Customer Retention: The 3-Step Formula

Dan Kennedy, a well-known marketing guru, described being in the waiting room of a professional’s office on a fairly busy day and overhearing a conversation among several others waiting to be seen. The entire area was fresh from major remodeling, with new carpet, furniture, and several big flat-screen TVs.

One person said to the other, “I don’t care about any of this. I just wish he’d be on time and that my appointment time meant something.” The person next to him said, “Second that. We wouldn’t need TVs to watch if we weren’t kept waiting around for a half-hour or hour.”

Soon, several more people joined in to this shared frustration. So, what do you think the odds are of retaining these clients or getting them to refer? Slim to none.

As a business owner, it’s important to know what’s really important to your customers. The complete formula for retaining customers includes three simple steps:

Shared Interest + Shared Space + Shared Concern = Customer Retention

Shared Interest
First, you need to find shared interests — those areas in your life that overlap. You see, I never communicate just about my products, services, and business. Doing that makes my clients feel like numbers on my income statement. I want a relationship, so I share my life, my interests, my experiences, my ideas, who I am, and what I’m about, so they can find shared interests with me.

This is something a lot of business owners find difficult to understand or do. But at the end of the day, a person, not the business, is the one who decides to buy your product or service. You’ve heard the saying, “It’s not what you know; it’s who you know.” Regardless of whether you’re selling B2B or B2C, people would rather do business with someone they know.

Shared Space
Sharing an interest is important, but so is sharing a space. You want to be present in the lives of your customers. Here’s a short list of some of the ways The Newsletter Pro maintains a presence in our clients’ homes, offices, and vehicles: monthly print newsletters, weekly educational emails, plaques to hang on the wall, audio CDs with our branding … and I could go on, but you get the idea.

Sharing space in someone’s physical world is not a new idea. Dan Kennedy literally has a bookcase in my house. When he first started making an appearance in my life, he had one spot on my bookshelf.

Now, I have 20-plus binders filled with his years of newsletters and dozens of course materials. I even have a Dan Kennedy bobblehead! Long before I personally knew Dan, I had a relationship with him, and part of that relationship was developed via his ever-growing presence in my space.

Shared Concern
Shared concern is the final piece to this formula. Relationships don’t thrive when they’re one-sided. You have to genuinely want to help every customer and prospect. Too many business owners put their needs ahead of the needs of customers and prospects.

Although you may do well for a time under those circumstances, your customer retention rates will suffer, your referrals will be nonexistent, and ultimately, your business will plateau or, worse, rapidly decline.

Customers want to believe that your concern for them goes beyond getting into their wallets! The more ways you find to demonstrate that, the stronger your customer relationships are, the better and longer the retention is, and the more frequent those referrals become.

Once you have your customer retention strategies in place, it’s time to to maximize your profits from those clients. See this article to discover how to maximize your income.