While acquiring new customers is a priority for many businesses, it’s certainly not cheap. According to Invesp, it costs five times as much to attract a new customer than it does to keep an existing one. Despite this, only 18% of businesses prioritise customer retention over customer acquisition.
Clearly, there’s a flaw in how businesses think about customer growth. Phil Foster, Managing Director of Love Energy Savings, one of the UK’s leading energy comparison sites, describes it this way:
“Trying to grow purely through the acquisition of new customers without considering the customers you already have is like trying to get water from a well with a bucket full of holes: you’ll lose just as much as you’ll gain. The obvious solution is to fix the holes first, but so many businesses are afraid of losing their perceived momentum that they put off doing this for as long as possible, not realising that it’s stunting their growth in the long term.”
Investing in a “Customer for Life” strategy is an effective way to reduce expenditure and boost profits. Research conducted by Bain & Company revealed that a 5% increase in customer retention rates can boost profits by between 25% and 95%.
Fred Reichheld, founder of Bain & Company’s Loyalty Practice, explains it like this:
“Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. What’s more, return customers refer others to your company. And they’ll often pay a premium to continue to do business with you rather than switch to a competitor with whom they’re neither familiar nor comfortable.”
The bottom line is this: customer retention is good for your business, and in 2018, it’s more vital than ever in helping you succeed.
So, how do you go about turning those one-off window shoppers into brand ambassadors?
- Measure customer retention
Peter Drucker, often hailed as the “father of modern management”, once said “If you can’t measure it, you can’t improve it”.
It’s a quote that has fast become the mantra of many a marketing director and it’s especially relevant when it comes to customer retention. If you’re not currently measuring how customers are interacting with your site over multiple visits or transactions, it will be impossible to see whether the changes you make have any effect.
So, the first hurdle you need to overcome is how to measure customer retention.
Track both new and returning customers
If you’re familiar with using analytics tools, you should use them to track two basic metrics: new and returning customers.
As a basic rule of thumb, you want both of these numbers to increase over time, but – since returning customers are more profitable – returning customer data is the one you’ll want to keep your eye on.
Set a benchmark based on the previous data, such as the number of returning customers you had last quarter, to measure against your current performance. That way, you can measure the impact of any new initiatives you might want to try.
If you haven’t used analytic tools before, there are a number of free options you can get started with, including Google Analytics and Open Web Analytics.
Identify points of difficulty in your customer journey
If it’s difficult to interact with your business, it doesn’t matter how good your products are: customers won’t buy them. You have to ensure that the entire journey, from browsing to buying, has as few hurdles as possible.
Take a look at the pages of your site where customers typically drop off the most; maybe it’s the page where customers are asked for their personal details. Then take a look at why customers might be leaving this page. Are there too many mandatory fields? Is it unclear what customers are meant to do once they’ve filled in their details? Is there a clear call to action?
You can use A/B testing tools like Optimizely and Unbounce to see whether the changes you make based off your observations help customers get to the next page.
Assess customer spend and transactions
Identify not only what your customers spend on an average purchase, but how much the average customer spends over the course of a year, or how many transactions they make.
You can use this data to establish your Customer Lifetime Value (CLV) – once acquired, how much does a customer spend with your company? Measuring CLV will give you a much better idea into how much a customer is worth to you and how much you need to invest in improving customer experiences.
- Invest in experience
When Uber took the taxi world by storm, it did so by giving users an easier way to get a ride than had ever been available before. Millions of app downloads later, it’s a lesson in how making customers’ lives easier can lead to massive business growth.
Improving customer experience can ensure your customers transact with you again and again, even if it might be cheaper to go elsewhere: research from Oracle shows that 86 percent of users will pay more for a better customer experience.
That said, here are a few easy ways you can invest in customer experience.
Make it as easy as possible to buy from you
Basket abandon can be a big issue for businesses, so take a look at the analytics data of your checkout journey to see how you can improve this experience for your customers. Are you asking customers for too much information? Is it unclear what they need to fill in and what they can skip?
Solve problems quickly
Customers will always have the odd problem that they need help with. It’s up to you to ensure that when they need help, they get it from you readily.
Add on-site live chat facilities across the site so that users can ask for help while they’re still thinking about purchasing from you. You should also include a help link in order confirmation emails so that if a customer has any questions about their order, they can talk to you about it straight away.
Spoil your customers
O2 users get priority tickets to gigs all around the UK. Amazon Prime users get free next-day delivery and instant access to thousands of films and TV shows. Nandos give their customers a free whole chicken on every tenth visit.
The reason these companies invest in rewards is because they work. Spoil your customers by offering them gifts, exclusive discounts or unique experiences and it’ll be difficult for a competitor to win them over on price alone.
- Embrace complaints
If there’s one group of people who know what you could improve, it’s your customers.
