How to retain your customers

1 “Re-gruntle” your customersIf, heaven forbid, you disappoint one of your customers, give them something back that far exceeds the value of their problem. “If one of our members is upset because we’re fully booked for the second time in a row, we’ll give them a voucher for a meal for eight,” says James Minter who set up Adam Street, the private members’ club, in 2001 using the basement vaults of Georgian terraced houses owned by his father. “It’s an unexpected and magnanimous gesture that ultimately costs you far less than it would to have a single disgruntled member.”

2 Pimp your officeInvite customers to a dingy office at your peril! Even if you’re based on Slough Trading Estate, create the illusion of a palace. Joanna Miller, co-owner of £2m-turnover phone parking company RingGo, has set up an account with her local florist and gets fresh flowers delivered to the office each week. She says: “We spend £60 a week on flowers. That’s not much – but nothing makes the office look more inviting and extravagant.” Miller also recommends checking out second-hand site www.wantdontwant.com to update tired pieces of office furniture. If your office is too small to host clients, take a leaf out of James Caan’s book. The  Dragons’ Den star wanted to base his first recruitment firm in Mayfair to give it a grand address but the only space he could afford was a former broom cupboard in Pall Mall, with no window. When clients turned up, he’d say: “All my meeting rooms are busy, so shall we go down the road for a coffee?” Cunning.

3 Never say noWhen John Timpson, chairman of the eponymous high-street cobbler and heel-bar chain, called in on one of his shops in the centre of Taunton a few months ago, there was a dog standing on the counter. “If this was unusual, what followed was bizarre,” says Timpson. “Wayne, a lifelong shoe repairer got out his tape measure to measure the dog. ‘What’s all this about?’ I asked. ‘Well,’ said the customer, ‘I ride a scooter and the dog goes in the basket. For ages I’ve been wanting a special leather jacket so he can join the biker’s brigade, and your man here has promised to do it for me.’” When Timpson checked back a week later, the jacket had been made and fitted perfectly. “I’m sure it cost a lot more than the £20 we charged the customer, but I’m equally sure it did the business a lot of good,” he says.

4 Protect their reputation“Protect your client’s reputation, even if it means risking your own,” says Darren Tilley, founder of chauffeured transport firm Driven Worldwide. “If something has gone wrong and it’s your fault, take it on the chin.” Tilley says he once travelled into town to apologise personally to the CFO of a major electronics manufacturer because his car had been five minutes late in collecting him. “We’d provided a car for him through an investment bank client of ours. I made it clear to him that it was our fault, not the bank’s. He appreciated our honesty and it actually improved his relationship with our customer.” Small wonder Driven Worldwide has a 95 per cent customer retention rate.

5 Give them an escape routeConvinced you offer the best customer service on the planet? Then make sure it comes with a guarantee. When Dan McGuire founded job advert distribution firm Broadbean in 2001, he offered all clients a 30-day notice period. He explains: “We knew our customer service was special but it was a way of saying, ‘we’ll prove it’. All of our first 20 clients are still with us today.” Two-thirds of Broadbean’s £3.2m turnover comes from repeat business.

6 Forget market research“I never do market research and I don’t care what the competition is doing,” claims Brendan Barnes, the entrepreneur behind London Business Forum. Instead, he swots up on customer service by reading business books and “listening to more inspirational speakers in a week than many people do in a lifetime”. He adds: “I surprise my customers with free events, charity dos and speakers including Sir Richard Branson, Sir Alan Sugar and Jack Welch. I’m obviously doing something right – my corporate memberships increased by 19 per cent this year despite gloomy times.”

7 Give their mates presentsLoveFilm.com is the third most popular movie and entertainment website in the UK, with nearly a million members. But CEO Simon Calver isn’t resting on his laurels. In December, Calver sent more than 800,000 free, three-month subscription vouchers to his customers, which they could then hand out to their friends. “The vouchers were worth around £40, so our customers could use them as little Christmas presents,” he explains. It’s a wily move: customers feel as if they’re being thanked for their loyalty and LoveFilm.com gets extra brand exposure. Calver, who worked at Dell and PepsiCo before heading up LoveFilm.com, expects to boost membership by ten per cent off the back of this Yuletide promotion.

