Customer Retention and Profits.
Customer retention is linked to a business’ profits. A study by Fred Reichheld of Bain & Company finds that a 5% increase in customer retention generates over a 25% increase in profits. This is due to repeat customers purchasing more from a company over time and lower operating costs to serve them over time. In addition, loyal customers are more likely to generate referrals for your business. Increasing your customer retention should be a priority for every small business owner, and it does not require more effort than providing excellent customer service to a well-defined target market.
Understanding Your Customers and Market Space
In order to best serve and earn the loyalty of your customers, your business needs to understand their wants and needs from your service or product. Thorough and ongoing market research should dictate the way you run your business to best cater to your clients’ needs. Also, provide ample opportunity for customer feedback. Emailing optional surveys to clients allows for their voices to be heard and provides your business with valuable praise or criticism on your operations. Additionally, positive feedback can aid your marketing campaigns with client testimonials. Be sure to take into account what your consumer actually wants, not simply what you think they want.
Technology and Customer Retention
An American Express customer service study from 2017 reports multiple channels of customer support. A website, mobile app, voice response system, and online chat function offer the consumer options of helping themselves without direct human contact. Digital self-serve options like a mobile app or chat bot are helpful for small inquiries, yet issues with payment or complaints require human contact through face to face interaction or phone communication.
What do consumers look for in customer service? What makes your business excellent at customer service?
- 81% say a satisfactory answer is a very important part of servicing satisfaction
- 74% want a knowledgeable professional
- 47% say personalized service
- 45% say appreciation for them as a customer
Customers are willing to spend 17% more money to do business with companies with excellent customer service. Excellent service also encourages your existing customers to spread your name. Not only do you have a loyal customer, but you also have a referral source. Serving your customers and surveying their needs to ensure you are continuously meeting them is best practice for any business. Customer retention should be a central goal to any company’s operations.
Eagle Business Credit is an invoice factoring company. Our factoring services help small business owners grow their operations. We provide excellent customer service through our transparency, speed of funding, and low fees. By understanding our clients’ unique needs of working capital financing, we can offer custom funding plans to meet them.