In some industries, the average cost of acquiring a new customer exceeds $500. That’s a lot of cash, so you can imagine how it would hurt to spend all that money only to lose the customer after a few months. Fortunately, you don’t need to reinvent the wheel—you just need to focus on building customer relationships.
Here at The RevOps Team, we’re always looking for ways to help you maximize your revenue potential. Strong customer relationships make it easier to generate revenue and increase the lifetime value (CLV) of each customer. Focusing on customer satisfaction also has the potential to reduce your expenses, leaving your company’s bottom line looking a little healthier.
The Importance of Building Customer Relationships
Good customer relations are a bit like Scrooge McDuck’s vault full of gold coins. While you can’t swim around in them, they do make your business more valuable. Here are six reasons you need to focus on building relationships.
In The 7 Habits of Highly Effective People, Stephen Covey says, “Trust is the highest form of human motivation.” When customers trust you, they’re motivated to try your new products and continue spending money with your business.
Here’s why it’s so important to build trust:
- Brand advocacy: A high level of trust encourages customers to become champions of your brand. They’ll recommend your products, rave about the service you provide, and root for your company’s success. Referrals from current customers usually convert better than leads from other sources, too, making brand advocacy an important part of your strategy.
- Opportunities for personalization: If people trust you, they’re more likely to provide personal information that can help you deliver customized experiences. Think about all the companies with loyalty programs. Those programs would be dead on arrival if customers didn’t trust each company enough to turn over their names, ZIP codes, birth dates, and other data. The more you personalize your offers, the more likely you are to retain customers.
- Helpful feedback: Honest feedback can make the difference between having a struggling business and a flourishing one. When customers trust you, they’re willing to open up and share about less-than-stellar experiences. You can use that feedback to improve your business.
Improving Customer Retention
Remember we said the average cost of acquiring a customer exceeds $500 in some industries? It costs a lot less to serve an existing customer than it does to find a new one every time you want to make a sale. The good news is that effective customer relationship management (CRM) makes it possible to improve your customer retention rate and lower your acquisition costs.
High retention rates have several benefits:
- Increased loyalty: Someone who doesn’t quite trust your business might buy an inexpensive product once or twice to suss it out, but there’s no guarantee they’ll stick with you for the long haul. Loyal customers buy from businesses more often and also spend more per purchase than other customers.
- Greater return on investment: Hubspot estimates that a 5% increase in retention can boost your revenue by anywhere from 25% to 95%. That’s a little work for a lotta gain.
- More referrals: If customers trust you enough to buy from you again and again, they’re more likely to provide high-quality referrals, giving you even more opportunities to generate revenue.
Reducing Employee Attrition
Companies that do a good job meeting customer expectations are likely to have lower employee turnover rates than businesses that don’t seem to care about what their customers need. If any of your employees rely on commissions or incentives to increase their earnings, good customer relationships can help them boost their earnings, making them want to stay with your company for as long as possible.
In fact, good customer relations and low employee turnover go hand in hand. Long-term employees have more product knowledge and may even have more authority to make customers happy, meaning low turnover rates can improve the customer experience.
Loyal customers spend about 30% more than ones who don’t quite trust your business yet, according to Patricia Rioux, a Forbes Councils member. Rioux also notes that you’re as much as 14 times more likely to sell to a current customer than a brand-new client. As a result, good customer relationships are essential for increasing sales.
Bettering the Customer Experience
At some point during the customer's journey, they interact directly with your business. They may browse your website, visit a brick-and-mortar store, or call to inquire about one of your products. Focusing on relationships improves the quality of customer interactions, strengthening your client base and making your business more successful.
Think about a time when you had a bad experience with a company. Maybe it was a big-box retailer or a small business you really wanted to support. Did that experience make you want to buy from the business again and again? Probably not.
Now think about a time when you had a positive experience. Perhaps the salesperson really understood your needs or worked hard to put you at ease. Now you’re obsessed with the company and love to tell your friends to shop there. That’s the power of good customer relationships at work.
Improving Brand Loyalty
Unless you sell something truly unique, customers have a lot of options. If one company doesn’t treat them right, they can go somewhere else for better service. Successful businesses understand this concept and work hard to make sure their customers don’t have a reason to go elsewhere.
Brand loyalty is when a customer keeps buying products from the same company even though there are similar products and services available elsewhere. Loyal customers are dedicated to your business, sometimes moving mountains to buy from you even if they have the option of trying something new.
