Consider a small business that lasted 5 years. Now, think of one in the same industry that made it for over 20. What factors enabled one to succeed and the other to have its run cut short?
In addition to product-market fit, having a customer retention strategy is often the key differentiator between small business winners and losers.
Improving your customer retention rate makes good business sense. Repeat business is reliably cheaper to acquire than new customers. If you converted just 5% more of your one-time clients into repeat buyers, you could increase overall profitability by as much as 75%.
A customer engagement program unites sales, marketing, and customer service activities to delight clients, build loyalty, and keep your business on their minds. It’s up to you to develop, test, and fine-tune the activities, incentives, and programs that will convert your top customers into referral-generating, long-term evangelists for your business.
Here’s our advice on creating a customer engagement program from SOAR Innovation’s team of small business growth experts.
What is customer engagement?
Customer engagement is the emotional connection forged between customers and your business.
Why do emotions matter?
Emotions motivate consumer decision-making and purchasing behavior. The following 10 emotions create strong connections through brand marketing and customer engagement programs:
- Standing out from the crowd
- Having confidence in the future
- Feeling healthy
- Enjoying a sense of independence
- Feeling thrilled
- Feeling a sense of belonging
- Protecting the environment
- Being celebrated as an individual
- Feeling secure
- Enjoying success in life
A successful customer engagement program won’t attempt to incorporate all 10. Instead, focus on 1-2 core emotions that align with your product or service’s unique value proposition.
For example, if you operate a local, solar-powered coffee roastery, your customers might be interested in supporting you for two emotionally-motivated reasons (aside from enjoying your products):
- Protecting the environment: Your customers feel good about purchasing from a low-emissions company.
- Feeling a sense of belonging: Your customers gain a sense of pride from helping a hometown business succeed.
This coffee business might consider creating a customer engagement program that celebrates the unique attributes foundational to their buyer relationships. (More on that later.)
Once your business is up and running, customer engagement should be a major focus for your ongoing operations. It doesn’t have to be an expensive endeavor. But it may require a good amount of your time, patience, and brainpower.
If you run an online search for “customer engagement,” trust us: you’ll be inundated. There’s no shortage of software companies making big promises to grow and nurture your client relationships — in exchange for a large share of your budget.
We take no issue with using digital productivity tools to streamline your operations. But while software may ultimately play a role, you need to have a strategy first. Otherwise, you’ll be wasting your hard-earned cash.
How to design a customer engagement program that creates customer evangelists
Your customer engagement program should be unique to your business and your customers. That said, you can follow a set formula to lend structure to the process.
Start by setting goals
First, evaluate the customer data you have through the lens of engagement. You want to understand how customers currently perceive you, what motivates their buyer behavior, and what marketing, sales, and service tactics have worked best so far. (If you don’t have these categories of customer data yet, start collecting them ASAP.)
Customer lifetime value (LTV) calculates how valuable the average customer is to your business. Your goal should be to increase this figure over time, and your customer engagement program should help with that.
To calculate LTV, you need to be able to measure the following:
- Retention: How long customers stay with you
- Frequency: How often customers buy from you
- Average purchase value: How much customers spend per purchase
Next, look closely at customer interactions with your business outside of purchases. Email opens and clicks; social media shares, likes, and comments; and online customer reviews are great sources for this information.
Do your customers show proactiveness — interacting with your brand without being asked? What is the context of the interactions? Online or in-store? Pre-purchase or post-purchase?
Establishing a baseline for your customer relationships will help you set achievable goals for nurturing and growing them over time.
Design an environment for customers that meets their wants and needs
Next, you’ll use this data to curate a program that taps into your customers’ emotional connections with your business. If you do it right, you can help them feel like stakeholders in your company’s ongoing success — i.e., if you benefit, they benefit, too.
What do we mean by that? Customers are under no illusions that you need their support. Instead of treating these relationships transactionally, you should find ways to go above and beyond to reward their continued loyalty.
There are a few ways to do this. We’ll highlight two common programs used to drive repeat business, bring in new customers, and increase LTV.
Give your customers a sense of belonging by launching an ambassador program.
Create status tiers based on customer engagement and purchases. Airline frequent flyer programs are a great example. When travelers choose the same airline every time they fly, they gain status membership that provides perks (free in-flight amenities, early boarding) and financial incentives (discounts, complimentary seat upgrades).
An ambassador program should celebrate your most frequent customers — and help less-frequent customers see the benefits of increasing their business with you.
You may start with one status tier and add more over time. The entry-level tier should be achievable for your customers that are already loyal. Higher levels should come with even better perks — incentivizing your top clients to move up in the ranks.
Perks for your ambassador program should align with your customer’s emotional connections with your brand. So however you decide to celebrate your most loyal buyers, make sure it ties back to the motivations that keep them coming back to your business.
Examples of ambassador perks include:
- Client appreciation events: Throw a small party or happy hour for your top clients.
- Exclusive sale/early access events: Offer ambassadors access to exclusive discounts or access to pre-sales of popular products.
- Free swag and discounts: Who doesn’t love free swag and 15% off?
- Celebrate your ambassadors online: Highlight your most loyal clients by sharing their personal stories and connections to your business.
The goal is to funnel your most engaged and valuable customers into a role that helps perpetuate your success — and express earnest gratitude for their contributions.
Referring back to the example of a coffee business: their ambassador program might include:
- Buy 10 bags of coffee, receive a free to-go cup of coffee.
- Buy 50 bags of coffee, and receive a premium, locally-produced reusable travel mug.
- Buy 100 bags of coffee, receive a tree planted in your name, a feature on the blog, and a handwritten thank-you card from the owner.
A referral program incentivizes your existing customers to bring you new business — and rewards their support for doing so.
You should make it as easy as possible for customers to recommend you to friends and family, share your business online, and speak proactively about you to others. It’s essentially a way to generate word-of-mouth marketing for your business, which is one of the cheapest and most effective marketing channels in most industries.
You can reward referrals with discounts, giveaways, swag, and customer recognition. Align rewards with the volume and frequency of referrals.
Make sure your referral program doesn’t have barriers that are too high to clear. Don’t require too many referrals to receive a reward — even 1 referral is valuable to your business. (And much cheaper than advertising to gain 1 new client!)
Also, don’t make it difficult for consumers to trip up over technology or promo codes to redeem their rewards. Your team should be trained and ready to show referring customers they are valued — and provide them with their perks expediently.
Measure results and fine-tune
Keep the goals you set close by, and refer to them once your program(s) are in place. After 6-12 months, are you seeing a noticeable change in LTV? Social media engagement? Email subscribers? Referral rates?
Keep your eye on these objectives, and adjust your program to correct issues or double down on successful strategies. And if participation is starting to grow, consider ways you can automate reward fulfillment to help the program scale with your growing business.
Free resources to support your customer engagement program
You can successfully engage your clients without a large budget. But since it may take up more of your time, at least in the beginning, consider how you can make your life easier in other areas of the business.
Download the Complete Guide to Entrepreneurship for advice on small business growth strategies.
SOAR recommends these 14 free productivity tools to run your business better. We also provide 6 free direct services to help small business owners enhance day-to-day operations.
Coming up next: Using content marketing to build new client relationships
If customer engagement helps your business retain more clients, consider content marketing a complementary strategy for bringing in new clients — affordably.
Our client engagement blog series continues next month with a discussion about content marketing. Stay tuned to the SOAR blog and social channels for updates. In the meantime, reach out to SOAR Innovation to access more resources to help your small business grow.