8 Let them meet each other“In times of financial instability, your reputation becomes your best asset and your clients want to know they’re in good company,” says Kevin McSpadden, the co-founder of More2, a £5.4m-turnover marketing agency. More2 has a client churn rate of just five per cent, and holds networking events for clients within the same sector. “It makes them feel as though they’re part of an exclusive club,” says McSpadden. “They get to meet their peers and you get the chance to demonstrate your influence and reputation within the industry.”9 Have a coffee “Whenever you’re out and about, consider if there are any customers nearby that you could meet for a quick coffee,” advises Tilley of Driven Worldwide. “Give them a call and see if they’re free to meet. They appreciate a quick, spontaneous break and it’s a great way to spend relaxed, quality time with your customers, finding out how they’re performing and diffusing any niggling issues.” Tilley says his firm recently won a huge new piece of business with an investment bank because one of his “coffee meetings” led to a referral.

10 Find out what they’re saying about youMessage boards. Blogs. Facebook. Let’s face it: it’s easy to “eavesdrop” on your customers’ conversations. Listen to what they’re saying about you – and then give them what they want. “This is powerful stuff,” says Mark Rogers, who set up web monitoring firm Market Sentinel with his brother, Simon, in 2004. “We monitored what the public were saying about our customer, Avis, and noticed a strong demand for a GPS system in its hired cars. Avis subsequently fitted its fleet with the device and achieved ten per cent growth in a sector that was experiencing one per cent growth.”

11 Get personalKnow your customers. Then really get to know them. “You should know when it’s their birthday (and send them a present), the names of their kids and whether they have a dog,” says Simon Campbell, who set up electronic postal firm ViaPost in 2007 and expects a turnover of £7m in year one. Campbell’s philosophy? The better your relationship, the more you’ll learn about their business and be able to up-sell. “I used to have a customer based in Spain. I called him each week to chat about the Barcelona football match. Every week I learned more about his current projects and we won them all!”

12 Be lenient Sure, it’s important to respect terms and conditions. But you don’t need to follow them to the letter. “We train our staff to know when it’s okay to bend or break the rules,” comments Laura Tenison, the entrepreneur behind £18.5m-turnover maternity and childwear firm JoJoMamanBebe. “A good customer who returns an item a couple of days late without the receipt should be given the courtesy she requires and not be made to feel uncomfortable. She’s much more likely to return and buy again.”

13 Give them a good deal“Structure deals based on longer-term commitment,” advises RB columnist and marketing guru Peter Knight. “Consider offering loyal customers a reduced fee that increases in reasonable increments over a period of time.” Knight, who runs creative agency Phoenix, says he recently reduced a client’s fee by 50 per cent for the next six months to cement a long-term partnership.

14 …Or let them skip paymentYou’re not alone in suffering the credit crunch. Your customers are feeling the squeeze, too. They’ll think twice about signing new contracts. “In the past, we’ve offered a payment holiday in return for contract renewal to clients who are feeling the effects of a downturn,” says McSpadden of More2. “They appreciate having one less payment to worry about in a month. Ultimately, your empathy will boost their loyalty. It’s a small price to pay for client retention.”

15 Treat them to hospitality with the wow factor Thinking of taking your customers to an Arsenal match or a three-course meal? Boring! Use your imagination and treat them to something a bit different that they’ll tell their friends about. “We’ve flown clients abroad on private jets for the day, to country houses in helicopters for lunch and to Champneys for a weekend of pampering,” says Driven Worldwide’s Darren Tilley, who hasn’t lost a single client during the past three years. He recently treated his customers to a meal at Archipelago in London. The speciality dish? Chocolate-covered scorpion. “Our clients loved it because it was quirky. It gets talked about to this day.”

16 Get creativeJames Frost, founder of marketing agency Coast Digital, runs quarterly innovation workshops with his top customers. “We encourage the whole team to come up with new ideas, however crazy,” he says. “The workshops are really popular with clients. We sat down with Wiltshire Farm Foods and came up with 11 new ideas – they took five of them on board straight away.” Frost, whose Essex-based firm pulls in sales of £7.3m a year, says the workshops help to generate revenue and keep his team on their toes.

17 Get stuck in Go and work in your client’s business for a day or two. “See the position from their front line so you’re better placed to deliver ideas that will work,” advises Peter Knight of Phoenix. “I spent three days working at Romans Estate Agents before implementing a personal development programme and helping them with their marketing and promotion. The lessons learned were really valuable and it gave credibility to our recommendations.”

