It’s not cheap to acquire a customer, as every business person knows – or learns very quickly. But it’s costlier still to lose one, after the substantial costs of acquisition.
The numbers, of course, vary from business to business and product to product, but one thing remains constant: the Cost to Acquire a Customer (CAC) is only money well-spent when that customer stays around long enough not only to pay it back but also to add to the business’s profitability. One rule of thumb says the customer’s Lifetime Value (LTV) (revenue after the cost of goods) should average three times the CAC in a healthy enterprise.
To achieve that benchmark, of course, the business has to succeed on two fronts. In the first place, it has to spend wisely, minimising the CAC while attracting an optimal flow of new customers. And then it has to maximise customer satisfaction to forge a long-term relationship with that hard-won customer.
Customer satisfaction doesn’t only improve the bottom line – it is the bottom line
To put it simply, in today’s e-commerce marketplace an excellent customer service experience is everything. To put it in perspective, just a 5 percent increase in customer retention translates into a 75 percent increase in company profitability, according to a survey by Bain and Co. Some businesses might want to take comfort in the fact that most unhappy customers won’t complain or make any waves at all, but it’s hard to find any comfort whatsoever in the fact that many of those unhappy customers won’t give that business a second chance.
There are just too many competitive options online and too many quality businesses vying for each and every customer to think that anything less than an excellent customer experience will turn a new customer into a long-term customer.
You don’t need to reinvent the wheel – just set it in motion
It’s usually the case, and it is this time as well – someone else has already blazed the trail and found proven solutions to the customer retention challenges every business grapples with. It’s not a matter of creating new solutions, then. It’s just a matter of finding and recognising the ones that are already tested and already within reach.
Small and mid-sized businesses have plenty of options to choose from, but here are three key ones that can form the bedrock of any online customer satisfaction initiative.
- Customer satisfaction is a two-way street, so bring your customers into the conversation. Every time a customer engages with one of your digital channels there’s an opportunity to ask them about the quality of the experience and to invite their thoughts about how it might be improved. Both individually and when a critical mass of responses is studied for patterns, surveys can be one of the best ways to keep customers’ experiences on the plus side. And you don’t even have to wait for your customers to engage. You can also invite feedback by way of email, a link, or a popup on your website. Just keep two things in mind when it comes to surveys of any sort: keep them short and to the point (nobody wants to spend too much time wading through questions) and – the most important part that so many businesses overlook – don’t forget to really listen to what your customers have to say and don’t forget to thank them.
- Don’t forget social media outlets, which are more robust and productive now than ever before now that chatbots have come into the picture at Facebook and other social media channels. Chatbots are nothing less than game changers in the customer experience field, and platforms like Facebook with its 1.6 billion users make them indispensable, in the view of the experts at the industry leading Nanorep. Although they are nothing more than programs that utilise instant messaging platforms to engage with customers – in real language and in real time – chatbots have the remarkable ability to essentially converse with a customer the same way that customer might converse with a friend, or a sales rep. Put to work properly, they give your customers a straight line to the answers and support they need, and without the delays that come with battling with endless menus or waiting for a response.
- Remember email? You should, because as much as some businesses look upon it as old technology these days, three out of every five B2B marketers still count it as one of the most effective ways to build customer satisfaction. That can mean follow-up emails after a purchase (or after a visit that didn’t end in a purchase), personal greetings for a birthday or holiday, surveys, as noted above, or targeted announcements and specials with links to information, coupons, or other benefits. When a large majority of online marketing pros count on it, it’s a good idea to pay attention.
Customer churn comes at a big price
If anyone doubts that losing a customer carries a price tag that no business can afford to bear more often than necessary, consider a few more sobering statistics. While costs vary across businesses, as we said at the outset, experts say that it costs a company, on average, $234 every time they lose a customer.
And, most telling of all maybe, research shows that 80 percent of a business’s future revenue is going to come from just 20 percent of its existing customers. Those stats add up to a pretty persuasive case for a focus on customer satisfaction for any business.