The Entrepreneur’s Guide to Improving Customer Retention
Customer retention is essential to the long-term viability and success of all entrepreneurs and small business owners. After all, today’s fickle customer has plenty of options and with the constant threat posed by larger, better financed competitors, entrepreneurs need every tool at their disposal to stay front and center in the eyes of customers. What can entrepreneurs do to ensure their future growth is built on repeatable business from clients who are not only loyal, but who consider them their primary vendor? Surprisingly, there are a couple of simple approaches that all small business owners and entrepreneurs can adopt. In fact, being smaller really does have its advantages. Knowing these advantages will help your company become that vendor of choice and always give you the right of last refusal with respect to your customers’ business.
Reward & incentive programs
Just how important are customer reward and incentive programs? Well, considering that some consumers will go out of their way to accrue points with their favorite credit card, or at their favorite store, then it’s fair to say it’s pretty important. Small business owners can run the exact same reward and incentive programs and are likely to be much more flexible on how those programs are managed and implemented, than their larger competitors. Large companies have rules, regulations and a myriad of procedures in place to protect their gross profits, and most importantly, their bottom line. With less overhead, and more flexibility, entrepreneurs can offer incentive programs for customers that match their exact needs.
Take the time to come up with your own reward program. It could be based on volume purchased, frequency of orders or the types of products or services offered by your company. Make sure your program is flexible! Provide your customers with options on how they can accrue their rewards and how they can be redeemed.
Offer discounts on prepayment & prompt payment
Make sure to offer your customers several payment options and methods. However, concentrate on getting your customers to prepay, or pay a portion of the invoice amount sooner, by offering discounts for prompt payment. Discounts for prepayment & prompt payment are excellent tools to increase customer loyalty as they allow customers to accrue additional savings off the invoice’s value. At the same time, you benefit from earlier payment, which helps your company’s cash flow.
Be flexible on payment terms
Being flexible on payment terms is a benefit that small business owners have over their larger competitors. Now, this doesn’t imply you allow your customers to take as long as they please to pay their invoices. Not at all! Like any business, your small business has to not only pay its bills, but also meet payroll and still have enough to pay for those day to day operating expenses. However, if you can afford to be flexible on payment terms with your largest customers, then use it to your advantage. Most competitors will find it hard to be as flexible. If it makes a difference between business won and lost, then make sure to weigh the benefits of extending terms to your largest customers.
Be willing to sign contractual agreements on supply
Most large companies have all kinds of rules and regulations governing how they manage and hold inventory for their customers. After all, inventory can be extremely expensive. However, with less overhead, small business owners and entrepreneurs can afford to be far more flexible in managing and controlling their contractual supply agreements. Now, the intention is to be more flexible in managing supply agreements, not to be a “pushover”. In this case, be sure the supply agreement covers your company’s inventory costs of ownership. However, be willing to hold inventory longer if needed. This is often one thing larger competitors simply can’t compete with.
Be willing to become an “unpaid consultant”
This last point is something that must be handled with care. By no means is anyone implying you offer up something for nothing. This is not the intention of this last point. Regardless, small business owners often have keen insight into their given industry or market. That insight and information is often of great value to customers. Therefore, be willing to share information that could help your best customers secure business of their own. However, be sure to draw the line at customers asking you to provide competitive pricing in order to lower other competitive bids. This is not acceptable.
When it comes to improving customer retention and loyalty, small business owners and entrepreneurs have the capacity to be more flexible than their larger competition. The key is to be aware of the ways your business can afford to be more flexible, that can’t be duplicated by your competitors. Take the time to enact these aforementioned strategies. They will improve customer retention and ultimately ensure your company is your customers’ primary partner.