18 Attend their events“I always try to meet customers outside the normal ‘buying-and-selling’ meetings,” says Mark Needham, founder of £37m-turnover gadgets firm Widget. “If they’re running a charity event, I’ll be there.” As most of his customers are retailers, Needham also turns up to store openings. “One of my customers opened a new store in Huddersfield the other week. It was a great opportunity to talk to all four of the key directors, including two I hadn’t met before. I also had the pleasure of watching one of them sell a tumble dryer, proving that the directors weren’t just decoration!”

19 Price flexibly“From time to time, cowboy cobblers open down the road and charge half our prices. It’s a mistake to start a price war – you simply end up being a busy fool – but you must compete,” says RB columnist John Timpson. “One of our cobblers, Darren, had the answer: ‘Look,’ he said to a customer who was complaining that our prices were much higher than the grumpy cobbler down the road. ‘I’ll charge the same as him as long as you promise to come back and tell me how much better my service and quality are than the competitor down the road.’ We won a sale and a customer for life.”

20 Show them the moneyCustomers will wield the axe on a contract if the ROI isn’t clear. “We produce detailed campaign reports for each customer,” says Coast Digital’s Frost. “We break down every pound spent and the return achieved. Our average return is around 20:1. In a downturn, customers need to justify every bill, so make it easy for them.”

21 Let them have funMarshal McCombie placed a gaming table slap-bang in the middle of his shop, Southsea Models and Games. On Saturdays, he runs tournaments and gives prizes to the winners. “Many of these tournaments take place prior to the release of a game so my customers are first to try it,” explains McCombie, who appeared on BBC2’s TV programme All Over the Shop. “I compete with internet sites where people can order their games online but I’ve created a personalised ‘try-before-you-buy’ service for my customers. That gives us the edge.”

22 Steal them away from the competitionThe Real Hotel Company runs a “Make an FD happy” challenge. “If you’re staying with one of our competitors, we’ll take a fiver off your bill per night if you move all of your business to us,” explains CEO Michael Prager. The company’s interim turnover for the first half of 2008 hit £37.1m. 23 Don’t dilly dallyGorkana is an online media directory for PRs and journalists, which pulls in sales of £5m a year. To deal with enquiries quick smart, founder Alex Northcott set up a dedicated feedback desk with a team of six. “If an email request comes in, they get back to the client within a minute,” says Northcott. It works: Gorkana has a 98 per cent customer retention rate.

24 Ban the phone robots“We don’t have a switchboard. There’s no automated system. If a customer calls, every phone in the office rings so it’s picked up quickly,” says Dan McGuire, who sold London-based Broadbean to the Daily Mail Group earlier this year. “Everyone in the company is trained to deal with the initial call and the office is manned from 7.30am–7.30pm to fit in with the hours our clients work.” McGuire says 97 per cent of Broadbean’s customers renew their contracts each year.

25 Write a letterA handwritten note or card can be much more powerful – and personal – than a typed email. Peter Knight of marketing firm Phoenix sends at least one note a week to clients. “Sometimes, I’ll attach a clipping of an article that I know they’ll be interested in,” he says. “Many of my customers have commented on how they value this personal approach.” Knight expects this year’s sales to remain steady at £5m, despite the credit crunch.26 Give your VIPs extra special treatmentOnline fashion retailer Net-a-Porter lavishes attention on its top spenders. It gives its EIPs (Extremely Important People) dedicated personal shoppers, previews from runway collections and first-chance-to-buy offers. The proof is in the pudding: sales have jumped 48 per cent in the past year to £55.2m. “Work the 80-20 rule,” advises CD WOW! founder Philip Robinson, who sold his £140m-turnover music retail business in 2006 and has just started up a cosmetics company in China. “Remember that 20 per cent of your customers produce 80 per cent of profits, so give them personal attention, dedicated phone lines, priority delivery and ‘Gold Cards’. They’ll think you’re the best thing since sliced bread – and they’ll be your finest salesmen.”

27 Show your warts – and all“We like to work side-by-side with our clients,” says Oliver Bishop, who set up digital marketing agency Steak Media in 2005. “We’re not afraid to invite them to hot-desk from our offices. If that means having to introduce them to dishevelled colleagues who are taking part in a charity moustache-growing contest, we don’t really mind!” Sales at Steak are sizzling: turnover has jumped from £14.4m in 2007 to £23m in 2008.

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