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Why Customer Retention is so Critical

So many businesses work hard to find new customers to sustain or grow their business. The reality is that it is harder and takes more effort to find new customers versus retaining existing ones. Simply put, you can’t underestimate the importance of customer retention.

The process must begin with analytics to learn your current customer retention rate and why customers leave. Knowing the average spend and length of loyalty of a customer will determine the lifetime value to your business. This can be compared to the industry norm within the same geographical area (in case climate and economics play a role).

According to SAS Canada, 50% of consumers say three or fewer brands provide a high level of customer satisfaction. In comparison, 87% of brands say they provide the highest level of satisfaction to drive loyalty— clearly, there is a disconnect here!


Increasing Customer Retention

A few things to consider when analyzing areas of opportunity areas to increase customer retention:

  • Does a “thank you” campaign exist to show appreciation for using services?
  • Is there a customer service standard in place that is truly remarkable and measurable?
  • When customers bring complaints or concerns forward, how do you address them?
  • Do customers feel like they are part of a “community” through your website, social media, and shared testimonials?
  • Is there a personalized approach to promote an emotional connection by your last touchpoint employee?
  • What are the value-added products or services that can make your customer feel they received a perk?
  • Do you have a robust customer loyalty program that is viewed internally as an investment, not a cost?
  • Today’s customer expects a true experience when making a purchase; does your business offer that?

Of course, it is important to know what your business reputation is within the local industry. And whether there is an obvious brand associated with your business. Customers and employees expect a business to have a social responsibility initiative or several, so this is another important consideration.


Did you know difficult customers can be an asset to your business? Here’s how.


Invest in Training to Boost Customer Retention

One might think corporate culture is strictly internal. But the stronger a corporate culture, the more effective employees are delivering a positive experience. Customers feel that.

Every business should invest in a training program that addresses leadership effectiveness, employee collaboration, team building and overcoming conflict since these areas play an important role in culture. Leadership must lead by example, and ideally participate in the training.

Another important training area is customer service. Generally, employees want to do well but do not always have the knowledge, confidence, or experience to do so. That is when training can help. Follow up your training with performance indicators to ensure each team member starts with a benchmark and something to strive for.

Depending on the nature of the business, customers can lapse. But this isn’t always because they move to a competitor. The reality is they no longer need the service or product. That does not mean they should be forgotten, though. Stay in touch on a regular basis with a strategic Customer (past or present) Communication Plan.


Five Customer Service Skills to Stand Out in the Crowd


Think about it: when a customer reaches out to you, it’s usually because they have a problem or complaint.

Despite how frustrated a customer may be, part of what they’re looking for is to feel heard, acknowledged, and understood. Dealing with several customers each day can be exhausting, especially if most of them are frustrated and angry. But maintaining your patience throughout every customer experience— regardless of how escalated it becomes— is a customer service skill that will instantly set you apart from your competition.

You see, when a customer feels heard, they also feel appreciated. This not only helps resolve difficult situations. But at the same time, it also drives loyalty to your business.



Taking an empathetic approach to customer service is crucial, although it’s probably something your competition isn’t doing. While having patience is one part of providing excellent customer service, being able to put yourself in your customer’s shoes and understand exactly how they feel (opposed to just listening) can take your customer’s experience one step further.

Having empathy for a customer is guaranteed to positively influence the outcome of any complaint, which ensures your customers are always leaving satisfied.


Learn How to Read Your Customers

It’s likely that your business deals with customers in person, over the phone, through social media, or over email correspondence. Therefore, the importance of being able to read your customers’ emotions in various interactions cannot be understated.

Whether it’s digital or in-person customer interaction, it’s important for you to be able to understand your customer’s emotional state. The risk of losing a customer is much higher when you accidentally misinterpret the level of their anger or frustration. Being able to accurately assess a customer’s emotions will allow you to offer them the best personalized solution possible.


Treat Every Customer as If You’re About to Lose Them

Not all customers that you deal with are going to be angry. Whether a customer gives you positive or negative feedback, treat them all the same. That is, as if you were about to lose them.

This simply means whenever possible, make the effort to go above and beyond for your customers. Even the simplest gestures (such as offering an umbrella on a rainy day) can be an unforgettable moment for your guests. As mentioned above, it’s not easy for a customer to forget when they’ve felt appreciated and acknowledged. And this is something your competition may be lacking!


Be Flexible

Life throws us all the occasional curveball. This is why being flexible with your customers can greatly set you apart from your competition.

Lapsed customers will come back. That is if a business stays in touch.

Consider a “We miss you campaign” with a giveaway of value that relates to the business. It is so rare that one receives an actual item of value from a past business that this campaign can also serve as an excellent source of referrals.


Here are some steps for building positive customer relationships… that last.


Understanding Customer Priority

Consider the order of customer priority:

  • Retention, and how this is measured
  • Bring back lapsed customers and measuring each campaign
  • Acquire new customers through referrals from existing ones
  • Source new customers through effective marketing campaigns

Ask customers why they selected your business early and ask again what keeps them loyal once you have an established relationship. Typically, people, who are also your customers, do not mind answering surveys if they know you are genuinely interested.


Try Rewarding Customer Loyalty

Studies show it is five to six times costlier to acquire a new customer than to retain an existing one. Reward customers for loyalty with initiatives such as:

  • Anniversary of first purchase
  • Birthday recognition
  • Customer appreciation events
  • Special offers for loyal customers

The topic of customer retention and acquisition is a popular one. As a business owner or business leader the important thing is to look at your results and consider how to prioritize retention versus acquisition for more sustainable business growth, and ultimately, profitability.

X5 Management offers an extensive list of communication, team development, leadership, sales, and service-related programs that can support any businesses training and coaching needs in any industry.

If your business wants to take advantage of the Canada-Alberta Job Grant so that you can expand on your sales and service-related training for your employees, let’s discuss your organization’s training needs in a complimentary Discovery Meeting.

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