Customer complaints often highlight key issues within the customer journey. David Ingram, Managing Director of Bring Digital, says that customer feedback is vital for retention and growth.
“It’s important to know as early as possible where you’re creating friction with your customers because this compounds over time. Find a way to get regular, honest feedback from your customers and use that to your advantage.”
Here’s how to get more customer feedback and start making the changes that matter most.
Don’t just wait for customers to leave you feedback – ask for it at every opportunity.
You can encourage more feedback with email surveys on the back of a customer’s first order and links to a preferred independent reviews website. Show customers that their feedback is valued by incentivising them; perhaps they could be entered into a prize draw or get a discount on their next purchase.
Once a customer has left their feedback – whether positive or negative – thank them for doing so. A great way to do so is by publicly thanking a customer on social media, or even sending them a personalised email.
Tell customers when you’ve made the changes they asked for
Don’t let the conversation end at “thanks”; you need to show customers that you’ve listened to them.
The only way to do that is with tangible action.
If you make a change to one of your products based on customer feedback, let them know. Get in touch via email or social media and highlight the original complaint and what you did to resolve it. Customers that see you making changes on their behalf will feel more valued and connected to your business, increasing the likelihood that they’ll come back to shop with you again – even if their last experience wasn’t positive. This positive interaction can also lead to customer referrals – helping you to save on new customer acquisition costs.
Make your customers the life of your business
Even in 2018, when technology appears to dictate everything we do, companies who make their customers feel valued are the ones that succeed.
So make it your year for measuring success, treating your customers better than your competitors and engaging with customer feedback and you’ll enjoy genuine long-term customer satisfaction that boosts your profits and puts you ahead of the rest.
Want to know how else you can save money while your business grows? Check out our guide to switching your business energy.
Why cybercriminals have ‘Gone Vishing’ during the COVID-19 Pandemic
- More than 215,000 vishing attempts in the last year alone
As new coronavirus restrictions look set to confine much of the UK population to their homes this winter, cybersecurity specialists Panda Security are warning consumers to be on guard for an explosion in ‘Vishing’ attempts by cybercriminals.
Vishing, or voice phishing, is a social engineering technique used by fraudsters posing as someone from an IT helpdesk or support services, in order to obtain personal information from a victim. They will then look to use this information to hack into secure systems and defraud victims.
Vishing has increased as hackers are taking advantage of employees working remotely. Since August last year, HM Revenue and Customs (HMRC) has received reports from the public of more than 215,000 vishing attempts. These scams often offer fake tax refunds or help with claiming Covid-19 related financial support.[i]
The hacker can be very convincing and will often have done a lot of research into the company and the person they are contacting, to make what they are asking you for sound plausible. At times they even spoof phone numbers, so it looks like the caller ID is authentic and the same number as the real business.
European Cybersecurity Month: Keeping the ‘Vishers’ at bay
During European Cybersecurity Month, Panda Security is raising awareness of the dangers of vishing and is calling on consumers and businesses alike to take some simple measures in order to protect their data. Hervé Lambert, Global Consumer Operations Manager at Panda Security, gives his top tips to avoid being a victim of a vishing attempt this winter.
- Never give out your personal details: You should never give anyone your personal details such as bank details or passwords verbally over the phone or via email. Hackers will often find data about you on the internet and through social media networks and use this to convince you they are legitimate
- Be suspicious: It is right to be apprehensive of unknown callers, particularly if you are not expecting the phone call. Ask the caller questions or give deliberately false statements, and if you do not feel comfortable with their answers, hang up and phone the company or person back directly
- Don’t always trust caller ID: Hackers can often spoof legitimate phone numbers and make you believe that the phone call is coming from a credible source. Remember that legitimate businesses will never ask for your personal details unsolicited over the phone
- Install security measures: While internet security will not completely protect you from fraud, installing measures such as antivirus software will help protect your digital identity and make the job of the hackers much more difficult
- Keep calm: Often the hacker will try to panic you into reacting very quickly and scare you into providing them with your information. Take a moment to breathe and slow the conversation down
Commenting on the raise in vishing attempts, Hervé Lambert, Global Consumer Operations Manager at Panda Security says: “Vishing is not a particularly new or sophisticated technique, and yet the “new normal” of working from home has been a boon for cybercriminals looking to exploit vulnerable people in this way. Hackers will scour the Internet and social media networks for any information they can glean about a potential victim before making a call. Once they have secured the victims trust they are then in a position of power to defraud them.”
Lambert continues: “It is essential that consumers take preventative measures to protect their digital identity, while remaining vigilant and question anything that seems unusual. Our key piece of advice remains: never give out your personal details over the phone.”
