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How Great Customer Retention can Skyrocket your Profits

Want to know a red hot strategy to grow your business?

It’s customer retention.

That means delivering the best possible customer experience to actively retain your customers.

This is the new growth area, because 80% of your company’s future revenue will come from just 20% of your existing customers, according to Gartner Inc.

Implementing a customer retention strategy will give you an early advantage over your competitors. That’s because a whopping 80% of businesses think they’re delivering a superior service, yet only 8% of their customers agree with them.

And what about the bottom line? A study by Bain & Company found those businesses that increased their customer retention rates by as little as 5% typically saw profit increases ranging from 25% to 95%.

Customer retention is a key brand differentiator and one of the most important components of positioning.

Selling to an existing customer is easier than selling to a new customer

An existing customer has already gone through the know, like and trust phase with you. They’ve purchased your product or service and they trust you.

They believe your product is better than what your competitors offer. The positioning of your product has resonated with them and they’ve purchased.

And this makes it easy when they purchase from you again.

The stats for embracing a robust customer retention strategy are compelling.

According to Marketing Metrics, there’s only a 5-20% chance of selling to a new customer compared to a 60-70% probability of selling to an existing customer.

That means you’re 14 times more likely to sell to an existing customer than a new customer.

Then there’s the 6-7 times cost of attracting and converting a potential customer into a paying customer, as stated in a report by John A. Goodman for the White House Office of Consumer Affairs. That’s significant and makes it a no brainer to do everything possible to retain your customers.

The benefits of customer retention

Retaining your customer involves actively delivering the best possible customer experience.

The benefits of customer retention are as follows:

Selling to an existing customer is easier than selling to a customer that hasn’t purchased from you.
It’s far more profitable than converting a lead or a prospect as outlined above.
An existing customer is highly likely to buy from you again.
They talk. They’ll recommend your product or service to their friends. That can be face to face, social media or whatever, it doesn’t matter.
According to American Express, one happy customer will tell nine other people about their experience.
You can charge more by delivering a superior customer experience. A study by RightNow Technologies found that 86% of consumers are willing to pay up to 25% more for a better customer experience.
Then there’s the lifetime value of the customer. On average, loyal customers are worth up to 10 times as much as their first purchase.

Customer retention front and center

Customers expect a lot. A recent report shows that 60% of consumers have higher expectations for customer service than they did just one year ago.

Yet the majority of businesses are not delivering that superior customer experience, even though consumers are willing to pay more for your product to obtain it.

The benefits of an active customer retention strategy are obvious and compelling. In summary:

That’s what your customers want.
Your profits are increased substantially.
It’s a key brand differentiator where customer experience will overtake price.

For it to be successful, a customer retention strategy needs to be adopted at all touch points with the consumer. And it has to be consistently superior.

Customer retention shouldn’t be just a cog in the wheel of marketing. It should be front and center.

How to Create a Tagline with Benefits Your Customers Want

What do you do?

Most people will answer with what they do for a living. Nothing more. Ask a company and you’re told what they make or what service they provide. Again, nothing more.

With a tagline, however, you can explain in the simplest way possible what you do and how your customers can benefit – that’s it.

David Ogilvy said

What you say is more important than how you say it.

Although only one sentence or phrase, a tagline provides a very powerful statement of how you, your product or service, can benefit a potential customer.

In this article, I’ll show you how to create a tagline for the benefit your customer wants.

How to create a tagline

People have trouble creating a tagline because they’re not exactly sure who their potential customers are, or how they can serve them.

So, these questions need to be answered before you can create a tagline:

Who are your potential customers? Who is the buyer?
What are you selling them? What will they be able to do, with what you’ve sold them?
How will they benefit from buying it from you? What problem will it solve for them?

That’s pretty straight forward and enough to construct a tagline.

Now, use this basic template to create a tagline for your own business:

I help _____

(do) _____

so they can _____.

Typically, a tagline contains some sort of transformation, which is the “so they can _____ “.

This is where you show the benefit of buying from you, and how your customer will be better off. This is what differentiates you from your competitors.

Other types of tagline templates

Here are a couple of examples of tagline templates.

For creating a product or service:

I am going to create a (whatever the product or service is)

to help (your potential customers or buyers)

that will enable them (what transformation you’ll help them achieve)

For an online course:

Learn (how this works),

so you can (achieve so-and-so).

An example of creating a tagline

Recently I wanted to get more Ratings and Reviews on iTunes for a podcast I produced. This is the aim of all people starting a podcast, because the more ratings and reviews received, the higher you rank in iTunes.

