Let’s dive in and see how your small business can build a loyal customer base.
Customer acquisition vs customer retention
Businesses need new customers, there is no denying that. Acquiring more and more new customers over time means you are growing. What businesses most often struggle with when selling to new customers is the cost of acquisition, which can range from 4 to 25 times the cost of selling to repeat customers. This cost difference incentivises businesses to turn a new customer into a loyal customer.
How to increase customer loyalty
Creating a loyal customer base requires understanding. Purchasing a good or service is nearly always an emotional decision, so to build a loyal customer base, businesses need to tap into the emotions that make customers buy.
Identify your audience
Identifying your audience is about finding the commonalities across your customer base. This involves investigating why your product resonates with people, and can be broken down into three categories:
- Demographics: General details (who they are, where they live, age, gender, occupation, etc.)
- Behaviours & interests: Hobbies and buying patterns.
- Psychographics: Values, opinions, and pressure/pain points.
Once you have an idea of who your customers are, you can tailor the sales experience, after-sales care, and customer communication to meet their needs. You can develop marketing strategies by creating the ideal customer and making templates of customer profiles and personas.
Customer Experience
Nail first impressions and cater to the buying experience. Make buying your product or service as easy as possible. If you have a website, this could be in the form of UX Design – have you ever abandoned a sale due to how clunky and unresponsive a website was? If you have a retail store, how is the customer treated when entering, throughout, and leaving the store? How is the store set up? When providing a service, how quickly and how high was the quality of the service person?
First impressions can have a lasting impact; a positive experience will often lead to customers coming back. While a negative experience is a common reason for customers to abandon a sale, it can also lead to boycotts of a brand.
Communication Frequently
Keeping in touch with customers is a great way to keep them engaged with your product. This will keep your services in mind when they have needs on any given day. The best way to stay in contact is through an email program, which can range from a number of subjects:
- Product updates and offerings
- Welcome emails for new customers
- Thank you emails
- Customer feedback requests
- Re-engagement emails
- newsletter/blog
Incentive, Loyalty and Reward Programs
Loyalty and incentive programs provide a great strategy to re-engage customers in your product. An effective program can be a valuable resource for a business, as loyal customers benefitting from incentives are:
- More likely to purchase more frequently by 64%
- More likely to recommend to others by 50%
- More likely to choose the brand over competitors by 35%
- More likely to pay higher prices to stay with a brand by 31%
Incentive programs aren’t considerably cost-ineffective, as even the most basic offerings can result in repeat business. A good example of this is the free coffee card, where, after 10 purchases, the next coffee purchase is free.
Customer Feedback
Customer feedback is a great way to improve your processes and invest in the customer-business relationship. By giving a voice to your customers, they will feel heard and that their opinions have value. When customers see that your business implements and takes action based on their suggestions, you build trust with your customers through transparency.
To fully take advantage of customer feedback and use it the right way:
- Research before you commit to a change: enacting change is expensive, so make sure that feedback is in your best interest.
- Reach out often: don’t wait for things to go wrong, listen to what your customers have to say.
- Track sentiment: check in and see how impressions have evolved over time.
- Ask the right questions: avoid wasting time and money on miscommunication, and be efficient with your questions.
- Acknowledgement: show gratitude to invested customers and provide incentives and rewards.
Loyal Customers for new businesses
Among a million other things, finding ways to grow your business and build a customer base as a new business or start-up will be a challenge. This is where you start small and expand outwards. The key is to adopt initiatives that make sense for your small business and discard those that don’t.
Building customer loyalty from first-time buyers is easier with the right tools, so make sure that your business is prepared, whether digitally, socially, or financially.
