Keep ‘Em Coming

Customer retention is key to long-term success, but it’s not always easy. Industry experts share their tips on how you can keep shoppers coming back for more.

By Lyndsay McGregor

Running a successful store isn’t always about pushing product. At Angelique Kids in New Orleans, LA, it’s also about becoming a part of the community it serves. “We do a lot of outreach in the neighborhood: trick or treating, spring festivals, art festivals, lemonade stands,” notes Co-Owner Jennifer Atkins. “Anything that helps us hold onto customers from the crib all the way to when they start shopping in adult stores.”

Atkins is definitely onto something: As retail research continues to pile up, it’s becoming undeniably clear that customer loyalty is intrinsically linked to a store’s long-term success—much more so than simply boosting foot traffic. In fact, a Lee Resource Inc. statistic reveals that attracting new customers will cost your business five times more than keeping an existing one, while Gartner Group indicates that 80 percent of your store’s future revenue will come from just 20 percent of your current customers.

With the economy and retail industry still in a comparatively slow recovery mode and increased competition from the online tier, customer service and engagement are more important than ever. But many retailers are so focused on gaining new customers—and pouring money into digital marketing—they fail to effectively address the need to retain those they already have. It’s a major retail fail, considering that it’s far easier to sell to your existing base than to entice new prospects. “Marketers simply want to bring in as many new leads as possible. And if you bring in bad leads, there’s nothing to retain because they’re bad to begin with,” says Jerry Jao, CEO of Retention Science, a two-year-old Santa Monica start-up producing customer retention and marketing automation software. After all, there’s no guarantee a new shopper will return for more. “Customer retention should be as important, if not more important, than customer acquisition,” he adds.

Why? Try this statistic on for size: A 5 percent increase in customer retention can increase a company’s profitability by 75 percent, according to a recent Bain and Co. study. Or, as Sarah Knup, head of strategy and marketing at San Francisco clothing brand Tea Collection, puts it, “All of the energies and costs that go into acquiring a customer are worthless if you don’t then focus on customer retention.” To that end, everyone from big box stores to mom-and-pops needs to keep their customers eager to return for more with a mix of stellar customer service and new promotions, including loyalty coupons and rewards. Here’s how.

1. Sell Smiles

Customer service has the power to make or break a small business. Simply put, it’s essential to establish a solid policy for the entire sales staff to follow. “If people leave your store feeling like they didn’t get good service, they aren’t likely to come back,” says Tamsin Carlson, co-owner of Wee Soles, a children’s shoe store in Los Angeles. She’s right: According to a survey conducted by Harris Interactive, 89 percent of consumers have stopped doing business with a company after experiencing poor customer service.

Toni Budworth, who with her husband, Frank, owns and runs Birkenstock Midtown in Sacramento, CA, believes that paying employees on a salary basis removes the motivation to simply sell the most expensive products to a customer without truly considering her needs. “We try to build a camaraderie where we’re all working together to find a solution,” she says, adding, “We try to make suggestions that are great solutions. We emphasize to customers that our goal is to find them great shoes so when they get up in the morning and go to the closet they’re so happy they can put that shoe on.”

“We really spoil our clients,” Atkins says, adding, “If there’s no easy parking for them, we run out to the curb for transactions.” Nina Takesh, co-owner of Los Angeles-based baby boutique, Petit Trésor, says customer service is the pillar of her business. “It’s easy now to offer everything to everybody, but it’s a lot more difficult to handpick and offer the products we feel are relevant. We have a very niche client base. Customer service goes hand in hand with our curated product selection,” Takesh shares. Budworth echoes this. “Our staff will sometimes speak to us about opportunities we may have missed, like a brand that people keep asking for that we don’t carry. By doing that we’re really able to fine-tune our collection so it’s meeting the needs of our community, and our customers can walk out wearing the shoes they walk in looking for,” she says.

2. Know THY customer

One of the biggest advantages to being a small business is the opportunity to know customers in a way the big guys don’t: first by face, then by name. “Most of my customers have my personal cell phone number and are friends with me on Facebook. Sometimes we could be texting at 10 p.m.!” Atkins laughs. If customers receive that level of familiarity every time they visit your shop, they’re likely to keep coming back.

“Be able to collect as much data about your customers as you can,” advises Jao, using e-mail addresses, shopping histories and on-site behaviors as examples. With regards to the latter, he says, “If two customers each spend five minutes on your e-commerce site and you notice that Customer A spends three minutes looking at dress pants and reading the product reviews really closely, while Customer B looked at 20 different products and went from page to page, you know Customer A is more likely to buy in the future.” As he puts it, when you can anticipate a need or pinpoint what they like, you can get ahead of the game.

For example, Carlson keeps a database of information about Wee Soles’ customers, including their shopping histories. When she receives new inventory, she delves into her records to see who she thinks would be interested and calls to let them know. It’s a tactic that works: One-third of her business comes from repeat customers, she says. “It all comes back to customer service,” Knup states. “Capture customer data and use that data to send targeted information to consumers. If someone only shops sales, let them know there’s a sale on. If someone loves new arrivals, reach out and let them know.”

Angelina Jolie, Britney Spears and Jessica Alba are just a few of the famous faces that return to Petit Trésor time and time again for nursery consultation and design. “When we do home visits within our design services, we get to know the client, and we are involved on a more detail-oriented level. Not only are we designing the room, but we’re giving them advice and building relationships,” Takesh says. “Everything is about differentiation, hand selection and keeping the end customer fully in mind.”

