However, not all businesses last. According to the Small Business Administration (SBA), approximately 30% of businesses survive at least 2 years and about 50% at least 5 years. Also, 66% survive the first 10 years and around 25% up to 15+ years.
The Effect of COVID-19 on the Business Landscape
One in 12 businesses closes annually and the reasons are largely personal.
Unfortunately, more than 100,000 businesses have closed permanently since the COVID-19 pandemic escalated in March 2020, according to a study.
The latest data suggested at least 2% of small businesses shut down. The National Restaurant Association reported 3% of restaurant operators went out of business.
Approximately 4.2 million businesses received emergency loans from the SBA, but what about the 26 million small businesses?
Small business owners stated that the financial rescue provided by the Congress is not designed well enough to assist micro-firms or businesses with large overhead costs, such as rent.
In February 2020, an eMarketer survey projected a 2.8% growth to $5.621 trillion in total U.S. retail sales. After the pandemic hit, it predicted a 10.5% decline in total US retail sales this year, with a 14.0% drop in sales at brick-and-mortar stores.
The Rise of Ecommerce During the Pandemic
Necessary lockdowns and stay-at-home orders reduced the demand for nonessential goods, resulting to the closure of brick-and-mortar stores
The good news, e-commerce is projected to grow 18% after a 14.9% gain in 2019.
An advantage e-commerce has versus physical stores is reduced contact, and that’s possible with online purchases, which more consumers prefer.
eMarketer projected a growth to $58.52 billion U.S. click-and-collect e-commerce sales, up 60.4% from its initial forecast of 38.6% growth.
How Can Entrepreneurs Grow Their Businesses at This Time?
What have most business people learned about business growth? Generating a steady stream of leads is fundamental. But if you want to grow your business, you need more leads.
This is what new entrepreneurs learned and proved true.
As many consumers prefer online purchases, getting new leads is more possible for businesses that can shift to online transactions.
Should you compete with businesses scrambling to acquire new leads? Not necessarily.
Did you know that acquiring a new customer could be five to 25 times more expensive than retaining an existing one? This is especially problematic for businesses with limited budgets.
The reality is 44% of businesses are more focused on customer acquisition compared to only 18% that focus on customer retention. Only 40% have an equal focus on acquisition and retention.
Why should business owners focus on customer retention?
Customer acquisition measures how successful a business is at acquiring new customers, but retention measures how successful it is at satisfying customers. This is a direct result of the power of the company’s customer experience.
Why would you spend more time and resources finding new clients if you can keep existing customers happy?
Experts found that the probability of selling to an existing customer is 60-70% compared to the only 5-20% selling probability to a new prospect.
Furthermore, current customers are 50% more likely to try new products and spend 31% more compared to new customers.
According to a study by Frederick Reichheld of Bain & Company (the inventor of net promoter score), increasing customer retention rates by 5% will increase your profits by 25% to 95%.
When your existing customers are satisfied with your products and/or services, they do not just make repeat purchases, but they’re also likely to refer family and friends to your business.
What Strategies Can Improve Your Customer Retention?
Share case studies and customer testimonials
Present previous case studies to show your company’s style of communication and collaboration with customers and the results you achieved from them.
Sharing testimonials from existing customers will also make new customers understand that doing business continuously with you will be better for them.
Set clear expectations
Do it from the start. For example, some customers may feel you should give excellent customer service for the price of the product or service.
Understand your customers’ different viewpoints. Impart your communication style, your process, deadlines and progress toward goals to ensure that customer expectations are met.
Provide excellent customer experience
Consistency is the key to building customer trust. Customers want to know what to expect from you and need assurance that they can rely on you and your team to get the work done.
Customers prefer businesses that regularly communicate results
If your product or service delivers results and ROI for your customers, they are more likely to do business with you. To do this, utilize a smart tracking and reporting system on the metrics that matter to the customer. These metrics should relate to the goals you established together.
Ask for customer feedback and address it
As in any relationship, you need to know how your customers feel about the company and the products and services that you offer. Say with negative feedback, you’ll have an insight on what to improve or change altogether.
Where you are in customer relationship
Show customers reasons to keep doing business with you. To do this, create initiatives and projects that you and your customers can work on in the future. This will help take your business relationship to the next level.
Highlight shared successes
In a business relationship, missed goals or deadlines, for example, are a big deal. When this happens, the company should apologize and take the necessary steps to mend the relationship. Similarly, when something good happens, you must celebrate it together.
Make sure your team relates well with customers
Many businesses tend to have one point of contact for the customer, usually their primary customer success manager. However, one face might not be enough to represent your company.
What’s better? Introduce the entire team to the customer and make him/her feel that he/she can rely on any member if a problem arises. This can improve customer relationships because customers would know who they’re doing business with and make it easy for them to connect and feel home.
Create a customer loyalty program
It can foster customer loyalty and retention because it adds value to your customers. This can take the form of loyalty bonuses, gamification and user-generated content.
Giving them a great experience, they’re likely to buy again, stay loyal to your brand, and share your business with family and friends.
One survey said, 86% of buyers will pay more for better customer experience. This clearly shows that many consumers still believe in the saying, “You get what you pay for.”
Even in this pandemic, I believe that COVID-19 Provides Us an Opportunity to Focus on What’s Truly Important.
Are you struggling with customer retention?
With a targeted and customized approach, you can keep customers interested, engaged and loyal.
After all, loyal customers are your brand’s ambassadors who endorse your brand willingly.
They spread the good word about how your business helps them succeed and how other people can too if they do business with you. That’s the power of positive word-of-mouth that existing, HAPPY customers can offer you.
Take care of existing customers by learning how to make and keep them happy.
May this serve as a message of hope that being human may very well be the best silver lining to all of our current vicissitudes.
In love and respect,
Founder & CEO, Corna Partners