To achieve this, I created a Podcasters Private Facebook Group to give ratings and reviews on each other’s podcast. I also needed to create a tagline to entice podcasters to join and show them the benefits of doing so.

The first step was to create a simple tagline using a basic template.

I am going to create a Private Facebook Group

that helps Podcasters

get more Ratings and Reviews and therefore obtain a higher ranking in iTunes.

Then I broke it down as follows:

Problem:

Can’t get Ratings and Reviews on iTunes

Solution:

Podcasters Private Facebook Group for giving Ratings and Reviews to each other’s podcast

Benefit:

Podcasts receive a higher number of Ratings and Reviews

Ultimate benefit:

Podcast will rank higher in iTunes

Finally, I had a polished tagline for podcasters to join my Podcasters Private Facebook Group:

Increase the number of Ratings and Reviews in iTunes for your podcast to rank higher.

A tagline is different to a slogan

Yep, and that’s fact.

A slogan helps with branding or product identification. They’re catchy, seen on packaging, display ads, commercials and large billboards. The aim is to associate the creative catchy phrase with the product and make it stick in the consumer’s mind.

Here are some famous and well-known slogans:

“Where dreams come true” – Disneyland

“Have a break, have a Kit Kat” – Kit Kat

“Think different” – Apple

“American by birth, Rebel by choice” – Harley Davidson

“Just do it” – Nike

“Finger lickin good” – Kentucky Fried Chicken

“Buy it. Sell it. Love it.” – Ebay

Slogans are directed towards an association with a product, whereas a tagline shows the benefit you can offer your customer.

However, in some cases taglines are slogans

This is particularly true when brands are just starting out.

This is what Erica Mills of Claxon had to say

When brands are starting out, sometimes the slogan and tagline are one and the same because you’re just trying to establish who you are, what you stand for and why people should buy you.

An example of a tagline being a slogan is M&M’s timeless

Melts in your mouth, not in your hands

M&M’s originated in the United States in 1941 after one of the founders, Forrest Mars (son of the founder of the Mars Company, Frank C. Mars), patented a process that stops the chocolate candy from melting in your hand. In 1954 Peanut M&M’s were introduced and the tagline “Melts in your mouth, not in your hands” made its debut.

The benefit is obvious and the slogan is very catchy and enduring.

This is an excellent example of a brand starting out with the tagline and slogan being one of the same. After all, the patent was based on this premise.

An equally famous tagline being a slogan is the first tagline FedEx used from 1978-1983

When it Absolutely, Positively has to be there overnight

A memorable tagline with a very clear benefit to the customer. At the time, it also represented a unique selling proposition for FedEx.

Why taglines are important

In one sentence, a tagline tells the world who you can help, and why they’ll be better off after buying from you.

A tagline is simple and to the point. Anyone should be able to understand it clearly and easily.

Finally, your tagline should reflect how your business differentiates itself from your competitors and what makes you unique.

And, it’s all packed into one sentence.

How to Position Your Product in a Crowded Market

Have you ever had a brilliant idea for a new product or service, only to find there are heaps of people doing exactly what you thought was a spark of genius?

So back to the drawing board? No, that’s not necessary. It may seem counter-intuitive, but a crowded market with heaps of competitors should be embraced rather than ignored.

That’s because it’s all about positioning your product and finding a unique niche, no matter how crowded the market is.

The market where money is made

A crowded market represents a market where money can and is being made.

It’s fertile ground just like a rainforest with its complex ecosystem. If you were to plant something in a rainforest, it has a great chance of growing. The same is true for a market with many competitors.

Contrast the rainforest analogy to a market where there are no competitors. You’re the first! This is like being in a desert, looking around and seeing nothing growing. There are no competitors because the market or niche is not profitable.

It’s crowded out there and almost anything you can think of has been done or attempted. New products that come into the market are for the most part reiterations of products or services that already exist. It then comes down to finding the right niche that differentiates you from your competitors. This is called positioning.

Positioning your product

Positioning is what sets your product or service apart from your competitors. It’s not just a case of being different, it’s also being better.

So rather than trying to avoid competition, you want to successfully compete by positioning your product in a unique and better way, so people will buy from you and not your competitors.

Many marketers and business owners refer to this as the Unique Selling Proposition (USP). In its simplicity, the USP shows a specific benefit of your product to your potential buyer that your competitors don’t have.

