A Complete Guide on How to Retain Customers for Small Businesses

Learn customer retention strategies, importance of retention, and how to build customer loyalty through customer growth by Moeed Amin

The pandemic stalled growth for a lot of businesses. The smartest entrepreneurs were those who quickly realized that the best source of business growth was going to come from their customers.

However, most entrepreneurs failed to achieve the growth they desired from their customers. They found a lot of their customers were resistant to their proposals for new services or upgrades. I interviewed over 400 buyers, and I was surprised to find their reasons were not connected with the fear of budgets due to the pandemic. Their reasons were due to one primary ingredient that was missing from their suppliers.

Small business misconception about customer retention

There is a misconception in business that you earn customer loyalty through the outstanding service levels you give them. I’m not saying that customer service is not important. It is. However, customer services can best be summarized with the phrase “table stakes.”

You obviously need to treat your customer base well and deliver on your promises, but providing an ever-increasing quality of customer service will reduce your margins and prevent you from growing your dollar retention level.

How to retain customers globally

The missing ingredient: Focus on customer growth and improvements

Custom growth strategy and improvements should be nurtured over customer service. As the world we live in changes at a break-neck speed, your competitors find novel ways to make you redundant. This could come from a mixture of more valued product features and lower pricing.

Long-term customer loyalty comes s more from their belief that you are their best source for continued growth than the feeling that you are providing them with great support. This is a critical point to understand and embalm into the DNA of your business and offerings.

Why did your customers decide to work with you?

Think back to when they became new customers. Why did they buy your product or service? Was it simply the promise of great customer service or support? Hardly.

Customers decided to work with you because of the promise that what you offered will do two things:

  • Elevate the customers’ value
  • Enhance the customers’ identity

It’s likely you have not heard that these two things are the actual reasons why someone buys a product. We are taught that customers buy because you are the best because your product is the best, or because you are the cheapest. But those are just “tools.” They are “means reasons,” but they are not the “end reasons.”

Think about the last time you may have bought a coaching program or a technical product or a training course. You will have purchased them not just because they had a good brand and you trusted their promises, but also because they promised to deliver something you needed. They promised to deliver something that you strongly believed would elevate your skills or abilities. Those skills and abilities would then increase your value.

In addition, you would have also bought those products or services because they enhanced your beliefs about your identity. The tech-savvy person buys the latest gadgets because they identify themselves as someone who has the latest technology. The cautious, frugal person would never buy the latest technology for such a reason.

Instead, the latter group identifies themselves as people who are “smart” with their money and only buy based on perceived need. Entrepreneur doesn’t buy marketing platforms because they are marketing experts. They buy them because they believe that they will increase their business’s value, which in turn increases their perceived value of themselves as a successful entrepreneur.

Global customer service

What types of growth can I offer?

You might be thinking, “What are these changes or improvements that Moeed is referring to?” Well, these usually come in the form of either lateral growth or longitudinal growth.

Let’s use the example of a subscription-based business. You might sell your services on a seat-based model. This means that you charge a license per seat. You might have a customer with only three licenses, but you see the need for them to have additional licenses. This is an example of longitudinal growth. You are growing by deepening their relationship and use of your service.

Another path to growth might be to offer them new services. You might offer them access to consulting or licenses to different platforms you have. This would be bilateral growth.

You should have both types of growth in your business. Think about how you can deepen your customer’s current service and have new offerings that will help them grow and improve their business or outcomes.

Why is customer engagement important for customer retention?

When you acquired a new customer in the past, you convinced them to change from either someone/something else they were using or change from their current methods of working. You convinced them that your product or service would deliver better results while being a less risky option.

But let’s be clear. When you approached them, they were already working with someone else. That other supplier or partner was potentially already providing them with good customer service. So, why did they decide to work with you? Was it the promise of better customer service? Absolutely not! Unless their previous supplier was really bad, the chances are that they took the risk to work with you because they believed they would receive a disproportionate positive result from you compared with their current supplier.

That is why customer growth and outcomes, not customer service, is the key to customer retention. As the world changes, your customer needs to change to continue thriving. They are not loyal to customer service; they are loyal to increasing performance and growth.

A recent study by Salesforce found that customers value outcomes more than experience. Gartner also conducted a study into what determines customer loyalty and how companies are successfully increasing their customer’s dollar renewal rates.

Your customers are not working with you in a vacuum. You must realize your competition is continuously contacting them. They are being influenced by others just as you were once the competition to their previous supplier. Someone else is trying to convince them that they are a better option compared to you. They are not using better customer service to tempt them away from you; they are promising them better results and returns.

