To sign up for our daily email newsletter, CLICK HERE
Running a successful business means active sales of goods and services. After all, sales are the lifeblood of any enterprise, and customers are the driving force behind them. However, many small businesses find it difficult to attract enough customers and struggle to keep them coming back. Why does it happen and how to avoid it? In this article, we will review the common challenges small businesses face when it comes to retaining customers, find out how to define reasons for poor customer attraction and explore effective strategies to overcome them.
Starting a Business
Starting a business is an exhilarating journey, one that demands courage, adaptability, and a solid plan. For those embarking on this venture, understanding the basics is crucial. Begin by identifying a market need and conceptualizing a product or service that addresses this need uniquely. Drafting a comprehensive business plan is your next step, outlining your vision, target audience, financial projections, and strategies for growth. Securing funding, whether through savings, loans, or investors, will fuel your startup’s initial operations. Embrace the learning curve, leveraging resources related to starting a business, and remember resilience and flexibility are your allies in navigating the dynamic landscape of entrepreneurship.
Why do small businesses lose customers?
Every entrepreneur knows how frustrating a customer churn may be for a business. However, customers leave. Research shows that only 13% remain loyal to one brand. What drives customers to switch from familiar businesses and opt for products or services offered by competitors? There are several key reasons for this:
- Poor customer service. Slow response times or unhelpful interactions always frustrate customers. When they feel their needs are ignored, they start to look for alternatives.
- Low quality of goods and services. If customers are disappointed with the quality, they will never return for a repeat purchase.
- No loyalty programs. Customers like to be rewarded for their faithfulness – they expect perks like discounts or exclusive offers. If you have no loyalty program, they will go to competitors who offer incentives.
- Old methods of sales. Traditional advertising or in-person sales pitches are no longer effective. Modern customers are looking for personalized shopping experiences.
- Lack of technology use. The reluctant adoption of digital innovations means you are not competitive. Tech-savvy consumers choose chatbots, voice search, and mobile-friendly services.
You will hardly identify your business pain points with the naked eye, and here, market research comes into play.
What is market research for a small business?
First of all, you must understand what market research implies. It is a process of gathering and analyzing data about your target audience, competitors, and industry trends. This information allows business owners to make informed decisions. You will learn your customer preferences, behaviors, and demographics. Besides, you will understand the competitor’s tactics for customer engagement. The goal of market research is to let businesses better understand their customers, improve products or services, identify growth opportunities, and develop data-driven marketing strategies.
How to get market insights via research.
You believe you know everything about your customers and your business. However, market research will let you clearly see the whole picture. Here are a few steps to get key information.
Define your buyer persona
A buyer persona is your average customer. It is a semi-fictional character. However, it ideally represents your audience. Look for similarities among your customers to identify common traits and characteristics. It will help you create a generalized portrait that represents larger groups of your audience. You may add age, gender, occupation, income level and even interests. Then, gather more specific information about their preferences, needs, and buying habits. This qualitative data can provide valuable insights into what your customers usually buy and refine your offer. Use a buyer persona template to present the data and create detailed profiles that accurately represent your target audience.
Study your competitors
When you compare your business to competitors, you will clearly see different aspects of your performance – product quality, pricing, customer service, and other factors. It helps you identify areas where you excel and areas where you need to improve. Furthermore, will learn how you differentiate from other businesses. Knowing your unique features, you can position your products or services in a way that sets you apart from competitors and attracts more customers.
Find out what customers like in your business.
The best way to learn your customers’ attitude and especially what they like about it is to ask them about it. There are many ways to do it:
-
- Online surveys. It is a cost-effective and quick way to gather feedback from a wide audience but may bring incomplete answers.
- Telephone surveys. This approach is good for in-depth interviews.
- Direct mail surveys. This method can cover a wide geographical area, but you may take time to collect enough responses.
- SMS surveys. Sending surveys via texting notifications can be an effective way to get more people to respond.
- Purchase feedback. Conduct a short survey to learn whether your customers are happy about the purchase.
- Allow online review. Encourage your customers to leave reviews on your website. Make sure to check these regularly and react even to the negative ones.
- Social media interaction. Engage with your audience through interactive features like Stories, stickers, questions, and quizzes. Invite your customers to share their opinions on your products and services.
Once you understand your cons and pros through the eyes of your consumers, you will have a clear guideline for how to proceed.
Calculate your NPS
Your Net Promoter Score (NPS) is a powerful metric to assess your customer experience. You can find it by asking customers if they would recommend your products to others. Use a scale of 0 to 10 for this purpose. Then, split the respondents into categories based on the number of points they give:
- promoters (score 9-10)
- passives (score 7-8)
- detractors (score 0-6).
Now, use the following formula to calculate your NPS:
Total % Promoters – Total % Detractors = Net Promoter Score (NPS)
This result gives insight into customer satisfaction and loyalty and identifies business strengths and areas for improvement.
Now, you can put together all your findings to determine the most probable reasons for customer churn. The next step is developing an action plan to eliminate the most alarming issues.
How to conduct market research?
Big businesses can allocate time and money to such research. How can small companies with limited budgets collect the required information? You can use a method known as secondary market research. It is fast, cost-effective and easy to conduct. Here are five steps to take:
- Define your research objective. List several questions that your research should answer.
- Decide what resources you want to use – customer database, tool, industry data, etc.
- Collect the data.
- Put down the information in a readable format.
- Analyze the obtained data. If your questions are not answered, return to point two to look for more resources.
This method is simple and applicable to any business scenario. It helps identify trends and opportunities to weave into your customer attraction and retention strategy.
Conclusion
Market research uses different methods, such as surveys, interviews, and calculating essential metrics of your performance. It may be time-consuming, but it provides valuable information. The main thing to remember is that market research is an ongoing process. Customer behaviors and market trends are quickly changing. Luckily, you can employ many online tools to simplify information collection. Note that businesses that do market research are usually more successful than those that don’t.
