Did you know improving customer retention by 5% could increase your profits from 25% to 95%? Plus, it costs five times less than acquiring new clients.
Focusing on acquiring new customers without caring much about keeping their existing ones is a business mistake many rookie entrepreneurs make. Don’t be one of those! Getting existing customers to buy more times will take your profitability to the next level. Let’s dive into how to turn your company’s customer lifetime value into a primary business goal, and the best client retention strategy to achieve it: customer satisfaction!
Customer Satisfaction Is Key to Improve Customer Lifetime Value
Customer lifetime value is the total revenue a client generates for your business. There are two ways to look at CLV — historically or predictably:
- Historic lifetime value is pretty straightforward. If your typical client hires your service — priced at $1000 — ten times before leaving you, your CLV is $10,000.
- Predictive lifetime value is a bit more complex — as it projects your clients’ future behavior. In a nutshell, you calculate customer lifetime value by combining your previous clients’ purchase history, average purchase price, and average purchases over time.
Regardless of your method, customer lifetime value derives from customer satisfaction. The happier your customers are, the more likely they’ll be to come back and buy from you — again and again.
That is why we have heard it so many times, “the customer is always right.” Even though that saying can make us cringe, your customer is the ultimate judge of their experience with your business… and they know it.
Customer Satisfaction While Keeping the High Ground
Your business communication should not concern whether you or your customer is correct. Instead, let’s try to find a common ground of understanding where:
- They are happy with the service and your disposition to solve their problems.
- You do not give in, trying to fit any unrealistic expectations they throw at you.
Yet, improving customer satisfaction through effective customer service has two precise requirements. First, you must get to the bottom of the issue with as little friction as possible. Second, you cannot be awkward or defensive when communicating with the client.
Honesty and transparency are always the best policy, requiring accountability from both parties while setting the mood for collaboration.
Turning Clients Into Repeat Customers Through Customer Service
Let us get into the first part. How do we get to the bottom of the issue?
- Acknowledge the customer’s inconvenience. Always. For example, instead of answering, “That’s not it!” when you disagree, say something like: “We understand XYZ is troubling you.”
- Get to the root of the issue to find a helpful solution. Do not assume you are right or that you know what is going on before exploring the case in depth.
- Validate the customer’s inconvenience. Agree with them on the importance of the matter or, at least, with the consequences it causes them.
Then, establish your position when the customer has unrealistic expectations (or has touched your sensible fibers!):
- Accept the mistake and apologize if the issue is on you.
- Explain the error and kindly educate the customer if the blame was on them.
- Acknowledge the misunderstanding and be optimistic about the client’s upcoming experience without blaming them.
Dealing with your client’s feedback can be stressful; it is understandable if you do not get it right 100% of the time. Who could?! But it is essential to improve your customer service to keep clients happy and stay with you for the long run, elevating your customer retention to new heights!
Tell me, how do you ensure your existing customers keep buying from you?