This article first appeared in ‘Bicycling Trade’, 1st December 2016
Bicycle retail is a lot more brutal than it used to be. Consumers are considerably better informed, with superior product choice, purchasing and delivery options. They know it too! They will give you less chances to win their business and even less opportunity to keep it.
If you don’t have an active, all of business Customer Retention Strategy in place, you might as well plan your closing down sale today. Without a strategy in place, you are bleeding customers at a minimum rate of 20% a month. And thanks to social media, Google ratings and the like, you’re also probably losing potential customers you don’t even have yet.
Why You Should Care About Customer Retention?
1. Cost of Acquisition vs Retention
Researchers broadly agree that on average, it costs seven times more to acquire a new customer, than it does to retain an existing one.
2. Long Term Customers Are More Profitable
Research also shows that 80% of your future profits will come from 20% of your existing customer base and that loyal customers will spend on average, 33% per transaction more than your casual or occasional customers.
3. Existing Customers Are Easier To Sell To
Marketing metrics studies have demonstrated that established customers are likely to be successfully converted (sold to) 60-70% of the time. Conversely, the conversion rate of new customers is just 5-20%.
4. Retained Customers Are a Proven Acquisition Tool
Those loyal customers you’ve invested in will then serve as fans and ambassadors for your business and win you new customers through referrals, recommendations or simply by talking about you online or at the local café. This works exponentially online. As the saying goes, ‘Word of mouse spreads even faster than word of mouth.’
Ten Easy & Affordable Customer Retention Strategies
There are high level, more sophisticated things you could invest in like customer relationship management (CRM) software, professional social media planning and management and other strategies which are smart and worthwhile investments. But first, let’s look at the cheap and easy strategies you can employ today, if you’re not already, that will actually make a positive difference.
1. Don’t Stuff Up!
Simply making sure your customer’s experience is positive will see you experience far less customer churn in the first place.
2. Give Great Service
Think of how you’d like to be treated if you were a customer. Think of the service you get in your favourite café, auto service centre or butcher and replicate it.
Smiling at your customers is another really simple and easy thing to do, that doesn’t cost you a cent. Yet, like bad service, it’s another common complaint about bicycle retailers. Cognitively, liking smiley faces is something we learn as newborns. We associate it with the first loving glances of our parents. We’re trained to seek out, remember and trust faces that are smiling over those who are frowning.
4. Use People’s Names
This is almost the number one thing café owners try to learn. Think how important and valued you feel when you walk in to a busy store or café and the staff say, ‘Hi Jonathon’. A simple, but powerful customer retention tactic.
5. Thank Customers for Their Business
Your customers have an enormous choice of places and ways to buy their bike gear. But, today, they chose to spend their money with you. It doesn’t matter if it was just an inner tube, say, ‘Thank-you!’ And if it’s a bike or high value sale, tell them you really appreciate them supporting your business and choosing your store and your product. Shake their hand even.
6. Train Your Staff
What’s the difference between the staff working in most bike shops and the staff working in McDonalds, Bunnings or an Apple Store? Not much. Both are most likely not formally qualified in sales or customer service and probably earning a similar hourly wage. The crucial difference is training. Successful retailers don’t expect their people to just walk in off the street armed with sales techniques, customer service knowhow and product knowledge and neither should you. Been back to Apple or Bunnings recently?
7. Make the Purchasing Experience Simple
Make the pathway to purchase as simple as possible. From de-cluttering your store, to making products easy to find as possible, to taking Amex, offering Pay-Wave, carry bags, home delivery or just keeping good stock levels, faced and fronted. Making it easy to get in and out with what they want and they’ll come back again.
8. Go the Extra Mile
Anything that shows your customer you’re prepared to go that little extra for their business, will keep customers loyal. It might be that clean you did on top of their bike service; setting up their new GPS computer on their bike after you sold it to them; or simply carrying their bike to the car. It won’t seem like much to you, but it will be noticed and appreciated.
9. Welcome Complaints
Any successful retail professional or businessperson will tell you, ‘complaints are a gift!’ Firstly, the customer bothered to tell you there was a problem in the first place. In most cases, customers will just simply not come back to your store and you’ll never know why. Except for the 22 people they’ll typically tell how much your business sucked, versus the nine they’d have told if they were happy.
Secondly, a complaint is an opportunity to learn and improve.
Finally, complaints are an opportunity to actually boost your reputation with customers. No-one is perfect. Deal with a complaint in a prompt, positive and proactive manner and it’s essentially a net better result than if you’d gotten whatever it was, right in the first place. Go figure.
10. Swallow Your Pride
Stop thinking everyone is out to get you. Your customers are looking for lots of different products and services and motivated by different things, not always price, but what they’re not looking for is attitude, arrogance or grizzling. Suck it up and be nice. Don’t give your customers a reason to go down the road and not come back.
Australia’s Bicycle Industry Consultant & Commentator