Five golden rules of recruitment
Former investment banker and entrepreneur, Connie Nam, discusses five ways in which basing your recruitment process around understanding a candidate’s personal passions, motivations and personality can improve staff retention and strengthen your workforce.
Ex-investment banker Connie Nam saw a niche in the UK jewellery market and built a £10m business from her kitchen table in just eight years. Today, as CEO and founder of cult jewellery brand Astrid & Miyu, she is continuing to grow her business as well as her team despite the unprecedented challenges of a global pandemic.
As founder and CEO of a rapidly growing business, Nam’s role is ultimately to create a clear vision, run the business, continue its growth and – most importantly – lead and support her team in their work and in their progression within the business. Nam started her business on her own and, as the brand grew exponentially, she had to become quickly accustomed to managing people and continually refining her recruitment process to attract and retain the best talent to grow with the business.
Now, with a team of more than 80 across the business, Nam and her senior management team have built a rigorous recruitment process, driven by strong cultural values, to identify the perfect candidates and ensure there are world class managers heading up each department as her team continually expands.
The key to recruitment and retention according to Nam, is that the people and culture element is part of the wider company strategy, not just part of a HR strategy in silo. Nam believes that people should be at the heart of any business and that taking the time and asking the right questions to understand a candidate’s personal passions, motivations, goals and personality during the recruitment process is vital to building and retaining a unified team. Here are five key benefits of taking this approach, according to Nam:
- Bring any missing qualities into a business
We’re always reviewing our business and team which allows us to identify gaps and bring in missing qualities into the business. One thing I do – which I’d recommend any business leader does – is hold strategy meetings with my leadership team every quarter where we review the brand, business, and above all team strategy. These meetings allow us to find out what we’re missing in a team – in terms of communication, skillsets, values and personalities – and look to bring people in to fill those gaps.
- Craft a cohesive team
When crafting a cohesive team, it’s important to recruit based on values and ensure that a candidate’s own values align with those of the business. Values are such an important part of our business and this is true to everyone’s heart in the business; it’s not just coming from me – or from the top – it’s not corporate spiel rather it is instilled in everything we do.
We recently redefined our values which are: grow together, celebrate each other and break all boundaries (or throwing out the rulebook!). We take these values very seriously and build the team on these foundations. Whenever we recruit, we look for these three signals and if people don’t fit into these three values then they won’t be hired – values are not just a company buzzword, they are important and just underpin everything you do as a business and as a team.
We are also planning to put these three values formally into our appraisal system so when we do our biannual reviews with colleagues – aside from the business KPIs – these values will be a very important factor in their progression and development within the business. I would advise any business leader to make sure you take the values seriously and live and breathe them so everyone in your team feels equally passionate – that is the secret to crafting a truly cohesive team.
- Enable empowerment of individuals
Empowering individuals in your team is so important, not only for their own personal development, but for the benefit of the wider team and even the business as a whole. It’s important to allow people to play to their own strengths and give them a sense of ownership if you want them to fulfil their role with as much passion as though it was their own business.
As we have grown so rapidly, it has put a lot of challenges and pressure on the team, but at the same time they have been able to grow as individuals and step up very quickly to becoming industry leaders in their fields. Our last value is to break all boundaries and we give a lot of freedom to individuals and allow them to take risks (within the means of their roles). Everyone at Astrid & Miyu owns some segment of the business; they have clear boundaries and budgets but –if they act within that and meet business targets and KPIs – they’re free to do their job however they like. They can take risks and if they fail, we don’t have a blame culture. If they fail within the means, we actually celebrate it as it allows people to reflect on the key learnings which I think is quite powerful in terms if empowering individuals.
- Enhance job satisfaction
Job satisfaction seems like an obvious one, but it really is one of the most important elements of maintaining a loyal and motivated workforce. As I’ve already mentioned, we ensure everyone has a very specific role with strong sense of ownership, and we let people run with their work within very clear boundaries with clear expectations. Aside from business KPI reviews we also carry out regular personal development reviews where every individual comes up with what they want to learn for the full year or for the quarter and how they want to develop and their manager will guide them – even if it’s not related to their immediate job – so they have something to look forward to which keeps them satisfied in their role and motivated. That learning and sense of ownership, development and progression really enhances employee satisfaction.
- Improve staff retention
Clearly, staff retention goes hand in hand with job satisfaction – if people are satisfied, they will stay in their role. As well as having a sense of ownership, having clear goals and enough progression opportunities form a big part of staff retention; teams and individuals need room to grow. We have always made sure there are progression opportunities for our people, though we have been lucky to experience continual growth that allows us to have even more progression opportunities for those who are able to keep up.
