The Top 4 Customer Retention Strategies for Small Businesses

The average business spends 5 to 25 times more to acquire a new customer than to retain an existing one. And if the cost of acquisition isn't troubling enough, the global average cost of a lost customer is $243. So if you lose ten customers per month, you lose $2,340 and $28,080 annually. 

That's an immense loss for any small business. However, it's also a testament to the value of customer retention. 

In this post, we’ll share the top ten customer retention strategies to help your small business improve customer retention and ultimately generate more revenue. 

1. Customer onboarding program 

There are two main reasons new customers churn quickly:

• They don't understand your product
• They didn't derive value from your product

Customer onboarding solves both problems by guiding customers through a positive user experience and helping customers derive value from your product. However, friction throughout the onboarding process may lead a customer to find a solution elsewhere. 

Consider the case of mobile apps that lose three-quarters of their active users three days after installing an app and 90% within the first month. 

An effective onboarding process helps your customers understand your product and establish a use pattern. Here are several ways to improve your onboarding program and boost customer retention. 

• Welcome email: Congratulate your customer on their new purchase and their new customer journey with your small business. Be sure to tell your customer how excited you are to have them on board. 
• Greeting message: Encourage your new client to create a new account, schedule their first meeting, or visit your website to enjoy your services as the first step. The first step in any customer journey may vary, but the goal is to encourage your customer to take the first step. 
• Interactive walkthroughs: The best way to guide your customer through your product is to let them use it, but with guidance. You can add tip banners (feature callouts) that introduce key features, response samples for empty slates, guidance videos, how-to guides, progress percentages and images, and a knowledge base for key features and frequent questions. 
• Mini celebrations: When a customer completes a step in their onboarding process, congratulate them, and guide them to the next action. 

2. Implement a chatbot 

As a small business owner, you likely balance it all from being an HR expert, manager, head of customer support, and more. Unfortunately, you may fail to provide quality customer support if you have other responsibilities. If your customers feel neglected or unappreciated, you risk the chance of losing their loyalty.  

In fact, according to a ZenDesk Customer Experience report, 50% of customers would switch to a new brand after one bad experience.

While you can hire a front desk manager to handle calls and respond to queries, it's costly and unreliable. Instead, a chatbot is a great way to provide 24/7 customer support for your loyal customers and improve the customer experience on your website at a fraction of the cost. 

After installing a chatbot, you can automate your most frequent queries and only invest human labor when an automatic response isn't sufficient. 

Ensure you find a chatbot tailored just for small businesses with pre-built templates for specific industries. That way, you can customize your chatbot exactly to your needs and provide the most personalized, human-like experience for your website visitors.

3. Customer rewards 

Rewards encourage customers to keep doing business with you and motivate new and existing customers to try a new product or service. Pacifica Beauty is an excellent example of a brand reaping the benefits of a successful loyalty program. The brand is generating 33% of its revenue from loyal customers after implementing its GirlCode Points loyalty program. 

Loyalty programs are an excellent way to establish a reliable reward system for customers. You can use the following rewards to encourage loyalty and boost customer retention. 

• Post-purchase discounts: Offer first-time buyers a post-purchase discount to encourage them to purchase again. 
• Personalized rewards: Offer rewards relevant to your customer. For example, you can discount a product based on a customer's purchase history or current subscription. 
• Exclusive access and products: Offer loyal customers free exclusive content or products. Alternatively, you can provide exclusive early access to highly sought-after merchandise or a new product that hasn't been launched. 
• Variable rewards: Introduce variable rewards to create the element of surprise. For example, you can use a spinning wheel or slot machine on your website to encourage interactivity and then reward each customer's wins. 
• Thank you cards: A thank you note is an excellent way to make your customer feel valued and important to your brand. 

4. Down selling 

When a customer abandons a purchase or chooses to end their subscription, it's likely because of the price. According to WorldPay, 56% of online shoppers abandon their cart because they're presented with unexpected costs. 

You can sell the customer a cheaper product to increase sales, even if you don't gain the same profits right away. Proposing a lower-priced alternative also shows customers that you care about their cost constraints. 

Here are several hacks for your small business down selling strategy. 

• Trial offer: A low-cost trial offer encourages the customer to use a product by generating initial interest. 
• Payment plans: According to a survey by Splitit, 35% of customers are more likely to pay if a business offers payment plans. Payment plans reduce the fear of making one large upfront payment and help your customer enjoy your product even if they can't afford the entire package. 
• Multiple offers: Highlight the products and services that complement the customer's initial package at lower prices. 
• Value package: Help your customers get more value for their money by offering "Buy one get one free" or "Get three for the low cost of X" deals. 

Retain more customers while you sleep 

Customers today expect 24/7 support. You can improve you're their experience by investing in Amy, an intuitive chatbot designed for small businesses. With Amy, you can talk to your customers, even in your sleep. Sign up for the Amy blog today to learn more ways to improve your small business.