What Makes a Customer Retention Strategy - Is Your Newsletter Enough?

Question: I run a medium-sized business, a lot of our profits are dependent on customer loyalty. What sort of customer retention strategies should I employ? Do I need to be doing more than just a customer newsletter, to retain my customers.
Answer: Based on my experience as a marketing consultant and feed back I get providing imput on customer newsletters, the very first step in customer is start with a printed customer newsletter. Once you are able to mail to your entire customer base profitably, begin mailing to your unconverted leads, then it is time to start looking at what you might want to add.
There are two factors that need to be looked when evaluating your customer retention strategy. It is never just black and white.
What are your current defection rates?Some businesses can be blessed with naturally high retention rates. It can be they are the only game in town, they might have some secret ingredient. So you need to know what percentage of your customer base you are losing after one year three years and five years. Are you able to offset that with new customer marketing?
From my perspective as a marketing consultant, providing that there is nothing 'wrong' with your products and services then by simply investing in your relationship with your customers will increase retention rates.
And it is much easier and cheaper in most cases to keep an existing customer happy than it is to go out and get a new customer. So it makes sense to invest to a level that makes financial sense.
What is the value in retaining the customer?For most businesses 80% of their profits come from 20% of their customers (Or some variant). Understanding which customers bring you how much profit is a good first step to stratifying your customer list to work out which customers warrant how much customer retention effort.
You might have a much better idea then who warrants how much investment in retention. For example, if you have a couple of large customers that you can't live without then you need to be doing a lot of work in order to be sure you don't lose them. Simply doing a monthly customer newsletter may not be commensurate with their value to you. They may need special treatment.
Ultimately, you want to be breaking this dependency. But for now, recognise the situation and do your best to prevent the disaster while you work to break dependency.

To help you get the most out of your customers, I have put together with the help of my business partner a guide called "Get More Repeat Business and Referrals"
You can download a copy at http://bitly.com/WHEVce
From Zac Nelles, Newsletter Marketing Specialist