customer retention for small business

Customer Retention for Small Business

This guide will help you build a solid foundation for a retention program inside your business.

A business can utilize many strategies, so we will dive down into these strategies so that you can see what will be the best for you to implement in your business.

What Is Customer Retention?

Customer retention is a business strategy that involves extending the purchasing life cycle of the average customer for that business.

When it comes to growing a business, there are two paths: customer acquisition and retention. Customer acquisition is converting people unfamiliar with your company into customers. Customer retention is keeping those people around and having them return to purchase repeatedly.

Why Does Customer Retention For Small Business Matter?

Customer retention is the most critical strategy in business growth, and every business should have retention strategies in place. A mere 5% increase in customer retention can result in a company increasing profits from 25-95%!

In the past, business owners used to think that getting as many new customers as possible for their businesses was the best way to grow. Retaining customers who have already purchased from their company was the strategy they should have focused more on.

Don’t get me wrong; I’m not saying you shouldn’t acquire new customers. I’m saying that you should have a solid customer retention strategy for your small business in place before trying to scale acquisition.

Top 10 Customer Retention Strategies For Small Businesses

The ugly truth is that most business owners do not track and will probably never track customer retention rates. That’s perfectly fine. We understand that you’re wearing 100 hats already. The last thing you want to do is track something that is already difficult to follow (especially in a brick-and-mortar business). Suppose you start implementing some/all of the strategies in the list below. In that case, you will undoubtedly increase your business’s customer retention.

1.) Have a Great Product or Service

It doesn’t matter if you have the best media buyers and marketers; nobody will buy from you if your product or service sucks. 

Take a look inside your company. Watch how your employees interact with customers. Just because you (or your employees) have been having a bad day doesn’t mean you have to take it out on your customers. It is crucial, although sometimes difficult, to leave your problems out of business.

2.) Build a Texting List

The best way to retain customers is to stay in touch with them. With 98% open rates, texting is the best communication in the modern world. You want your business to always be at the top of your customer’s minds. When a scenario occurs where your business can help them, they don’t even need to think about where to go.

A texting strategy does not mean texting each customer individually or in a group from your phone. It’s best to use text message marketing software. Text2VIP is the leader in text marketing software. We offer a 14-day FREE trial (no credit card required) to learn how this would work for your business. We will hold your hand and build a text marketing strategy with you.

3.) Upsell, Upsell, Upsell

After someone purchases your business, you should always have an option for them to buy another product or service that is complimentary to the one they just purchased. A certain percentage will always take the upsell, making your business more money with less effort.

Let’s take customer retention in the restaurant industry as an example. How often do you go out to eat, and after you just devoured a mountain of food, your server asks, “Did anybody leave room for dessert?” They are pitching an upsell. They know that if they ask that question to enough customers, a percentage will go ahead and get dessert. They will increase their ticket much more and increase how much in tips they may earn. It’s just statistics.

4.) Ask for Reviews

It’s no secret that reviews play a huge part in consumer purchasing decisions. 79% of customers value online reviews as much as personal recommendations. On that same note, reviews produce an 18% increase in sales.

Reviews are typically the first stop in your customer’s journey from research to purchase, so they are critical. With bad reviews, acquiring and retaining those customers is much more challenging.

Create a system for asking for reviews and become the top-rated business in your niche market.

5.) Ask for Opinions

Similar to reviews, it is excellent to ask for customer opinions. See what they like and don’t like about the business. What can you add or take away from your company that would make them happier? Consumers love it when they get to express an opinion on something and feel they played a part in something larger than themselves. You can get creative and do polls or go live on social media channels and show different options so they can see their choices.

We have a clothing boutique customer that was shopping for new shirts to sell. The owner ran into too many options that she liked, so she went live and let her customers say which clothes they wanted the most. It helps build a more solid community knowing that you are listening to them.

6.) Handle Complaints Quickly

Dissatisfied customers tell about twice as many people about their experience vs. happy customers. On average, an unhappy customer will tell ten people about their experience, while a satisfied customer will tell only five.

Since bad news can spread like wildfire, resolving issues as quickly as possible is essential. Build a process for handling complaints. Your business will inevitably run into or create unhappy customers.

A proven system for handling complaints in a timely, professional manner will cause many unhappy customers to appreciate your business. 

7.) Have a Referral Program

A referral program is a system designed to incentivize previous customers to recommend a product or service to their family and friends.

study found that referrals are one of the best forms of marketing. The reason is that people trust the opinion of those closest to them more than most research online. Your business should have a system to take advantage of such a powerful form of marketing.

There are many referral marketing examples, but the most common type is an incentive for both the referrer and the referee. 

8.) Special Occasion Notifications

Don’t you enjoy it when a company or sales representative reaches out to you on your birthday? Does your company collect customer information and have access to birthdays, anniversaries, etc.? Those are incredible opportunities to connect with your customer and show them you are paying attention and care enough about them to reach out. This stacks on top of referrals. You can build loyal customers by telling them a happy birthday and even throwing them something their way because it’s their special day.

9.) Holiday Events

When most business owners think of holidays for promotions, they think of the typical 4th of July, Christmas, Thanksgiving, Halloween, etc. While these are great times to have specials and events at your business, many other holidays can be a great excuse to reach out to your customers. National Hat Day, National Tell a Joke Day, and Hobbit Day are just a few of the hundreds of other holidays you can use! Don’t you think you can get creative with many of these for your business?

There is something joyous about being in the holiday spirit! You can send messages notifying your customers of these holidays. You can also inform your workers of the upcoming holidays and let them show up to work on certain days in outfits that correspond to the holiday.

10.) Create Recurring Revenue

Recurring revenue is the portion of a company’s revenue that is expected to continue in the future. Netflix’s monthly subscription is an excellent example of recurring revenue. They know users will pay a reasonable monthly price to continue watching their shows. 

If a company has a service they can charge $99/month for, they only need 100 customers to make $10,000/month! 

Think about what can be added to your business to encourage customers to come back again and again. An HVAC company, for example, can have yearly service contracts. A customer pays the company once a year to come back and service their air conditioning unit to ensure a longer life span. That creates more revenue from that particular customer and a degree of loyalty. They will be more likely to refer them to a friend or family member needing air conditioning services.

Final Thoughts

Hopefully, this article has provided enough value for you to take action toward implementing a customer retention strategy for your small business. Even if you start with a few strategies, that is better than not starting.

Most of these strategies involve staying in touch with your customers. Implementing a texting strategy should be your first step, as those subscriber counts will compound over time. As the subscriber list grows, so will your income. It’s simple math. You can do a lot of these strategies simply by texting your customers.


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