Want your business to perform better? Turn to one of the heartbeats of your organization, your customers. A business that can build and maintain a healthy relationship with its customers is a business that thrives and succeeds.
There are several strategies for increasing customer retention through relationship building, but first, you need to understand why developing customer relationships is critical to the ongoing success of your business.
The Importance of Building Customer Relationships
Today’s customers want a relationship with your business.
“Always remember that everyone with whom you have a relationship has an invisible sign on their forehead that says ‘Make Me Feel Important.’ Treat them accordingly.”
— Eric Philip Cowell, Estate Agent Developer & Music Industry Executive
The livelihood of an organization depends on the rapport it can build with customers over time. Your customers are the "boss;” creating a bond paired with quality products or services and support is the key to success.
There are three primary benefits of building customer relationships:
1. Reduces churn
Most of us have heard the phrase, "It's cheaper to keep 'em," though used in a different context. Well, this applies to business as well.
Customers don’t churn because of cost; they churn because of customer service or lack thereof.
We get it, obtaining a new customer is exciting. However, if you don’t have a retention strategy customer acquisition is wasteful and cost ineffective.
Here’s why: According to Our Social Times, “70% of companies say it’s cheaper to retain a customer than acquire one.”
Also, consider the following:
- Your current customers have a 50 percent chance of being interested in purchasing a new product versus a new prospect.
- There is a 60% to 70% chance of making a sale to a current customer versus a 5% to 20% to a new prospect.
- Focusing on your current customer base can increase profits anywhere from 25% to 95%.
Recommended Reading: Customer Churn: 6 Reasons You're Losing Customers
2. Boosts Customer Lifetime Value
Customer Lifetime Value (CLV) refers to the total revenue a business can expect from a customer over the course of the business relationship. Your CLV can be improved through customer satisfaction (and retention.) How so?
Customer satisfaction leads to a healthy relationship which leads to more revenue for your business.
According to Help Scout, satisfied customers result in a 30% increase in profitability as they are 80% more likely to renew services. A happy customer will also contribute up to 2.6 times more revenue as compared to an unsatisfied customer.
3. Develops Brand Advocates
Brand advocacy happens when your customers become your biggest cheerleaders.
What this means is that your customers will organically support your business and rave about your brand to any and everyone who is willing to listen (hello word-of-mouth marketing). Studies have found that 92% of consumers trust word-of-mouth recommendations, while 82% of consumers proactively seek recommendations from their peers.
How to Build Strong Customer Relationships to Boost Loyalty
The key to building strong customer relationships, no matter the size of your business, is to engage your customers. It begins with these seven strategies:
1. Get to know more about your customers
You can’t foster good customer relationships if you fail to understand your customers and tap into their emotions and psyche.
To understand your customers, you need to put your sales hat on and think like a salesperson; how do they interact with customers to develop a rapport?Through these interactions you can discover what triggers your clients along with their habits and interests.
When get insights into what your customer expect it makes it that much easier to communicate with them and deliver on your promise.
2. Tailor your communications
Be human and connect with your customers; have a conversation with them. After all, communication is an essential way to build relationships. The easiest way to do this is through email communications.
Now, this is more than random email blasts or monthly updates via reports (for you service-based businesses).
Tailoring your client communications involves personalizing your messaging, based on your customer data, and communicating in ways that are of value to your customers. You don’t only want to reach out to your customers when you have something to sell. Instead, keep them up to date on the latest happenings within your business or industry, send them special offers around the products or services they’re most interested in, and continue to educate them by being a source of valuable information.
3. Strive to exceed expectations through customer support
The key to exceeding expectations is to under promise and over deliver. The true definition of exceeding customer expectations begins with support through active listening and the asking of probing questions.
If you have multiple communication platforms here are a set of factors to consider:
- Communication turnaround time
- Professional Etiquette
- How to resolve escalated issues
- A retention plan to keep loyal customers
4. Be consistent and timely in your interactions
Customers value consistency. They will not tolerate rudeness, neglect, or failure to deliver on promises.
Engage and connect regularly; your customers expect it. No one wants to be left out of the loop and contacted when you only have something to sell.
Develop a policy in your organization that outlines how you will reply to clients (do not use scripts, keep your interactions organic) and how soon/often.
5. Seek feedback and show you genuinely care
Customer feedback is critical to your ongoing success because you get to hear directly from your customers about what is and isn’t working.
When you ask your customers to provide feedback, you are showing that you value their opinion and that you care about what they have to say.
The first step is to encourage open feedback on your website, via email or through social media. After recording feedback, set up meetings with employees to find out how you can improve. A team that openly discusses ways to enhance products will prevent issues in the future once recommendations are implemented.
6. Establish trust
Building trust is about being honest and open, even when it’s not a good look.
For example, if it will take an extra week for a product to be delivered or if a customer submits a request, such as a change to their website by a specific date, and you know you want to meet that deadline, let them know.
In most cases, a customer will be appreciative that you’ve kept them in the loop. Keeping them in the know builds trust.
When in doubt, ask yourself, “What is the best way to serve our customers?”
7. Make them feel appreciated
Find a way to reward your most loyal customers to show them that they are top-of-mind.
Develop a loyalty program. Send swag bags every so often with inexpensive branded items such as pens, stickers, notebooks or notepads, t-shirts, hats, and jackets; anything with your logo on it. Consider first-time customer discounts.
Think of these incentives as an investment to retain customers. Be creative and remember to give them what they will appreciate.
Nurturing & Managing Customer Relationships with CRM
The truth is, great customer relationships aren’t built overnight. For this reason, it’s essential to cultivate and nurture customer relationships as you would any other relationship that matters. When an organization is successful in doing so, it can lead to increased loyalty, positive word of mouth, and sales.
One of the most effective ways to nurture such relationships with the strategies mentioned above is through Customer Relationship Management (CRM).
A CRM, such as HubSpot CRM, allows you to stay connected with your customers and ultimately improve your profitability by making it easier for businesses to organize, track, and nurture their customers (and leads). More specifically, you can capture customer’s purchasing history, revenue patterns and even the sales funnel for your team, see what actions they’ve taken on your website, chat with customers in real-time, and much more.]
Remember it costs more to attract new customers than to keep the ones you have happy. However, that doesn’t mean you should neglect this part of your business.
A bit of creativity, active listening and appreciation are the ingredients to successful customer relationships. Now that you have a better understanding of how to retain customers and further develop relationships, structure a plan that will work best for your organization.