10 Proven Customer Retention Strategies for Local Businesses

The marketing funnel is a powerful tool, particularly for local businesses that may have limited resources. It serves as a guide for maximizing your advertising budget while delivering results that drive sales and business growth.

Every local business should create its marketing plan with the three core stages of the funnel in mind, but what happens once you’ve completed the funnel? In this article, we’ll explore the next step that will further cement your marketing efforts and boost your business for the long haul, and that step is customer retention.

Before we dive into strategies you can incorporate into your marketing campaigns to keep customers coming back, let’s define customer retention and why it’s so important for local businesses.

Why Focus On Customer Retention?

Customer retention isn’t an official stage of the marketing funnel. Still, it’s a valuable addition to the primary three stages that we’ve already covered, which include top-of-funnel (TOFU), middle-of-funnel (MOFU), and bottom-of-funnel (BOFU). While these make up a comprehensive marketing plan, your efforts won’t be fully optimized until you focus on keeping the customers you’ve already earned.

Customer retention refers to maintaining customer engagement, satisfaction, and loyalty after their first purchase. It involves leveraging positive customer relationships to encourage repeat business and prevent them from turning to competitors.

The benefits may seem obvious, but their true impact can be surprising for some. According to Forbes, just a 5% increase in customer retention can increase profits by 25% to 95%. Additionally, it can cost up to five times more to acquire a new customer than to retain an existing one. This is true for multiple reasons, including the need for extensive marketing, advertising, and other resources used to attract new leads.

Retention also leads to better customer feedback and the creation of brand advocates. Happy customers are invaluable to local businesses as they’re more likely to share their experiences, provide constructive feedback, and spread the word about your products or services.

In short, past customers are easier and less expensive to win back than new ones, ultimately putting more money in your pocket. But how do you build an effective customer retention plan? Here are 10 strategies to get you started.

Strategies

While this isn’t a comprehensive list of all customer retention strategies, these proven methods will undoubtedly help you reach your goals.

Personalize Customer Experiences

Personalization is a powerful way to achieve customer loyalty. In fact, according to Twilio Segment, 45% of consumers say they’re likely to shop elsewhere if a business doesn’t offer a personalized experience. Many tools are available to help businesses collect customer data, which can be used to provide experiences tailored to individual preferences. This approach shows customers that you value their business and care about their specific needs.

Offer 24/7 Customer Support

When your goal is to turn satisfied customers into repeat buyers, providing robust customer support is essential. Salesforce’s State of Service report found that 88% of customers say good customer service leads them to purchasing from the business again. Provide multiple channels for customers to use for support and respond promptly, avoiding canned responses. AI tools can help create a 24/7 support model to address concerns immediately, no matter the time.

Implement Customer Loyalty Programs

Encourage repeat business by developing a program specifically for loyal customers. This could include reward points, punch cards, or other incentives to keep them coming back. It can also include tiers, which create a hierarchy that consumers naturally want to climb. No matter which method you choose, ensure that the terms and conditions of the program are clear, understandable, and realistic.

Build a Community

As a local business owner, you’re well aware that your community fosters a sense of loyalty and pride in the area. Apply the same principle to your brand by building a community around it. This can provide valuable insights into customer preferences while creating a support network beyond your products or services. Social media is an excellent platform for this, offering features like polls, videos, and user-generated content to encourage interaction.

Create a Referral Program

Word-of-mouth remains one of the most cost-effective and impactful forms of advertising. GatherUp’s Q4 2024 Local Business Review Survey revealed that, “60% of people feel more trust in the sentiment of fellow consumers than they do in anything your business can say about itself.” Incentivizing referrals with discounts or other perks benefits both your current customers and your business. It’s a win-win situation, and can be incredibly rewarding for local businesses in particular. 

Provide Exclusive Discounts, Offers, and Events

Some customers may not wish to join a loyalty program or online community. Instead, achieve that same sense of individualism by sending them exclusive deals. This can be as big as hosting an invite-only event or a significant discount, or as small as a first look at an upcoming release. These gestures help strengthen the emotional connection to your brand and keep you top of mind when they’re ready to purchase again.

Utilize SMS Marketing

While email and social media are valuable marketing tools, they often don’t guarantee immediate visibility. SMS marketing, commonly known as text message marketing, offers nearly instant engagement. According to Textellent, marketing texts have a 98% open rate, and 77% of consumers enjoy the convenience of texts for offers and updates. SMS is an excellent way to quickly share promotions or resolve customer concerns. 

Offer a Subscription Service

Engage past customers with a subscription model. This provides convenience for them and a predictable revenue stream for you. Product-based businesses can ship items weekly or monthly, while service-based businesses can offer scheduled access to their services. It’s a great way for customers to build the expense of using your business into their daily lives.

Form a Win-Back Plan

Some customers may have enjoyed your business but still drifted away. A win-back strategy targets these individuals by identifying patterns in their past behavior and addressing their reasons for leaving. It’s done by evaluating the purchase history and feedback of lost customers, finding the patterns in their reasoning, and personalizing ads that influence them to return. 

Ask For Feedback

Sometimes the simplest approach is the most effective. Asking previous customers for feedback can yield valuable insights into retention opportunities. Use surveys, polls, or direct outreach to gather input, and be sure to address complaints promptly. Continuous feedback ensures you’re meeting evolving customer needs. Just be sure that if you receive a complaint, you address it as soon as possible.

Common Mistakes

Now that we’ve covered several strategies for customer retention, it’s time to discuss some mistakes that could derail your efforts. 

Delaying the Start

If you’ve made it this far, you already have enough information to start forming your retention plan. The biggest mistake you can make is delaying implementation and losing customers in the process. Another reason it’s essential to start now is that gathering research takes time, so your strategies based on that research can’t begin until it’s collected. Start now, don’t delay.

Not Listening to Feedback

You can collect extensive feedback from previous customers, but it’s ineffective if you don’t listen and act on their input. It’s also important not to just ask for feedback once and then stop. Consistent feedback helps you stay ahead of trends and ensures you don’t fall behind.

Treating Everyone the Same

While there may be similarities among some customers, no two are exactly alike. Personalizing your retention efforts greatly increases the chances of winning back disengaged customers. People can tell when a message isn’t tailored to their needs, and they won’t respond as positively as they would to a message meant specifically for them.

Neglecting Communication Preferences

Some customers prefer texts or calls, while others prefer emails or social media. Reaching out through their preferred channel will increase your response rate and help prevent negative reviews.

Poor Customer Service

There’s no quicker way to lose a customer than to provide poor service. Treat every customer with respect, listen to feedback, and ensure your employees are trained to deliver helpful, professional service. This way, every interaction with your business leaves a positive impression.

Let Best Version Media Help

A comprehensive marketing funnel plan can seem overwhelming, but Best Version Media makes it easier by offering bundled display ads and geo-targeted social media campaigns that help you get the most out of your marketing budget.

BVM also offers listings, reviews, and reputation management that’s managed from one simple dashboard, ensuring you can manage every aspect of your marketing efforts without wasting time. 
Reach out to BVM today to take your local advertising to the next level.