4 Strategies to improve customer retention and win customer loyalty

Overdeliver on customers’ expectations

Consider these two scenarios:

  • On a scale of 1 to 5 (where 5 is the highest expectation) Customer A expected results that were a 3. They then received results that were higher than their expectations. They received a 4.
  • Customer B expected to receive 5-star results and received 5-star results.

Who do you think is the happier customer?

Research shows that customer A will be happier. You exceeded their expectations, and they are more likely to be loyal.

The first step to retaining your customer is to over-deliver on their expectations. However, this does not mean that you deliberately lower their expectations in order to make it easier for you to exceed them. Not only is that unethical, but you open yourself to risk from a competitor promising more and you then lose the business. The key here is to up your game to the point where you deliver such value that you leave your competitors sweating to keep up with you.

Be crystal clear on what success looks like

Some of the best businesses I worked with and interviewed have this incredible ability to be radically transparent and clear on what success will look like for their customer, and how that is being measured and communicated.

Expectations are important in retaining customers. The best businesses are those who communicate those expectations with their customer at the start of their relationship. However, you do not want your customers to determine what those expectations are and how to measure success.

  • Ensure both you and the customer have a clear understanding of what they should expect from working with you.
  • Discuss what customer success will look like. You mustn’t just share the end success when the work is completed, but share what success will look like at the incremental stages as well.

For example, if your project has four stages, share with your customer what success will look like at each stage, not just how it will look at the end of the fourth stage.

To accurately measure success and clearly present your findings, use customer success metrics and KPIs your customers agree are appropriate. This might be a call with a presentation, or it might be just emailing them the details, and they will respond.

My recommendation is to have a call with them. What often happens is that customers will be very busy with other responsibilities and may not thoroughly read your presentation. You want to imprint within their minds the reality that success is occurring.

There is a lot of research on the impact of positive reinforcements. You want to have every opportunity possible to engage with your customer and reinforce the successes you are delivering. You want them to acknowledge those successes.

The other reason to have a call is that you will be better able to notice any hesitations or misgivings your customer may have. It presents a chance for you to address and resolve any small problems before they grow into big ones that will be tough for you to resolve.

Maintain cadence

There is obviously a balance between valuable contact and contact that is either too frequent or a nuisance, but you want to ensure that you don’t leave a long period of time without some engagement with your customer. The key is to make sure that you are delivering value in every interaction with your customer.

If you sell a subscription service, the cadence in your engagement is vital.I used to work for several SaaS and subscription-based businesses and have many such clients. The best way to retain and grow your subscription customers is to have regular contact with them, often quarterly, that is just about your relationship and communicating the delivery of your promises.

You may have other contacts with your customer that are about delivering your service, but the best account managers are those who agree on quarterly “relationship meetings” with their customers. These meetings are a great opportunity for you to gather intel on what is happening in your customer’s world and you are more likely to hear about any risks to their business that might pose a risk to your retention and customer growth.

Customer interaction network

Go for a long-term customer relationship, and go for growth

The final step to retaining customers for is to help them grow continuously for the long term. For example, if you are a business coach, one of the best ways to have a customer continue spending with you is to provide them with scenarios about their future.

Paint a picture of how their world or their industry is changing. Describe what challenges those changes will bring and what impact this will have on them. Describe two visions of that future: one where someone who lacks specific, critical new skills will experience declining growth, and one where someone who has acquired those new skills is going to grow and thrive.

Whatever product or service you sell, central to your customer retention process should be to help them:

  • Understand the future
  • Understand what that future means to them
  • Understand what skills or technologies or methods of working will thrive in that future
  • Understand how you can easily give them those advantages

I have one word of caution when helping your customers grow for the future. Research by Corporate Visions found those companies who attempt to grow customer spending by proposing overburdensome changes will increase the chances of their customer shopping around by 10%-16%.

Customers bought your solution because they believed that it would deliver the growth or improvements they needed. They took the risk and went for change by going to you. However, if your proposed changes as the status quo supplier are too big or complex, this will induce your customer to think that the risk is too high and they should start shopping around.

My recommendation is to propose incremental changes. The future vision you portray may require big changes, but all those changes don’t have to happen immediately.

Your best option is to help your customer see that small changes will give them meaningful results and meaningful progress toward growth. Don’t scare them by showing them the big changes, but instead demonstrate that you understand the future and you have data and examples for how you can help them with small, safe changes.

Customer engagement



About Moeed Amin

Commercial Advisor to Foxy Nerds Studio

Website: Proverbial Door

Whether you are a start-up, an established company, or a professional seeking to grow your success I am here to help you. I can help you identify what is truly holding you back and unlock the potential of your business to make a greater mark on this world.