Welcome to our Dear Strictly Business advice column, brought to you by our pals at Xero. This is where you ask the questions and we hunt down the answers. Got a burning question? Feel free to send it our way.

In an ideal world, every new customer would be a customer for life, and they’d tell all their customer friends, who would go on to have loyal customer children, and so on. Unfortunately, real life doesn’t work this way. Small business competition is rough. Winning over customers is what 53 per cent of sole traders say is their main challenge when starting a business, according to Xero’s research. And hanging on to your customers isn’t always easy. This week, we sat down with homewares designer Shuh Lee and small-business coach Fiona Killackey to chat all things customer retention. Brace yourself for knowledge. 

Create small moments of wonder
As a customer, there are two brands you’ll never forget: the one that let you down, and the one that surprised you. Surprise and delight are two things small businesses actually do better than big ones: you know your repeat customers, and you control your service, production and packaging. It’s easy to create little moments of wonder. “Because I pack all my orders, I know some of my regulars,” says Shuh. “Sometimes I write personal thank you cards, or include a free gift. Wrapping is also really important. I like to write little notes on the package, like ‘Open Here’. They’re small touches, but they let people know a human actually wrapped this.”

Build ongoing value
In a world of limitless choice, brands have to go beyond services and products. They need to create value for customers. Fiona says it’s good to think laterally here. Can you help them discover new people or places? Do you make them laugh on social media? Do you provide killer customer service? Whatever it is, your value needs to be tied to your key revenue streams: social, email, Shopify, whatever. “Too often we look at customers like a one-night stand,” she says. “We spend all this time chasing them, but once we have the sale it’s like 'Byeeeee!' Retention can be as simple as sending a voice note DM over Instagram, asking how they’re feeling about their purchase. Always think: why should my clients stick around?”

Get to know your customers
Such a simple one, but if you don’t know who your customers are, where they come from, or what they really want, building loyalty becomes way harder. “I like markets,” Shuh says, “because I can meet my customers face-to-face and get feedback. I never say no to a new idea.” Fiona says it’s important to get your CRM (Customer Relationship Management) system humming. CRM just means any software that helps you track and organise customer relationships; you can use it to store contact info, analyse demographic data or even design an automated EDM campaign. “Most problems in small business stem from issues with processes and systems. There are so many great CRMs out there, from Hubspot, Notion and Insightly, through to Zendesk and Pipedrive.”

Don’t forget, you can also use online accounting software, like Xero, to create customer lists and get insights from sales data. With your full contact history all in the one place, you can easily monitor who’s purchasing from you, what they’re buying, and where they come from – this way, you know exactly who you’re marketing to. 

Let your customers in
Shuh makes an effort to show her customers behind-the-scenes: she takes pics of her studio, posts WIP shots on Instagram, and partners with other like-minded brands. “I always recommend showing your progress shots and showing what you’re working on,” she says. “It’s a window into the flow of your business. Also collaborations. I do a lot of work with other design businesses and it really helps grow my brand.” Fiona agrees that transparency is key. “Trust builds brand loyalty, and this can be hard to foster, and easy to lose. What are you doing to encourage trust? Are you transparent about where your products are made? If you say your product or service delivers X, then make sure it does.”

When they go low, you go high
A small-business owner can be defined by how they handle negative feedback and returns. If you’re really good at this, you can turn a keyboard warrior into a brand ambassador. And it’s not about bribing them with free stuff, either. “Respond to negative comments, rather than deleting them,” Fiona says. “Start a dialogue rather than shutting down debate. People buy from people, and humanity can be one of the biggest ways to instil trust.” Shuh says small businesses again have the edge here, because they have so much control over the customer relationship. “Word of mouth is so important, and I don’t want a single bad review. Dealing with returns, you just have to stay calm and assess each situation as it comes up.” 

This helpful content was brought to you in partnership with our pals at Xero. Whether you lead a small team or are going it alone, Xero is online accounting made for your business. For a limited time you can get 50% off new Xero plans for the first three months when you purchase before June 30th, 2021. T&Cs apply.