Tips for Building Better Customer Relationships
Okay, it’s clear why customer relationships are so important, so let’s get to work and build stronger relationships with your customer base. As we mentioned in the intro, you don’t need to start from scratch. Just follow these tips to find more repeat customers and improve your word-of-mouth marketing efforts.
Understand Customer Values
Why do you buy from your favorite businesses? Is it because they have the lowest prices, the best products, or the best service? Perhaps it’s because of how their product makes you feel when using it. Do you enjoy talking with their employees or visiting their brick-and-mortar locations? Your answers depend partly on your personal values, which help guide every purchase decision you make.
To build better relationships with your customers, you need to understand their values. Some customers value convenience over price. They want to buy from a company that makes the process easy and offers products to save them time. Budget-conscious consumers are more concerned with cost, so they value fair prices and enjoy shopping with companies that help them meet their financial goals.
Many customers also value empathy, innovation, sustainability, professionalism, and integrity. These values shape how they perceive a company and its offerings. Once you know what your customers value, you can better meet their needs.
Genuinely Care For Their Needs
A transactional approach to customer service may help you make a few quick sales, but it’s not a good way to increase customer lifetime value. You need to play the long game, focusing on long-term relationships instead of the temporary satisfaction that comes from making a single sale.
One way to increase loyalty is to show genuine concern for your customers. Get to know them, find out what’s going on in their lives, and look for ways to satisfy even the most obscure needs. When customers know you care about them, they’re more likely to spend their hard-earned money with your business.
Everyone makes mistakes, even the most successful business owners. It’s how you handle those mistakes that allows you to build strong customer relationships. If you’re not going to meet a delivery deadline, for example, you need to reach out to the customer as soon as you know there’s a problem. If they don’t hear from you until after the deadline has already passed, they don’t have much of an incentive to stick with you.
Effective communication is important even when everything is going smoothly, as it helps set reasonable expectations. Good communication also makes it easier for customers to understand the benefits of buying from your business rather than one of your competitors.
Here are just a few ways to maintain open lines of communication with your customers:
- Be as transparent as possible: We’re not suggesting that you share trade secrets, but providing information on your processes makes it easier for customers to trust you.
- Listen carefully: Have you ever dealt with a salesperson who saw you as a walking commission and didn’t want to listen to anything you had to say? Customers don’t like that. Listen to each customer’s concerns and take time to answer any questions.
- Adjust your approach as needed: The world is a diverse tapestry of people who have different communication styles and levels of understanding. Make sure you meet people where they are every time you interact with them.
- Don’t communicate too much: Some companies send emails two or three times a day, clogging up their customers’ inboxes and making it difficult to determine what’s special about each offer. Before you send an email or call a customer, think carefully about whether the contact is really necessary.
Another way to build great relationships is to always underpromise and overdeliver. If you tell a customer you can deliver their product on March 10, they’ll be pleasantly surprised when it arrives on March 5. But if you promise delivery on March 5 and then there’s some type of delay, they’ll be disappointed. Just make sure that you don't push out deliveries so far that they don't make the purchase in the first place.
Get Customer Feedback
As we already pointed out, people who trust you are more likely to give you honest feedback, so make sure it’s easy for customers to share their opinions with you. Send out surveys, give out comment cards, or do whatever else you can to encourage them to open up about their experiences with your business. Use that feedback to improve your products and deliver a better overall experience.
Build Customer Loyalty
Consider setting up a loyalty program to reward customers who stick with you through thick and thin. You can structure the program however you like, but make sure you include your customers in the setup process. Soliciting their opinions can help you put together a program that makes customers feel valued and understood.
Don’t take your customers for granted. Show them how much you care by sending thank-you cards, calling to thank them for recent purchases, or offering discounts and other incentives to your most loyal customers.
Follow Up and Stay Connected
Relationships are built over time. The best way to build strong relationships is to follow up regularly and stay connected to each of your customers. Start an email newsletter, invite customers to attend in-store events, post on social media, and do whatever else is necessary to keep the lines of communication open.
One way to stay connected is to use customer relationship management software to manage customer data. CRM systems store everything from birthdays to the total money spent by each customer, making it easier to create personalized offers.
Boost Revenue With Better Customer Relationships
Creating positive relationships isn’t rocket science. You need to be transparent, understand the customer’s values, and do your best to deliver an excellent experience every time. The RevOps Team is here to support you every step of the way. Subscribe to our newsletter for helpful tips on maximizing your revenue potential.