Approximately 80 percent of businesses make it past their first year, but the survival rates at the five-year mark are grim at 50 percent. You need a steady and growing customer base to set yourself up for long-term success. Here are the top five reasons that people are going out your door and not coming back.
Bad Customer Experience
You might assume that pricing problems are your biggest barrier to increasing your customer acquisition and retention. However, the overall customer experience is the critical element that you need to keep a close eye on.
Millennials and Generation Z in particular value the quality of service over price, and they're willing to spend more to get the experience that they desire. One of the most important things in giving them what they want is consistency.
Every time they interact with your company, they should see consistency in every way possible. A few examples of how this works include maintaining the same branding across all of your marketing channels, putting the same policies in place for in-person and online interactions, releasing products and services that relate to your core business, and maintaining regular communications with your customers.
A quality experience drives loyalty because your current customer base knows what to expect. Good retention rates are the key to building up your business, as you spend less on generating sales from people who have already purchased from you previously.
Consumers have many venues to tell you exactly what they're thinking, especially on social media. While you can't do every single thing that your customers want you to do, you need to pay close attention to overall trends. If you hear a lot of clients grumbling about the same aspects of your business, these are areas where you need to make improvements.
If possible, reach out directly to clients and try to help them out with their problems. When you're proactive about contacting them, rather than hoping that they call you for customer support, you stand out in their eyes. Social listening tools can help you with this process. You input your brand name and keywords, and the software scans social networks and other sites to see if you're mentioned.
Customers may not know what your social network profiles are, if you have any, so they won't tag you or otherwise try to connect when they're upset. You can learn a great deal about what you're doing right and wrong simply by keeping an eye on your brand mentions.
Take a look at similar businesses in your industry and local area. Are you positioned competitively compared to everyone else already operating in this market? While the customer experience is more important than your pricing, you also can't be outrageously expensive compared to similar businesses.
If your focus is on local business, your area may not have enough customers to sustain your company. You're not out of luck if you run into this problem, but you will need to expand into related markets and broaden your reach.
Finally, what are you doing differently than your competition? If you haven't defined your unique selling proposition yet, you need to nail one down immediately. If you don't have any way to stand out from other companies in your market, customers won't have a compelling reason to keep coming back to you.
Lack of Marketing
The greatest businesses in the world would have failed if no one knew about them. What does your marketing and advertising strategy look like? Are you utilizing multiple channels to connect with your audience and build relationships, or do you simply advertise occasionally and hope that people stop by?
Your customers have a lot of distractions when they're on the computer, their tablets and their smartphones. When you're trying to get their attention alongside every other company, you have to look at it as a marathon. Try to establish yourself on multiple channels, like social media, a blog, industry forums and a community sponsorship.
All the exposure adds up and builds trust even before the person needs to reach out to you for a product or service. Have relationship-building resources available on your website, such as expert advice for choosing products in your category.
Lack of Capital
Sometimes it all comes down to money, or lack thereof. If you don't have enough capital and cash flow to run your business, it becomes difficult to keep customers coming through your door. You might not be able to run advertising and marketing campaigns effectively, stay on top of inventory or provide quality customer service.
The problems that a lack of money causes bleeds through in many ways, and it's a difficult position to recover from. You may have the chance to bring in investors, take out a business loan or get lucky with your sales, but you'll be in for a stressful time if you have to go this route.
Starting a business is difficult, but keeping it going beyond the first year is the real challenge. Put yourself in a position to grow your company for the long term by considering how you can make improvements to avoid these customer deterrents.
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