There’s a problem with the USP as a stand-alone concept, and that is by offering your customers a different benefit doesn’t necessarily mean that it’s a better one.

A lot more is required to uniquely position your product.

How to position your product

To successfully position your product, it needs to be:

Unique. Is it different from what your competitors offer, and in what way?
Beneficial. Does your product offer a compelling benefit that your competition doesn’t?
Positioned in the mind of your potential customers. What do they think of it?
Remarkable in a positive sense. Will your customers recommend your product and share with their networks?
Memorable. Will your product or service have an immediate and lasting impression?

By taking this approach, your product can be uniquely positioned as being different and better than your competitors.

With great positioning, you have carved a niche in the market where your product will resonate with the potential customers you’ve developed it for.

Understanding your customer enables you to position your product

It comes back to knowing your potential customer. Being able to empathize with them and understand their worldview. This is the ground floor for product success and getting your customer to buy from you.

It doesn’t matter whether you already have an audience, existing customers, or starting from scratch. It is an individual that will hand over her credit card to purchase your product.

Understanding why she would purchase from you and not your competitor means that your product has been successfully positioned for your potential customers. They will purchase from you.

Customer retention is also part of positioning

A lot of effort goes into getting a customer to buy from you. Once they do it’s not the end of the story and mission accomplished. Far from it.

Positioning is an ongoing process from all touch points with your customer. Examples are warranties, customer support, evangelizing about the product and additional purchases. You want your customer to be happy and to buy from you again.

This is known as customer retention and I believe it to be one of the most important components of positioning.

Success with customer retention is mainly determined by the culture within an organization and how they view and treat their customers. As an example, I think everyone has experienced the good and the very worst of customer support at some time.

The importance of customer retention is vividly shown by the following facts:

Selling to an existing customer is far easier than selling to a new customer

5-20% probability of selling to a new prospect vs 60-70% probability of selling to an existing customer (Source: Marketing Metrics)

What this means is that you’re 14 times more likely to sell to an existing customer than a new customer.

Acquiring a new customer is very expensive

It is 6-7 times more expensive to acquire a new customer than it is to keep a current one. (Source: White House Office of Consumer Affairs)

This fact is self-explanatory yet only 16% of companies put their primary focus on customer retention.

In summary, great positioning sets you apart from your competitors. It’s not just being different, it’s also being memorable and worthy of recommendation. After the sale, it’s caring deeply about your customer and their experience going forward with you.

Frankly, you’ll just be better than your competitors.

Dispense with a Horse and Reduce your Anxiety

A brilliant example of features and benefits was the very first ad for an automobile. It appeared in the August 13, 1898 of Scientific American by the Winton Motor Carriage Co. of Cleveland, Ohio.

The jaw dropping headline read:

Dispense with a horse and save the expense, care and anxiety of keeping it

In 1898 this would have been a head-turning, utterly fascinating headline. Not just for the novelty of being the first automobile ad seen, but also the huge benefit that the Winton Carriage could offer potential buyers of their horseless carriage.

The headline says nothing about the vehicle and its fantastic features. That comes later.

Instead the headline drills into the immediate benefit of saving on the expense and care of owning a horse. Then there’s the transition into the ultimate benefit which is reducing the anxiety of keeping a horse.

The features of the vehicle follow on from the headline.

When making a purchase, people make decisions at a deep-rooted emotional level and then justify it with facts and features.

Whoever wrote the copy for this historic advertisement understood the concept of selling with benefits and supporting with features.

This short post is a follow-up to my recent article on the difference between features and benefits.

Know the Difference Between Features and Benefits

Do you know the difference between features and benefits?

It seems like a dead easy question, but it’s not. Actually, most business owners and marketers get it wrong.

And they get it wrong because their focus is on the product or service they’re selling, not on the customer. They’re selling features.

But the customer is wanting to buy benefits. She’ll hand over her credit card once she understands what’s in it for her. What is the benefit to her when she buys your product?

To sell your product or services you need to stress the benefits, not the features.

Why? Because customers really don’t care about you or the products and services you’re selling. They just want to know what’s in it for them and how your product can benefit them.

The difference between features and benefits

A definition is handy:

Features are facts about what your product or service does. Benefits are what your customer gets out of it.

Here are a couple of examples.

The first is a classic by former Harvard Business School marketing professor Theodore Levitt who said:

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.

Let’s break this down with an example of a man who’s been given a framed photograph of his beautiful granddaughter. He wants to hang the photo in the sitting room and he needs to buy a drill that can make a hole in the brick wall, so he can place a picture hook to hang the photo.

