12 tips for taking care of your customers
By Dana Dratch • Bankrate.com

Do you drop your old friends as soon as you acquire new ones? That's not a smart business move. Old customers, especially those who return often, are a business's best friend.

"It costs five times as much to attract a new customer as it does to keep an existing one," according to Norman Scarborough, assistant professor of economics and business administration at Presbyterian College in Clinton, S.C.

It's also smart marketing to reach out to someone who has already been a customer in the past. "That's an easy sale," says Scarborough, a co-author of The Essentials of Entrepreneurship and Small Business Management. "They're already there."

Here are a dozen ways to keep customers coming back:

1. Get to know your customers. "And that takes data," says Scarborough. He cites Harrah's Entertainment Inc., which operates a nationwide network of casinos, as an expert at data mining. With one popular loyalty card program, Harrah's can track which games a customer played, as well as ancillary interests like restaurants and shows.

"They know each individual's hot buttons," says Scarborough. Based on customer preferences, the company sends special mailings with deals on games, shows or activities likely to appeal to patrons.

Don't have the technology or know-how for a customer card? Take a low-tech approach. Talk to your customers regularly about what they want and need from your business. For more details, ask them to complete a survey or feedback form -- in return for a generous discount on their next order. If you have a Web site, make it easy for them to send an e-mail rating the service.

"You have to develop a relationship where they know you value their opinion," says Kim T. Gordon, author of Bringing Home the Business.

2. Give customers something new. Last year, when organizers of the Indian River Festival of Fine Music wanted to stem declining attendance at the annual summer event, they started selling it a little differently, says Doug Hall, CEO of Eureka! Ranch, a Cincinnati-based business consulting firm. Rather than focus on the music, they added candles, flowers and oysters at intermission and touted the Prince Edward Island festival as a romantic experience, says Hall, an adviser to the festival board. The result: despite a 20 percent price increase, attendance went up 50 percent.

"Come up with ways that are exciting enough to bring new customers in to buy and chances are you will keep your old customers happy," says Hall, author of Jump Start Your Business Brain. "But if what you're offering today is the same thing you were offering six to nine months ago, you're dying and you don't even know it."

3. Respond immediately to problems. "It doesn't matter who's right, make the appropriate restitution," says Gordon. "And do something fast." Even though your business is your baby and the customer may be a little hot under the collar, step back and "set personal feelings aside," Gordon says. Your goal is to make the customer happy and keep that person coming back.

4. Stay in touch. Don't let customers go too long without thinking of your business. You can use a variety of methods to get your message across: direct mailer, e-mail, phone call or fax. Every four to six weeks is a good rule of thumb, says Gordon, who also recommends segmenting your database. Top customers might get communications more often, others less.

Elaine Biech, owner of ebb associates inc, an 18-year-old business consulting firm, has specially-designed cards that she sends to clients for special occasions or when they've met a business or personal goal. "A handwritten note only has to be three sentences," says Biech, author of The Consultant's Quick Start Guide.

And Biech says businesses can get even more bang for the buck with a clever promotion targeted to a smaller holiday, like Valentine's Day or St. Patrick's Day when no one else is spending anything. "[Customers] know you're thinking about them and they appreciate it," she says.

5. Set yourself apart. "Avoid being a 'me too' business," says Scarborough. "Differentiate yourself from the competition."

In 1994, Albert Straus was facing the loss of his dairy farm, which had been in the family for generations. So he took his Marshall, Calif., farm organic. Now, yearly sales at the Straus Family Creamery top $7.6 million, according to Dun & Bradstreet estimates.

Another plus: Give your customers something they can't get anywhere else, and you can command a higher price, Scarborough says.

6. Follow up with customers. Whether you're a plumber or an auto mechanic, contact your customers after the job and find out what they think of the work, says Jan Norman, author of What No One Ever Tells You About Starting Your Own Business. That way, if they are happy, you can ask for referrals. If they're not, you're the first to know and have a chance to set things right.

Don't fall into believing that "if I ever make a mistake, I've lost a customer," says Norman. If you follow up with customers and correct problems to their satisfaction, they will probably be even more loyal because they know you care.

7. Entertain your customers. "You have to become almost a destination for your customers," says Scarborough. "Make it fun and interesting."

In the Boston area, the Jordan's Furniture chain attracts customers with fanciful re-creations of famous places, like a recent Bourbon Street scene that featured an automatronic Louis Armstrong. "They've done an amazing job," says Scarborough. "You think 'furniture store -- how exciting can that be?' But these guys have done a lot with it."

8. Give your customers superior service and convenience. "People are so busy that many customers are willing to pay for extra convenience," says Scarborough. Likewise, if they get great service at your store they'll be less likely to switch when a new one moves in down the street.

At Texas-based JoeAuto, customers can schedule their service appointments online. And while their car is in the shop, they can watch the mechanic at work via real-time cameras.

9. Emphasize value. If you're competing with a superstore, you may not have the cheapest price in town, but you can still offer the best value. In the long run, that's a much smarter strategy, says Norman. "You're not going to keep loyal customers based on price," she says. "The minute someone is a penny lower, you've lost them."

10. Find out what the customer wants and provide it. Sounds like a no-brainer, right? But too many small businesses overlook the obvious. Beartooth Mapping Inc., based in Red Lodge, Mont., started out offering topographical maps to government agencies. Campers, hunters and outdoor aficionados also liked their products, so the company now has a Web site where customers can order custom-made maps. "They make it very, very simple for the customer to get what they want," says Scarborough. "And they're using the Web as a marketing tool."

11. Give customers more than they expect. Whether it's spending a few extra (non-billable) minutes helping one client solve a problem, taking others to breakfast a few times a year, or becoming the expert they can call for solid research, give your customers more than they pay for, says Biech. Often, she will order books or reprints of magazine articles on timely topics and send them to clients with a short note.

"I have the reputation of being a resource center," she says. The approach has paid off. "I can track 75 percent of my clients back to my first client," she says. "There's a definite trail."

12. Reward your customers. "Ever had dinner at a restaurant and been surprised with a free dessert?" says Gordon. "It's a great idea. You've got the folks there, you've got the product. It costs very little. And there are lots of ways you can reward customers."

From promotional calendars to pens to writing tablets with your logo, there are all kinds of inexpensive, inventive ways to say "thanks." Gordon recalls a mail-order firm that used to send a gift with every order. It was always something small, inexpensive and very usable.

"Essentially it made it fun to order," says Gordon. "Things that are unexpected can help contribute to customer satisfaction."

Dana Dratch is a freelance writer based in Georgia.

-- Posted: Feb. 6, 2002