Congratulations! You've got a new customer! Whether through word-of-mouth, online marketing, print advertising, or just wandering by your shop, someone new has found your business. That's great news! Now comes the tricky part: how do you make sure that this new customer finds your business again? That is, how do you make sure that this new customer becomes a repeat customer?

Customer retention is one of the most important aspects of growing your business successfully. Repeat customers not only become more reliable sources of purchases (which is nice!) but they also serve as ambassadors of your business to their friends and contacts.

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[Like this guy. Maybe without the hat.]

Everyone loves recommending a cute little restaurant or great mechanic, and the result is a win-winwin: you get new clients through word of mouth, the recommender gets the prestige of being the friend who's “in the know”, and the recommendee learns about a great new business (yours). What could be better?

But for this wonderful situation to transpire, you first have to have repeat customers. So how do you get them?

In marketing, we use the term “conversion rate,”which basically means “the number of people (expressed as a percentage) who do something you want them to do.” For example, if you have an online ad. that 10,000 people see, and 2,500 people click on it, that would be a 25% conversion rate (which would be fantastic). You can think of retaining new customers in terms of conversion rate, too: how many first-time customers become repeat customers? Obviously, the higher the conversion rate, the more repeat customers you are retaining from your total customer base, and the sooner you can retire to that private island you've been thinking about.

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[Yeah, that looks about right.]

So how do we up this conversion rate? Without further ado, we give you The Three R's of Customer Retention.

Respect. One of the most fundamental—but all-too-easily overlooked—aspects of customer retention is good ol' fashioned respect: respect for your clients, for their goals and expectations, even for their hopes and fears. Customers are not suckers to be conned and exploited, but partners in an important give and take—you give me your patronage, and I give you great service and the products you want and need.

It all boils down to the fact that “good people is good business.” By running great initial offers and pulling shady schemes like bait-and-switch ploys, a business may be able to get a lot of new customers in the door, but this doesn't speak well to its long-term chances for success.

An example: I once did marketing (read: “handed out flyers”) for a bar in a crowded tourist neighborhood. The bar offered amazingly cheap three-for-one offers and spent a lot of money on marketing (read: “me and a bunch of other guys handing out flyers”). This worked fine in getting new customers, but the bar absolutely stank at customer retention. In part because the bar literally stank: it was in a basement with no air-conditioning, and it smelled like a charming combination of split beer, unwashed backpackers, and some small woodland creature who may have entered the storeroom years before and never left...unlike the customers, who left in droves.

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[Sammy the Squirrel: Stinking up the storeroom since 1985]

I pointed out to the bar owner that he might want to fix up some of these creature comforts (just little things, like putting a seat on the toilet in the ladies' room) and he stared at me blankly, before saying, “you think we should hand out more flyers?”

By respecting your clients, you make it a lot more likely that they will think of you again the next time they are in need of your goods and services.

Responsiveness. You aren't a mind reader (unless you are, in which case, you probably don't need any business tips, and also I bet you are really fun at parties). Even your best guess as to deals, products, and services that your customers might respond to is only that—a guess.

And that's okay. What's important is not that you get it exactly right the first time, but that you continually work to improve. One way to do this is to make sure that your business is responsive, that you encourage customer feedback and respond to it both directly—by speaking or writing to the customer, when appropriate—and indirectly—by taking the feedback seriously and being willing to change things up to better meet your clients needs.

No customer has ever said: “Man, I wish that business would be less attentive to my comments and concerns.”

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[“That lady was way too nice. Screw this place!”]

Ask your clients to tell you what they think: even when criticism is rough (and you can read more about how to deal with negative feedback here), it can be beneficial. Even if you decide not to change what you are doing, responding to your customers will show that you respect their opinion (there's that “respect” again) and it will also help you better articulate why you do things the way you do in the first place.

Reliability. We human beings are creatures of habit. Once we find something we love, we like knowing that it will be there the next time we want it. And when we go back to a great little place we've found only to discover that the hours have changed/they don't make that sandwich anymore/they are all out that brand of jeans because they've changed suppliers...we feel cheated. And we are much less likely to frequent that establishment in the future.

Reliability doesn't mean you should stop innovating. Indeed, changing things up, bringing new and exciting things to your customers—these are also very important aspects of customer service. But finding what it is that your clients most value about your business, and making sure that those things don't change, will ensure that your clients trust your business as somewhere they want to come back to again and again, and to recommend to their friends.

Obviously, running a small business is tough, and it can be easy to get lost in the details and the myriad details that pile up and clamor for your constant attention. But by keeping in mind Respect, Responsiveness, and Reliability, you'll be well on your way to making sure that new customers will become regulars in no time.

(And if nothing else, make sure you've at least got a seat on the toilet in the ladies' room.)

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[An idea whose time has come.]

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