The feature is a drill that can make a hole in brick-work or concrete. The benefit is he can hang the photo. But there’s more to this and that’s the ultimate benefit, which is the joy and pride he derives by looking at his beautiful granddaughter.

The second example I’ve borrowed from Brian Clark, founder and CEO of Rainmaker Digital, who discusses the motivation and benefits of people getting a college education. To quote Brian:

People don’t really go to and the parents really don’t pay for college in order to get an education. Knowledge is what colleges are providing. But what people are buying with all those tuition dollars are the benefits of knowledge.

In this case, the features are the descriptive facts of the course and its subjects. The benefits are what the student gains from the course and this goes much deeper than just the piece of paper on graduation day.

For a start, people with a college degree typically make more money than those without; they generally find it easier to get a job; and they can hopefully enjoy a better lifestyle which is an ultimate benefit.

The Benefits Pyramid

A handy way to look at features and benefits is with the Benefits Pyramid.

The pyramid represents the different levels of benefits, starting with “Features”. These are the descriptive facts about your product.

The next level is “Advantages”. This is what differentiates your product from your competitors. It’s what gives you the edge.

The next level is “Benefits” and then we move up to “Ultimate Benefits”.

There are benefits and then there are those ultimate benefits

Benefits tell you what your customers want to do and be.

Ultimate benefits align with the customer’s self-interest and what they’re looking for. Some of the things people want are to:

Look attractive
Be respected
Be loved
Be admired
Be more productive
Make more money
Be happy
Have good health
Have less stress
Have more leisure time

Finally, people want to avoid sickness, uncertainty, pain, fear, and guilt.

Advantages differentiate your product

Advantages is what differentiates your product from your competitors. What are the advantages of your product over your competitors? What is it that differentiates you.

Basically, advantages are the Unique Selling Proposition for your product or service.

How to find out what the benefits of your product or service are

First and foremost, it doesn’t matter how great your product is and the features offered, your customer isn’t interested.

She’s only interested in what your product can do for her. What’s in it for her. How can she benefit?

When selling, you need to sell with benefits and support with features.

This is easier said than done. Many marketers struggle to describe the benefits of their product, but there are a couple of cool ways of doing it.

One way is to list the feature at the beginning of a sentence and then transition to the benefit with the words “which means“. Let’s go back to the drill example and simplify it.

This drill can make a hole in a concrete wall which means you can hang a photo.

A useful method but a bit boring and doesn’t easily help you get the ultimate benefit which all customers subconsciously want.

My preferred way is the So What trick that Henneke advocates. It quickly defines the benefit of a feature. Here’s an example.

Imagine you’re selling an electric kettle. There are a number of features on the kettle but its special feature is that it boils water fast. This feature, like all features, is a fact about the product.

To flesh out the benefit the dialogue would go like this:

This electric kettle boils water quickly.

So what?

It takes less time to make your cup of coffee.

So what?

You’ll be able to enjoy your coffee sooner [benefit]

So what?

You’ll have more time to do the things you want to do [ultimate benefit].

Let’s revisit the drill and extract the benefit using so what:

This power drill has a hammerhead action.

So what?

It can drill through brickwork and concrete

So what?

It can make a hole in the wall so a picture hook can be inserted to hang a photo [benefit].

So what?

You’ll able to look at your beautiful granddaughter [ultimate benefit].

You can see by using so what in the above examples, we’ve been able to transition from features, through to benefits, and finally, ultimate benefits. You’ve described the ultimate benefit when you no longer can answer another so what question.

Know your customer to understand the benefits they want

All products have more than one feature and each feature has a benefit. Knowing what benefit to describe to your potential customer is to understand the benefits they’re wanting.

People want many things, but how do you find the real benefits your potential customers are seeking?

That comes back to the very basics of knowing your potential customer. Being able to empathize with them and see their worldview. This will give you an understanding of their desires, wishes and pain points.

Sell the benefits to increase sales

A bit of psychology. People make decisions at a deep-rooted emotional level and then justify it with facts and logic.

When buying a product, your customer is thinking of the benefit she can obtain and sub-consciously the ultimate benefit. She’ll then justify her decision to purchase based on the great features your product has over the competition. It’s as simple as that.

By knowing your potential customer, you’re in a position to sell the benefits your product or service offers. That’s what your customer wants, you’re aligned, and the sale is yours.

The expression “sell with benefits, support with features” is ever so true.