If you’re looking to grow your business profitably and for the long term, what’s the most important strategy to focus on? The answer might surprise you. Contrary to what many entrepreneurs think, customer loyalty and retention are far more valuable to a small- or medium-sized business than new customer acquisition.
Customer acquisition is expensive. Obviously, it’s important to spend some effort on acquiring new customers, especially when you first launch a business.
But customer retention should always be a priority, and be part of your business strategy. By focusing on customer loyalty, your business gains two advantages. The first is that happy, loyal customers are repeat customers—you don’t have to put nearly as much money into attracting new customers, if you can keep existing clients coming back. Second, loyal customers are more likely to become brand advocates for your business. They are more likely to refer their friends, family, and acquaintances to your company.
Again, that’s money you don’t have to spend on customer acquisition: your previous customers are doing your marketing for you. It’s a compound effect. Current customers will keep coming back to do business with you, and will refer new clients to you as well.
How to Build Customer Loyalty
So, how can you build a pool of loyal, repeat customers? This is one of those times where you have the upper hand as a small business. Quite simply, it makes people feel good to support small business. Plus, you have more freedom to build real connections with clients, establish trust, and ensure that clients are satisfied with your goods or services. You’re not constrained by the internal processes and bureaucracy rampant in large firms—you can spend more time and effort ensuring that every customer has a fantastic experience with your business.
That’s really what customer loyalty boils down to: setting a strong foundation of trust and exceptional service with customers. And because most people are used to purchasing from (or working with) large, impersonal corporations, the slightest personal touch will make your business really stand out.
Build on customers’ good first impressions by staying connected. If you’re a small florist, don’t let your relationship with a newlywed couple end after you arrange the flowers for their wedding: send them a happy anniversary letter a year later. (Bonus points if you send it just before their anniversary, so one of them has time to buy flowers from you again in celebration of the occasion.) It’s all about staying top-of-mind, without being intrusive or annoying.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more ways to grow your small business profitably, please check out our website www.portalcfo.com.
Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.