OK. Before we get started, let me make one thing painfully clear: I am not here to teach you math. I don’t want to revisit memories of calculus and algebra any more than you do. Leave that to the economists and nerds of the world. But there are two special numbers that can be very useful to small business owners, which is what brings us here today.
The Pareto principle, aka the 20/80 rule, states that for many events, 80% of the effects come from 20% of the causes. When it comes to your small business, the 20% is made up of those customers who return to your store over and over, who interact with you on social media, and are ambassadors for your products to their friends. These are your loyal few who make up the largest portion of your sales.
Because such a big percentage of your sales come from such a small group, nurturing these customer relationships becomes a key part of owning a business. Additionally, attempting to turn average customers into return customers will help you retain a steady flow of high-impact customers.
Identify Your 20%
Those customers who visit your store regularly, and have become known to you and your employees, are the influential patrons who keep your business running. Losing multiple regular customers would have a huge negative impact on your bottom line, so it becomes your job to ensure that they keep coming back.
There’s something about your store and products that they like, so the next time you see one of these customers, engage them in conversation about what they are looking for and how you can help them. Not surprisingly, the two main factors in establishing a lifelong customer are a comfortable shopping experience and high-quality products.
The biggest driver for return shoppers is the customer service experience. Whatever you’re selling, they can most likely get it somewhere else. But what makes you different is the inviting atmosphere a customer can expect when they walk in the door. So don’t get lazy on customer service.
Talk to your staff regularly about their challenges and successes in customer service to ensure they don’t become complacent. Additionally, training new employees to adopt the friendly culture of your business is essential. If an employee enjoys what they are doing, it will shine through to the customer’s experience.
Focus on Quality
The second factor in retaining return customers is the quality of products you create. Continue to hold your business to high standards, and your customers will thank you. How many times have you been forced to switch from a company you like, simply because the products aren’t what they used to be? Keeping an eye on quality, even as you continue to innovate, will keep your regular customers interested in your business.
Most products can be found at multiple stores, so the reason to buy at your store becomes your craftsmanship. Not surprisingly, the 20% of the 20/80 rule are those who recognize the quality of your products. As a small business owner, this is where you can shine. Invite regular customers to give their input on your current product line, including what they would like to see more or less of, or what type of alteration to the product would make it even better. Because you aren’t tied down to a massive production line, you can make small adjustments along the way to keep your regulars happy.
New (Return) Customers
There isn’t one part of business that holds still for too long, and the same goes for your clientele. Even after you’ve developed great relationships with your most influential customers, you never know who will walk through your door tomorrow. So instead of hoping that the current 20% will support your business forever, work actively to create new return customers and brand ambassadors.
Besides amazing customer service, and quality products, consider what entices shoppers to return to your store. It could include future sales, or coupons to be used at a later date. These tactics are useful, but rely in large part on the customer to actively return to your store.
Instead of waiting around for the grass to grow, why not try something new like joining local community events with other small businesses? Nothing impresses locally minded shoppers like a business owner who cares about their community. Or, if you’re more charity-minded, hold a special ‘charity day’ where you will give a percentage of every sale made to a certain charity. Identify a cause that the locals in your town care about, and make it your own.
By engaging your regular customers with personalized customer service and amazing products, you can ensure their continued patronage. And these are the same factors which create new regular customers, and help your business stay afloat even amid uncertain economic times.