We’ve all heard that it costs more to get a new customer than keep one. And it’s true. Which is why so many marketers spend so much time calculating their churn rate (how often people “leave” the return purchase cycle) and aim to reduce it. Because new customers are expensive, which makes loyalty so valuable.
Especially in today’s age of social sharing, loyal customers can be your small business’ fiercest online advocates and brand managers. So let’s look at two brilliant ways your small business can improve its customer loyalty.
1. Say No
Relentlessly focusing your attention on serving the needs of a highly targeted group will make you a can’t-live-without product or service for that group, but may require you to say “no” to marketing and pursuing outside this target. That might sound scary to a lot of small business owners but when done with a fierce commitment to your chosen customers, it will often result in die-hard loyalty who will never even consider any other company to fill those needs.
Having the discipline to serve one type of customer doesn’t mean you actually say no when a customers come to you, but it does mean saying no to pursuing them.
Why would a small business do this? For starters, it will keep your churn rate low, your customer acquisition costs low, and your brand beloved by all who know you. And you won’t have to question who you are as a company or how you define your brand.
Don’t think this will work? Look at Zappos, or Harley Davidson, both wildly successful companies that target a small group of customers and then work tirelessly to serve their needs. While other customers outside that target also value what these companies provide, that’s more luck than part of their strategy.
2. Give It Away
There are occasions in every customer interaction when giving away a little will get you a lot. But too often, as small business owners we think we can’t afford to give away anything. But in cases like the above, can you afford not to?
Free shipping is a great way to entice customers to purchase on your site than to go to another like Amazon. While it may cost you a few dollars, you’ll get more not just on the single order, but when that customer returns again to take advantage of your free shipping. In the online retail game, free shipping could be the keys to success.
Don’t stop there. Look at your return policy and process as a customer. A mistake can be an incredible opportunity to stand out from the competition with the power of giving. For example, the American store, Nordstrom allows customers to bring back any item purchased, at any time, no questions asked. But doesn’t it cost them money? Sure. But the basket size of customers who only purchase clothes from this high-end retailer far outweighs the cost, or they would have stopped doing it years ago.
Have you any ways to improve customer loyalty? We’d love to hear them in the comments below.