Customer retention for small businesses

What’s the best way to retain customers? How do you keep customers coming back to you instead of buying from your competitors? Customer acquisition clearly has a cost, but there may be more value to a small business in focusing on a strong customer retention strategy from the outset. This guide will help you to action that plan.

Loyalty has a value. In the early years especially, most small businesses focus on growth instead of thinking ahead and planning how they’ll keep the business they win.

Once you've created a great product or service, and you’ve built up a certain level of sales, it's important to dedicate the right level of resources to looking after and retaining those same customers for the long-term.

As a small business, those resources are important. However, it’s important to remember that anything you do must be part of a genuine desire to build positive relationships. Put yourself in your customers’ shoes. What would you want to receive in their position? What would make you keep coming back to a business again and again? And how can your whole business get involved in keeping your customers satisfied?

Tell people it’s worth coming back for more

Good news travels quickly, and in today’s market, a great piece of Public Relations work (PR) can have a tangible impact on your effectiveness as a product or service provider.

Potential customers are far more likely to buy from you if they can easily see that you make good on your promises as a supplier. Can you find good opportunities to publish case stories or press releases about your business’s success? Can you highlight trust and exceptional service, in a way that makes your proposition appealing to current customers too?

Incentivise people’s loyalty

Today, most customers aren’t naïve about their relationship with a product or service supplier. It’s a competitive world. Budgets are tight and people rarely have money to burn. Many will err clear of a deal that seems too-good-to-be-true, but most of us do still like the idea of getting a discount.

Giveaways, discounts, and refer-a-friend schemes work well in promoting customer loyalty. What’s more, customers who receive personalised discounts are also more likely to view you as having taken a genuine interest in their business; that connection to their purchase history is important.

Customers who return to buy from you a second time are then more likely to maintain the relationship for further purchases – so it may be well worth incentivising a follow-up sale. Choose your channel carefully (sometimes emails land in very busy inboxes), but think about sending out post-purchase discounts on similar products or services.

Ask questions, welcome answers

If you don’t know which customer retention techniques are working, then you could be investing in activity that’s costing you money in the short-term. Audit your relationship with customers; break it down into elements – product, service, communication, after-sales – and ask for feedback on how you can improve your proposition.

This overt commitment to making progress shows that you really care about the relationships you’re developing, and the sense of appreciation and engagement may even spur a reciprocal commitment. But it’s important to welcome all feedback, positive or negative, as undecided customers may make a pivotal decision based on your reactions.

We live in an imperfect world. Some customers may even switch to buy from your business instead if they can see that when things do go wrong, you’re ready and willing to put them right.

Surprise and delight, regularly

Everyone likes something for nothing. But everyone loves something positive that they weren’t expecting even more. The trick is to find something you can offer that is:

A. a differentiator, between you and your competitors,
B. of significant and tangible value to the customer, and,
C. priced or valued at a point that won’t impact your profit margins.

For many small businesses, the ‘add on’ can be most effective if it’s delivered in the form of an experience. Extra after-sales care, higher quality packaging than people are expecting, or even relevant information and insights, perhaps delivered in the form of a leaflet or on an invoice.

Be willing to get personal

We’re all growing accustomed to services and products that are provided at a lower price point thanks to the development of technology. Aggregator websites, price comparisons, chatbots, live chat, and automated online services - these have all become commonplace.

However, your business is likely to make a better impression with customers if you can personalise your proposition.That might involve following up on a sale with an email that’s written by one of your sales team, rather than automated through a piece of retention software. It may mean embracing social media to find out what’s working, or not, for people (or businesses) who’ve bought from you.

Get to know your customers, get to know what makes them tick. Find out why they’re buying from you, and feed those insights back into your sales and marketing processes.

Provide excellent customer service, always

Excellent customer service is one of the best customer retention strategies. Customers will often remain loyal to a second-place brand, or inferior quality product, if they experience really good customer service. This philosophy can be rolled-out into every part of your business, no matter how big or small your business may be.

In a supply business, for example, stock fulfilment can be enhanced by encouraging your team to personalise packages (in a controlled way). A ‘packed by’ sticker on a high volume item may not carry much sway, in terms of getting customers to choose your products every time, but – if volume allows for it – a hand-written note for larger orders may reap dividends.

In a service business, your teams can be taught how to deliver great service. They can also be introduced to the reasons why and how people react to receiving great service. Being polite and friendly should go without saying, but appearing knowledgeable, helpful, and genuine about your commercial relationship has a value too. If you - and everyone who works for you - gives your customers the best experience possible, then they’re going to be much more keen to come back.

If you can, nurture the ethos of excellent customer service right across your business. Encourage your teams to contribute their ideas for improving the way you deliver your proposition; reward employees who deliver outstanding customer service at any and every stage of the sales funnel.

Top takeaways

  • Customer retention is vital for long-term profitability

  • Personalised incentives are a very strong proposition

  • Feedback can strengthen your relationships with an audience

  • Don’t be afraid to ask for, or promote, repeat business

  • Deliver on your customer service promises - they matter greatly

  • Loyalty has a value, and it’s a two-way relationship: invest in your current customers’ satisfaction, just as much as you invest in attracting new business


Please note that these guides are provided for information purposes only and not as advice or recommendations. Before deciding to undertake any course of action you may wish to seek independent professional advice.