Managing your customer retention rates is an enormously important part of growing your business into a sustainable business.
How many of you have a favorite restaurant, garage or shop that you like to frequent above others? Why do you enjoy going back to these places? Customer retention is far cost effective and profitable to your business than going out to try and find new business only.
You must understand and appreciate exactly what your clients need when they do business with you—even if they are unable to articulate that exact result themselves. Once you know what final outcome they need, you lead them to that outcome—you become a trusted adviser who protects them. And they have reason to remain your client for a lifetime. – Jay Abraham
Customer retention is how well a company keeps its paying customers over a period of time. It’s been said that the purpose of a business is to make and keep a customer. A low customer retention rate is much like trying to fill a bucket full of holes with water and keep it full. You could keep pouring water into the bucket to make up for the water leaking away but a far better strategy would be to find out what caused the holes and fix them. Retaining existing customers is far less costly than going out to find new ones and far easier than acquiring new ones.
In a study by the Harvard School of business it was found that increasing customer retention by even 5% can increase profits between 25-95% and found that 61% of the small businesses surveyed indicated that more than half of their revenue comes from repeat customers. Furthermore, the study found that repeat customers spend 67% more than a new customer. The disappointing thing though is that 70% of businesses did not list retention as their top priority.
How can you improve your customer retention rate?
Stand for something
Customers like to be associated with businesses that share the same values as themselves. If you want loyal customers, you need to create real connections with them. What are your values, your business values? Promoting Project AWARE, eco diving practices or safe diving all can help to give value to your dive shop. What do you stand for?
Does your website have testimonials from existing clients telling about their positive experiences with you? Positive proof is the most effective strategy for getting people to listen to your business.
Appeal to your customers inner ego
Most people prefer products and companies that “resemble” them in some way. This cognitive bias is called implicit egotism, and is an important thing to keep in mind when talking to customers. To attract the customers you want, you need to identify your target customers down to the last detail, then craft a message that matches their pains, goals and aspirations. It’s easier to fill this existing demand than to create one. Using the PADI Continuing Education training courses is an effective method. Let your customers do courses that are beneficial to them.
Compare the before and after
“This is your world before diving and this is your world after diving.” Provide a contrast for your customers. Let them aspire to be that amazing scuba diver that they could be. Understand where they are now and where they want to be. Speak to that and show them how diving can bridge the gap between where they are now and where they will be.
Don’t just sell, educate
Customers enjoy receiving helpful recommendations or new information on products that will help them achieve better results, Have guest speaker evenings at your dive centre, invite scuba equipment manufacturers to do talks on their latests products, get the instructors to do presentations on breathing techniques to make dives last longer. This will keep customers engaged and wanting to come back to your dive centre.
Make it personal
In a study from the Journal of Applied Social Psychology, researchers found that waiters and waitresses could increase their tips by 23 percent by the simple act of returning to tables with a second set of mints. The researchers concluded that the mints created the feeling of a personalized experience for the customers who received them. So, it was the personalized service that made their day, not the small gift in itself. Do you have an effective Customer management program? Are you sending out personalised emails and thank you notes directed at the right customer? Using a system like EVE can assist you in this.
Customers enjoy business who know them
Numerous studies have shown that customers view their experience as more positive when they don’t feel rushed or ignored. Tell your staff to spend more time with their customers. Get to know them, share diving experiences. But its not just about hanging out. Make sure that your staff find out more about your customers and their key wants and needs. Use this for future retention ideas. Making every customer feel like they truly matter goes a long, long way. 68% of customers stop doing business with a company due to feeling like the company was indifferent towards them.
Get a Loyalty program.
The biggest pitfall in preventing customer loyalty programs from succeeding is getting people started. Everyone that does business with your dive centre should automatically be enrolled into your loyalty program. In the famous Car Wash study two groups of people were given loyalty cards to a car wash. The first group needed eight stamps to get a free car wash. The second group had 10 stamps but when given the card, two spaces were already stamped. Only 19 percent of customers in the eight-stamp group (the first group) made enough visits to complete their card. However, 34 percent of the 10-stamp group (the ones given a head start) came back enough times to finish their loyalty cards.
Additional research have shown that people love being “VIP” or higher status members. Make sure to have different levels to your loyalty program.
“Spend a lot of time talking to customers face to face. You’d be amazed how many companies don’t listen to their customers.” – Ross Perot
It is extremely important to conduct extensive research into your customer’s behaviors and demands to determine the best retention strategies for your business. But keeping that loyal customer will enhance your business, grow your turnover and reduce the overheads of seeking out new customers.