Ah, the customer. Ever more savvy, and of course, always right… (Right?). Dollar upon dollar is spent getting a customer through your door, but when it comes to sustaining profitability, it helps to keep in mind something the all-knowing Seinfeld once asked (well, close enough anyway!): you know how to take a customer, but do you know how to hold a customer?
If your answer is ‘no,’ you may be spending your budgeting in all the wrong places. As Nation’s Restaurant News’ Jim Sullivan recently argued, “money spent on customer acquisition…can fill a restaurant, but money spent on customer retention…makes that restaurant profitable.” Overspending on marketing, he warns, can lead to the vicious cycle of constantly acquiring customers you can’t retain.
We wholeheartedly agree with Sullivan’s advice – in fact, it extends well beyond the restaurant, applying generally to all retailers, especially those where employees have a lot of face (or phone) time with customers, and especially once retailers get through their first year or so in business. (In the first year, it makes sense that a new business will spend considerable resources generating awareness amongst potential customers and convincing them to give their business a try).
So what does it look like to focus on customer retention over acquisition? Here’s our two cents:
Take Training Seriously.
While corporate-led advertising and promotional campaigns are essential to gaining general brand awareness with your target market, repeat business, as Sullivan suggests, is won at the unit level, where brand and customer meet. Arm your franchisees with the training tools they need to be successful business owners and operators – not to mention your most valuable brand ambassadors. Incentivize them to participate in regular training sessions, whether monthly, quarterly or annually, to stay abreast on the latest corporate standards and industry trends.
Invest in People.
Franchisee training is a critical first step, but your buck shouldn’t stop there. Encourage and empower franchisees to train and motivate their employees. A well-trained, highly-motivated employee is excited about your product or service, has the knowledge and tools to serve your customer successfully, and is more likely to remain a loyal employee, especially if she is recognized and rewarded for high performance.
Realize Appearances Matter.
Call them superficial, but for today’s customers, looks are important. One 2014 study of consumers’ retail preferences found store ambience ranked above location, friendliness of staff and even customer service. (Top three preference were range of products, value and quality of products, respectively). “Lack of atmosphere,” on the other hand, was the most common reason for shoppers’ avoidance of certain retailers.At both the corporate and franchise level, your stores must not only represent your brand, but contribute to the overall brand experience for the customer. Store layout, lighting design, product display and of course, attractive, well-designed fixtures that withstand customer wear and tear are all critical elements of store ambience. Cleanliness should be a given, and should be a prominent part of your – and your franchisee’s – training manuals.
Let Them Outsource to You.
It’s not difficult to see how a franchisee’s plate fills quickly. With local promotions to execute, staff to recruit and train, a new brand and business model to learn, it’s too easy for them to let one of the key factors of customer retention slip from their grasp. Lighten their load by taking the things you do particularly well at the corporate level – store build-outs, employee training programs, etc. – off their hands so they can focus on what really matters: building a base of repeat customers so you both will profit!