This is a Guest Post by Gaurav Agarwal, the Co-founder of Pickmylaundry.
In today’s era of online retail, it is common to see startups burning cash to acquire customers, but they seem to have forgotten that unless they are able to retain their existing customers, they will not be able to do much to improve their profitability. It’s like trying to fill up a bucket, while it has a leak in it. The simple task becomes so much more complicated, with double the effort required to achieve the objective of filling up the bucket. Unless you are able to plug the hole, the effort will be no good. It’s as simple as that.
Remember, the cost and effort required to retain existing customers is only a fraction of what is required to attract new customers. Also, what is the point of spending so much to acquire new customers, if you are unable to retain them in the first place?
Discounts and freebies are not enough
Attractive deals and discounts may be fine to attract the attention of a customer, but not to retain them. It needs far more than freebies to gain their trust and convince them about the quality of your offerings and services.
Continuously analyse data to see if you are on the right track
To know whether people are satisfied with your offering on not, repeat orders are the best indicator. Continuously monitor your data to analyze how you fare on this front. If the retention percentage is low, it should ring alarm bells. You then need to work on figuring out where you are going wrong and take corrective action to get on the right track.
Count on customer feedback to understand what works
Customer feedback is vital and can offer cues that can help boost customer retention. It should, therefore, should be a continuous process. Only then can you work on constantly bettering yourself and matching up to the customer’s expectations, both of which are crucial to retain customers.
For example, a grocery delivery company may be focusing a lot on service levels, but lacking on its app UI front, as a result of which people may be unable to or unwilling to use it, which could hamper business. Regular feedback would ensure you are able to identify the problem before irreversible damage is done to the business.
Incentivize by calculating LTV
Customer Lifetime Value is a very important, yet most ignored parameter in identifying the customer acquisition cost and retention cost. Based on your net cash flow position and what your competitors are doing, figure out the incentive that will make a customer place repeat orders.
Remember, the same incentive doesn’t work for all. Also, it can vary, based on the offering. So use a mix of different incentives such as cash (cash back), kind (freebies), gestures (something for the kids) or a mere message. Even a personalized letter, gift, value added service etc. can go a long way in wooing a customer. It’s all about making them feel special and telling them that they are a priority for you. After all, your business rests on them.
Customer service is the key you have been looking for
In an age, when there are various forums available for customers to register their grievances, a mere mention on social media could do immense harm to your goodwill and drive away other loyal and prospective customers too.
You, therefore, need to have a proper grievance redressal mechanism, with defined SLAs, to ensure all grievances are addressed to their satisfaction within the defined time frame. If not, then resorting to social media to vent and elicit prompt action from the company has become a common practice, since customers are smart enough to understand that no startup would want bad publicity on such effective mediums.
The ease, speed, compassion and sincerity with which a complaint is handled and resolved, therefore, assume great importance. If you are unable to deal with the situation effectively, you don’t just lose that one customer, but also many others, whom he/she can influence.
There is a reason they say, “Customer is the king”. You have no choice but to keep them at the core of your business in order to sustain in the long run and succeed.
Disclaimer: This is a guest post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamwire and the editor(s).