Customer Retention Strategies & Apologies

Customer retention programs are important to any large or small business. We all know how much easier it is to sell something to an existing customer than to acquire a new one. So why aren't we making more effort in retaining our customers?

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The first thing we need to understand is that customer retention isn't built exclusively on satisfaction; it's built primarily on relationships—and like any successful relationship, respect and trust are fundamentally crucial.

Respect and trust come from how we conduct and manage our daily business relationships, especially in difficult circumstances (where apologies often come into play), and through the customer service that we provide. Unfortunately, our first instinct when faced with a customer complaint is to view the situation negatively, which is usually the last thing we should do.

Instead, these 'crises' should almost always be viewed as an opportunity—a positive step towards customer retention. This is not only true for customers who voice their complaints but even more so for the many customers who experience a problem but don't complain. Many of whom will be looking to take their business elsewhere without warning. As Bill Gates once said "Your most unhappy customers are your greatest source of learning".

Complaints should always be accepted, encouraged and welcomed as an opportunity to learn and build-on existing and potential business relationships. Unhappy customers should become part of a proactive customer-centric business philosophy—a business strategy that develops and refines effective service recovery policies and successful customer retention programs.

Service recovery, in the broadest sense, simply means that a series of measures are put in place to ensure a quick and effective response to any negative situation. These measures should therefore become (and remain) an integral part of all customer retention strategies—and perfect apologies need to play a major role in the service recovery process.

Apologies can be pivotal in customer retention by immediately addressing customers' concerns while earning their respect and trust.

The three primary elements of good business apologies that speak directly to customer loyalty are:

1 | Ownership/responsibility for the mistake

2 | Some meaningful compensation/restitution

3 | An explanation of how the problem will be fixed

Accepting full responsibility when apologizing for an error or inconvenience is key, followed by a clear, credible and quick solution, and then some form of restitution that lets the customer know they are valued. In regard to addressing the issue, it's critical that the customer be satisfied that the plan you've laid out will prevent any future recurrence.

The most important thing to keep in mind in terms of restitution is how it is perceived by the customer. This might translate into a dollar value or a more convenient way for your customer to patronize your business in the future. Either way, it's important to know how the compensation is viewed by your customer.

A customer who feels valued is more likely to translate those positive feelings into remaining a loyal customer and, more importantly will become an advocate for your business which, in turn, will have an ongoing positive impact on your bottom line.

Creating and developing customer retention strategies and programs that include a service recovery process with detailed guidelines (especially for issuing apologies) is one of the most effective means of building customer loyalty.

The guidelines should include among other items, information on when and how to apologize; what wording to use under various conditions; and what forms of restitution are available for specific types of situations. Adequate training on the use and execution of the guidelines should be part of the process.

These policies and related guidelines will also foster within your company a customer retention culture that stakeholders (employees, partners, customers) will find very appealing. As a result, customer retention strategies will be further entrenched throughout the company through a heightened awareness and appreciation of customer complaints that spans from the front desk clerk to the executive suites.

Welcoming customer complaints, understanding their benefits, and having policies in place to deal with them sets a solid foundation for an effective customer retention strategy and program.

Learn how customer advocacy is important to your business or explore other areas of apologies in business

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