How to Master Customer Retention and Get Repeat Business
Acquiring new customers to a business is often an expensive endeavor. It usually takes far less effort to retain and earn their repeat business. Planning and implementing specific marketing measures that are designed to increase the customer retention is fundamental for a sustainable long term business growth.
As discussed in the post ‘Developing Products so Good they Sell Themselves,’ there is often a variance in the marketing messages of most companies, and the end products that they deliver. The beginning of a long-term customer relationship starts with a foundation that’s based on trust. Putting out misleading marketing messages is a surefire way to guarantee the end of the relationship once they discover that the product is not as it was presented.
Before getting deeper into the discussion, I would briefly like to bring your attention to one of the most powerful customer retention tactics. As explained in ‘How to Retain Customers by Making them Psychologically Addicted‘, the psychological principle called ‘variable rewards’ has the potential to hook customers similarly to the way casinos hook gamblers, but in a more ethical sense. Check out the post to see how you can apply its core principles.
Be Like The Ritz-Carlton Hotel
The Ritz-Carlton Hotels are an embodiment of superior customer services. Most of their first time guests frequently end up becoming lifetime customers. It is as though the hotel casts a spell to make them forget the existence of other hotels. The only time a Ritz-Carlton customer would stay in another hotel is if there was no Ritz-Carlton around. The brand has developed what is akin to a cult of loyal followers, but the secret is in their customer retention weapon – superior customer services.
I have stayed at a Ritz-Carlton before and can testify that all they say about the brand is true. Providing superior customer service is like their religion, and they will do anything necessary to achieve it in an extra-ordinary fashion. Take a look at this statement by their former CEO, Simon Cooper, in an interview with Forbes Magazine:
“We entrust every single Ritz-Carlton staff member, without approval from their general manager, to spend up to $2,000 on a guest. And that’s not per year. It’s per incident. When you say up to $2,000, suddenly somebody says, wow, this isn’t just about rebating a movie because your room was late, this is a really meaningful amount. It doesn’t get used much, but it displays a deep trust in our staff’s judgment. Frankly, they could go over that amount, with the general manager’s permission.” – Simon Cooper, Ritz Carlton CEO, 2001 – 2010. Click here to read the full interview.
Every employee gets a whopping $2,000 that they can spend PER guest EACH time there is an incident! That just goes to show how much they care about pleasing their customers, even though the amount hardly ever gets spent. If you wonder why the chain is so successful – with annual earnings in excess of $3 Billion, then there you have it.
While the Ritz Carlton example may not be practical for many businesses, the idea can still be emulated. Whichever customer retention approach you take will cost some money; however the reward is the possibility of lifelong customers whose repeat business will grow the business many times over. A flower on Valentine’s Day does not cost much, but will never be forgotten. The bill will be on us today.
Why Many Businesses Fail to Retain their Customers
Ever noticed that people are usually oblivious whenever things are working out according to plan? For instance, a customer that frequently uses a particular airline to travel, and the staff is always friendly, check in is smooth, food is consistently good – such a customer naturally gets accustomed to the good services, and it becomes an expectation.
Now, the moment an error occurs and they stops receiving the things which they expect – that is when they get sparked back to life. When their flight gets delayed or favorite meal runs out, then they awaken from oblivion feeling angered and disappointed, and quickly disregard all the benefits which they have always and consistently been receiving. Those negative moments then become what they associate the brand with.
You have probably heard someone complain that the services at a particular restaurant are terrible. Well it was probably just one occasion that the services were slower than usual, but that is the memory that lasts. Businesses that are service oriented such as banks, airlines, insurances, etc. are generally more susceptible to human errors because the operations are being run by people.
It is human nature to mess up from time to time, we are not machines. A waitress that is usually consistent with her service could accidentally spill red wine over an unsuspecting customer. And whenever customers encounter such errors, they could easily be unsold as a consequence of the under fulfillment of their expectations. Neither the restaurant nor the waitress could foretell that on a particular day she would spill red wine on an unsuspecting customer.
How to Consistently Get Repeat Business
If a business intends to retain its customers and maintain a happy long-term relationship, then it should regularly remind them of all the good things which they receive. That will make the occasional discrepancies to fade in contrast. Yes it is a compliment if the services are so seamless that it becomes an expectation, but the biggest risk is losing the customer once an error occurs. There’s no telling when something will go wrong, but it will go wrong.
In order to open a customer’s eyes to the good things as they happen, the business can occasionally reinstate the promises which were used to win them over in the first place. Such can be done by sending out periodic emails at no extra cost. Newsletters can be used to highlight the monthly benefits received or to showcase new features which indicate progress. Phone calls that are intended ‘just to checkup’ are also incredibly powerful.
Such measures not only serve the purpose of reminding customers of the value of what is constantly and silently being delivered, but also reinstates the company’s presence in their mind. Such companies will be held in higher regard than the ones that only reach out whenever a payment is due.