Why a Small Business Needs a Customer Engagement Strategy

 In Business, Marketing

In the early months after a small business is launched some owners have a tendency to place all focus on attracting new customers and give little or no effort into developing customer loyalty.

Although a flood of unique sales may initially help to steady nerves, a small business has to develop a realistic customer engagement strategy to secure its financial future.


The Problems with a Sales-Only Strategy

1. Short-term blindness:

Also known as the ‘Fighting-a-Losing-Battle strategy’. A sales-only strategy is one which results in minimal reward for maximum effort. By expending all efforts on attracting new customers a small business is only seeing short-term business development.

2. Breaking the bank:

Studies have shown it’s far more expensive to find a new customer than encourage repeat business from an existing customer. Bringing in new business involves marketing and a marketing campaign is rarely cheap. If a business does nothing but focus on new customers when does the marketing end? For a small business with limited resources the cost of a continuous marketing campaign may not be sustainable.

3. Pyrrhic profits:

A Pyrrhic victory is a “victory with such a devastating cost that it is tantamount to defeat” (Wikipedia). Chasing new sales costs money and the profits will barely cover the costs (there may even be a deficit). A loss-leading campaign is only a successful measure if a business can capitalize by encouraging customer loyalty. If the financial burden of a marketing campaign (including a discounted price strategy) does not encourage repeat sales – through customer engagement -then the business strategy is flawed.

Curing Short-Term Tunnel Vision

Play the long game:

There is no denying sales are the number one factor for business prosperity. But to ensure continuous, stable sales a business must look beyond new customer attraction. Surviving the early days of business development is probably the toughest stage of creating a successful small business and many owners become obsessed with sales, sales, and more sales. It’s important to not only have a long-term development plan but also a strategy for turning new customers into promotional advocates and repeat sales prospects.

Engage and conquer:

A small business, especially a start-up, will receive new customers by using an effective marketing strategy. But the business has to focus on customer retention as well as unique sales. Encouraging customer loyalty is the backbone of a successful small enterprise and can be achieved through product quality, excellent service, and smart marketing strategy. Once a small business starts to develop a loyal customer base it will see a steady flow of continuous sales and an increase in new sales (as a by-product of satisfied customer referrals).

Build it and they will come:

The ‘it’ in this case refers to business reputation. The impact of a positive business reputation cannot be underestimated. Small businesses are often unable to compete with larger rivals on price or product range so different tactics are required to increase market share. Quality of service and customer experience have long been associated with small business and it’s a proven fact that consumers will pay higher prices and remain loyal to a small business that excels in customer satisfaction. Business reputation is earned through quality products supplied with exemplary service. Offer both and a great business reputation will come from positive customer reviews, referrals, and loyalty.

Do’s and Don’ts of Customer Engagement

  • Do create a positive online presence through a business website and social media profiles.
  • Don’t create online resources and then fail to keep them updated. Customers may assume you’ve stopped trading or are simply not interested in customer engagement.
  • Do use loss-leading promotions, such as: discounts, loyalty cards, and free gifts to encourage repeat custom and customer retention.
  • Don’t use loss-leading marketing if you’re only looking at increasing unique sales. A loss-leading strategy must be used in conjunction with a customer retention strategy.
  • Do encourage customers to sign up for online newsletters or even postal contact. Use this opportunity to advise customers of new products and money-off offers, for example.
  • Don’t abuse the customer trust in giving personal contact details by overwhelming them with a barrage of emails or post. Hard sell techniques do not result in repeat customers.

A small business has to attract new customers in order to receive the sales which cover start-up costs. But to become a profitable, successful enterprise a business has to encourage new customers to make repeat purchases and positive referrals. A loyal customer base is the key to business prosperity and customer engagement strategy that promotes consumer satisfaction and appreciation will result in an increased customer retention rate.


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