We have a very transparent progression scale, which includes total transparency when it comes to pay – something that isn’t common in the fashion industry or a start-up environment but is vital for ensuring teams are motivated and trusting of the company. Everyone at Astrid & Miyu knows what their salaries would be if they get promoted to certain levels and what their band is – if they’re on the same level, everyone is on the same pay, so I think that’s highly motivating. This is something we implemented at the end of last year to make things very transparent and open and I think people are definitely more motivated because they’re not left in the dark, which can be the feeling when remuneration is done on a case by case basis. Now we have a very clear process and salaries attached to job titles so there’s no room for complaints and the team all know exactly what they need to do to progress.
The fact it’s very clear and transparent makes people trust the business and trust the leadership. Our transparency when it comes to pay is reminiscent of the structured progression routes you see in the corporate arena of banking and accountancy which is where I started my career – I know it can become political and chaotic if you don’t have this, which is not going to aid staff retention, it will do the opposite.
Though these are the five building blocks of a successful recruitment and retention strategy, I would add that businesses should not be afraid of making hard decisions. Although it’s important to foster a supportive workplace culture and help your people with their career progression, the onus needs to be on the individual – if they are not working hard and to the business’ values, their role within the company should be reviewed – don’t let people slip at the detriment to the wider team. This can be avoided if you find the right people at recruitment stage which is why recruitment is so important because, if it doesn’t work out, companies should not be shy of letting people go if they are not committed and the right cultural fit. I think that is motivating for the people who do work hard – it can be very disheartening for employees who are working hard to see one of the team is not pulling their weight. It is important that businesses are constantly reviewing their recruitment strategy and that there is a strong set of values and a clear onboarding process to ensure a strong and united workforce.
Using data analytics to improve SME cash flow and treasury management
The pressure facing SMEs this year is widely known, and they are looking for ways to improve their cash flow and payment decisions. Data analytics is a hidden gem that many SMEs are not tapping into. Smart data-driven decision-making could potentially be transformational for small businesses owners, writes Neo’s CEO, Laurent Descout.
The ability to maintain positive cash flow is one of the biggest challenges SMEs are struggling with during the COVID-19 pandemic. In times like these, the ability to monitor outgoings versus income, make payments to staff and suppliers, be paid on time and preserve a healthy order book of customers, is an extremely difficult task.
Governments around the world have done their best to help business owners in different ways, with fixes such as direct cash injections and loans to covering staff costs. As welcome as these are, they are short-term solutions. As businesses hopefully start to emerge from the pandemic, SMEs need tailored support and guidance that address their specific challenges – not a one-size-fits-all strategy.
What many business owners may not realise is that they are sitting on a treasure trove of information that could go some way towards helping them in this regard.
Tapping into data and analytics for smarter decisions
Every SME will be facing their own challenges. Each business’ trading histories, payment cycles and cash reserve levels are unique. Over a period of months and years, through a process of trial and error, they increased oversight of their finances and improved their overall decision-making and performance.
They can go one step further and make smarter business decisions by using tailored data and analytics derived from their company’s history of trading, payments and cash flow. By utilising comprehensive analytics of their business functions, owners can have a complete view of their corporate behaviour, backed by intelligence.
Ever wondered if all of your payments made on time, or even too early? Or what percentage of their customer’s payments are delayed, and by how much? How can temporary cash shortfalls be addressed more effectively?
Knowing the answer to such questions and more can result in improved forecasting, detecting patterns and anomalies and automating processes. This enhances financial decision making, risk management and cash flow monitoring. Critically, the answers derived from these analytics are unique to each business.
There are other benefits too. Time is saved from participating in routine and straight-forward bookkeeping processes, which improves productivity, while decision making is more informed. Furthermore, improved forecasting and predicting customer preferences can lead to an improved experience as well as new business opportunities.
The need for a treasury system to navigate difficult times
Of course, this requires access to a treasury management system (TMS), something which has historically presented a hurdle. It is estimated that three-quarters of SMEs have no treasury function; rather, they often rely on spreadsheet software, but these were never designed for this purpose.
The events of 2020 have caused many people to reassess how they manage their businesses, especially while working remotely. For SMEs, modern fintech treasury management systems (TMS) could provide a solution.
Once solely at the disposal of large corporations, there is now a wave of innovation in treasury technology systems, which has democratised access through lower costs, and offer access to customised interfaces that are easy to use and tailored to individual business requirements.
The phrase ‘cash is king’ is often used more frequently during crises to highlight the critical importance of maintaining positive cash flow. Having a comprehensive oversight of your treasury management operations is essential for effective business and risk management and maintaining positive cash flows. Tailored data and analytics can be crucial for achieving this.
This has become even more important during the current pandemic. With the majority of finance teams around the world likely to be working remotely for a substantial period, and with social distancing expected to continue in some form throughout the year and likely into next in many countries, now is the time to make smarter decisions to sustain small businesses through a difficult period.
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