The dictionary definition for customer relationship is the relationship a business has with its customers and how it treats them. Practically, this entails the actions a business takes to build a mutually beneficial relationship with customers way before and after they’ve made a sale.
Think of a customer relationship like you would any personal relationship but instead of one between you and a partner, for instance, a customer relationship is one between the business and the customer.
And like any relationship, building it takes time, requires a level of trust and commitment beyond one-off transactions.
But you’d find that this is a worthwhile activity because it has so many advantages that I will highlight briefly below.
Why Is it Important to Build Customer Relationships?
1. Reduce Customer Attrition
Customer attrition is a big deal for small businesses and frankly any business owner because it means that they have to attract new customers over and over again not to talk of the high costs of acquisition. It is difficult to get recurring revenue and build a customer base if the majority of your customers don’t stay beyond one transaction. Creating a relationship with customers is the best solution to reducing the customer churn rate in any business. A report by Wunderman shows that 79% of customers only want to buy from businesses that prove they care about earning their business.
2. Boost Customer’s Lifetime Value
The lifetime value of a customer shows the value of the business the customer contributes during his or her entire relationship with the company. The longer that relationship lasts, the more value the customer can bring to the business. And it is only through an intentional attempt to cultivate such relationships that can it outlive its natural lifespan.
Building customer relationships creates an emotional connection to the business which makes customers more likely to turn to them when their service is required. As a direct result of lower customer attrition, a higher percentage of customers would be likely to do business with a brand they have a relationship with increasing the value the brand can accrue from them to their customers.
3. Reduces Cost of Acquisition
Acquiring a new customer is expensive. A report suggests that it is five times more expensive to get a new customer than it is to retain an existing customer. If for instance, you spend 80,000 Naira to get new four (4) customers for your business, you’re more likely to spend little or nothing to get them to buy from you again, and you can leverage them to bring in new customers at little to no costs.
But that is if you have established a satisfactory relationship with them beyond their first transaction. If you didn’t however, it would have to spend that same amount to get new customers each time you want to generate sales.
4. Develops Brand Ambassadors
The highest form of compliment a customer can give to any business is to talk about their positive experience with a brand with people in their network. By building customer relationships a business communicates how much it values the customer and that genuine show of concern nudges customers to become ambassadors of your brand.
5. Gain Customer Insights
Having a healthy customer relationship affords business owners the privilege of gaining relevant customer insights and feedback for free. Businesses that have not cultivated long term customer relationship have to pay more and sometimes rely on an external source for such insights.
How Small Businesses Can Build Customer Relationships
Here are a few things you need to build customer relationships in your small business:
1. Create Value
You cannot have a customer to build a relationship with if you are not offering any value. This is why this is an important place to start. Create value for your customers that is satisfactory to their needs.
2. Train Your Employees
If you can train your employees to value the customer and treat them well, then you would be able to establish your customer relationship on the right track. But you cannot treat your employees poorly and expect them to give their best to your customers. Start by creating a suitable working condition for them and train them on the importance of giving customers a memorable experience beyond single transactions.
3. Communicate Consistently
Communication is key to any relationship and that is true for the customer-business relationship too. Your business must maintain a constant way to keep in touch with customers and stay top of their minds. Now, this is not a go-ahead to spam your customers via emails or whatever means you reach them by. This means that as a business you must look for ways to communicate how much you value your customers.
This can be done by interacting with them on a more personal level like sending them birthday messages, showing genuine care, answering their questions, informing them of updates in your company (without being sales-zy), getting feedback from them. You see, from the activities, I outlined here your communication with customers should not be a one-way street. Be open to getting feedback from them and taking appropriate actions.
4. Go Above and Beyond
From the value, you offer to your post-sales interactions you must show your customers that you genuinely care for their success. Offer them more value than they pay more, reward them for their loyalty, and delight them with something unexpected – to spice up your relationship.
I believe with these four (4) blocks you should be able to build long-lasting customer relationships. Now, all you have to do is implement them.
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