the first quarter (March 31) with 250 customers [CE]

During the first quarter (Jan 1 – Mar 31) you acquired 65 new customers [CN]

Let’s plug them into the formula: ((CE-CN)/CS)) X 100

250 – 65 = 185;    185/200 = .925;    .925 x 100 = 92.5

Your retention rate for the period is 92.5%

#5 – Monitor Satisfaction

If you spend money to acquire and keep customers, it makes sense to get feedback and monitor customer satisfaction. Surveys allow you to do this. When done right, they help you quantify the quality in your business – and support your investments.

When done by phone, they allow you to stay in contact with customers, identify and fix mistakes, identify possible problems (before they become major issues) and request testimonials, reviews, and referrals. Remember to apply item #1 above when you consider changes or improvements in your business – rely on feedback from ideal, profitable customers!

Related:  5 Reasons Why Surveys Should Be on Your To-Do List.

Customer acquisition and retention are important for any business. Planning how you will do both will save you time and money. Incorporating the five items above will help you make better decisions.

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