3. SELL YOUR STAFF

Whatever skills and attitude you teach during sales training affects how your employees will approach their job with you forever. That’s why top-notch training should focus on your staff’s long-term ability to move your merchandise. “We have a list of clients that I ask our employees to call every day. They update them on the merchandise that’s coming in, but it also helps employees get to know that client,” Atkins says. “That way if they open a box and it’s something they know X would like, they know to call. Or if Tea Collection leggings come in, they know to pull every pair in a size 5 and call Y.”

Obviously you need to train new hires on just about every aspect of working in your store, but don’t forget your seasoned associates, too. It’s easy to assume that someone who has been with you for a number of years knows all there is to know about a particular product or technique, but assuming this will only hurt your business. Regardless of skill level, everyone in your store will benefit from ongoing training. “There’s a continuous education process that has to take place not only with regards to obvious things, like social media, but with how we market and advertise our store and the way we reach our customers,” Takesh notes.

Every few months, Budworth devotes one Birkenstock Midtown team meeting to associate training. “If we see a member of staff really excel at something, we ask them to lead the meeting and we do an exercise in fitting each other and selling to each other. We all have to be reminded from time to time,” she says. She also places informative articles in the break area for associates to underline and initial any comments that resonate for them. “The more we know about our products, the better service and solutions we can offer,” she adds. Knup agrees: “Ongoing training on great service is important, particularly as the retail world continues to change and evolve.”

4. GET CONNECTED

Retailers are increasingly turning to social media platforms such as Facebook, Twitter, Pinterest and Instagram to engage with their customers, share promotions, introduce new products, drive traffic to their websites, send people to the store and much more. “We used to have a very expensive, before-its-time shoppable website back in 2006, and it was a lot of labor. I found myself starting to sell more on Facebook, and now it’s a shopping tool,” Atkins shares.

According to social media analytics start-up Campalyst, 97 percent of the Top 250 Retailers are on Facebook and have an average number of fans ranking close to one million. Takesh notes that social media helps Petit Trésor stay in better contact with its clients. “If we’re given the green light, we’ll post a nursery design or a photo of a customer’s baby,” she says, adding, “It’s helped us maintain the integrity of the relationship and the relevance of the product.”

Carlson recently set up an Instagram account for Wee Soles. “Rather than send my customers an e-mail every time I get a new product in, which would be annoying, they can follow me on Instagram and see what shoes I get when I get them,” she says, noting that it helps keep Wee Soles top of mind with its audience. “The big thing with social media that we find as a brand is it’s definitely an effective tool to push information out, but you need to be engaging; post something that gets consumers to engage with you and with each other,” Knup advises. “Social media is a platform for conversations. It presents an opportunity to learn a lot more about your customers.”

Social media may be the hot new thing, but tried-and-true e-mail is still king when it comes to reeling in customers: More than 75 percent of consumers who get retailer e-mails not only read them, but also use them for shopping, according to a study conducted by Millward Brown Digital. “I think social media is very effective in terms of generating awareness and getting people excited about your product or service, but in terms of actual conversion I think it’s very inconsistent. One thing we all know still works very well is e-mail,” Jao says. York Rasmusson, management consultant at New York’s The Parker Avery Group, thinks e-mail is an important retention tool. “It’s a bit of a golden nugget that’s largely untapped, and not a lot of retailers are following up with e-mail post-customer engagement,” he says. Budworth is inclined to disagree. “I’m seeing some resistance to e-mails,” she says, but concedes, “We were recently offered an opportunity to present a limited-edition sheepskin Birkenstock boot. We e-mailed our customers about it and by the end of that day we had five people call about the boot.”

5. Reward AND repeat

Everyone from drug stores and bookshops to home and garden superstores offers a rewards program to keep customers coming back for more. Not only do these offer an incentive to buy additional products and services, effective loyalty programs also reinforce and cement customer relations. At Wee Soles, loyal customers get a punch card that gives them 10 percent off every sixth pair of shoes purchased. “It’s small, but it’s always a nice surprise when reached,” Carlson notes.

Birkenstock Midtown offers a free set of earrings to customers who purchase three to four pairs of shoes at a time. “The earrings have a perceived value of $20 to $30 but cost us half that. The customer likely smiles and thinks of us whenever she sees them. The same principle works with a pair of quality socks as a gift. I like to give them with a warning that they are addictive—plant that seed. Both are tangible ways to thank them for shopping with us,” Budworth says.

Another key to an effective rewards program is to run relevant promotions that make customers feel good about doing business with your company and encourage them to do more of the same. “When we identify our top customers, we invite them to shop early in the season at a trunk show with a small discount. We feel like that gets them wearing new product early in the season so their friends will see it on them,” she shares, noting that while last fall’s trunk show was pushed forward by three weeks, it didn’t hurt her business: Sales were up 20 percent compared to the same period in 2012. “Timing is important. I’m convinced that people who are interested in fashionable shoes shop earlier.”

On a more personal note, “thank you” e-mails and birthday cards with incentives and coupons codes meant just for loyal shoppers are additional ways to express appreciation and potentially increase retention. For instance, Angelique Kids sends holiday gifts to its repeat clientele. “We do appreciate that loyalty. They could go to 10 other places, but they come to us,” Atkins says.

At the end of the day, being lax about customer retention only leads to greater attrition. Small businesses that collect data, reward loyalty and actively communicate with customers to keep them engaged are well on their way to achieving the prime goal of any customer retention program: keeping shoppers coming back for more.