7 Ways To Use a Business Line of Credit To Improve Customer Retention
Regardless of the kind of business you’re running, attracting and keeping customers interested will always be one of your top priorities. New customer acquisition is great, but it’s not enough. That's where customer retention comes in - but it’s not a cheap task! You’ll need money to fund clever customer retention strategies. One way to get this money is through a small business line of credit.
This article will cover seven ways to invest your line of credit.
What is a Business Line of Credit?
A business line of credit allows businesses, big and small, to borrow up to a certain limit and only pay interest on the money that's used. It’s a similar idea to a credit card in that it isn't a one-time loan but a revolving line of credit/revolving business credit. A business line of credit is more of a small-term solution than typical business loans are. Though, there are still certain requirements that must be met. Before a business can access this form of financing, the owner needs to complete the application process. This includes personal information, data about your business, and some financial questions.
Lenders also look at:
- How long the business has been operating
Although it’s important to always gain new customers, it can be even more important to keep existing customers. Retention can lead to easier conversions because getting an existing customer to buy from you is much easier.
For example, according to FinancesOnline, businesses can expect an average success rate of 20% with new customers and an impressive 70% with existing customers.
Increasing retention by just 5% can also increase profits by 25%+.
Thus for a small and growing business, it’s far more beneficial to focus on a customer retention strategy than customer acquisition.
How To Measure Customer Retention
Of course, your customer retention strategies should be measured so you can determine if they’re paying off. You can determine your retention rate with this formula: (Number of customers at the beginning of the period - Number of new customers during that period) / Number of customers at the end of the period.
Don’t worry too much if math isn’t your thing, as many awesome tools can help you accurately measure customer retention. Here are a few options to choose from:
- Loyalty Lion
How To Improve Customer Retention With a Line of Credit
Now let’s look at how to retain customers sustainably. Knowing how to improve retention can take your business from "okay" to "thriving" quite easily. Naturally, you’ll need money to do this, so a business line of credit will come in very handy.
Without further ado, here's how to increase customer retention with your line of credit:
1. Invest in a CRM Tool For Stronger Customer Relationships
A good CRM (Customer Relationship Management) tool will streamline how you deal with customers. This kind of tool will also help you keep track of your sales and customer retention rates in one place.
2. Follow-up With Customers Post-purchase
Sending personalized thank-you notes after big orders is one way of following up with your important customers. Another is sending emails or messages with personalized recommendations and suggestions. You can also reach out to customers by phone or email to find out if they have any questions or issues they'd like to discuss. This contact makes customers feel valued and important.
3. Give Customers Desirable Freebies With Every Order
Everyone loves a free gift, so giving out freebies or special discounts with large orders can encourage customers to come back while making them feel important. Just make sure the freebies are valuable to your customers and not some generic, low-cost items — these will be quickly identified as cheap junk, so they won't encourage customers to make repeat purchases.
4. Build a Loyalty Program
Loyalty programs are a fantastic way to ensure your customers come back for more. And since almost 59% of US consumers say that once they’re loyal to a business, they’re loyal for life, investing time and money into a loyalty program is a must.
You should aim to make your best customers feel like VIPs by planning a good customer loyalty program. Namely:
- Know your audience
- Give them something to strive for
- Add personal touches
- Provide value that can't be bought
5. Invest in Professional Training For Staff
Your employees should be trained to treat customers in a way that makes them want to continue to support your business. Investing in professional training for your staff will increase customer engagement and performance, which improves the customer experience and boosts customer loyalty. As an added bonus, your staff will gain new and important skills.
6. Invest in Resources For Customers
Provide your customers with resources such as video tutorials, a Frequently Asked Questions (FAQ) section, and a comprehensive knowledge base so they can learn more about your business without having to ask for assistance. Giving them the answers to their questions right from the start will improve their experience with your products (thus, increasing the chances they buy more products).
7. Establish a Process To Collect Customer Feedback
Feedback is essential for any business, and giving your loyal customers an easy way to give their opinions helps you get more of them. Customer feedback can help you determine if poor customer service is causing customer churn, if customers dislike a particular aspect of your product, or if there’s a point in the sales funnel that requires your attention.
Need a Line of Credit? Idea Financial Has Your Back
If you need a business line of credit, don’t approach any old loan services. Not all of them can be trusted, unfortunately. Instead, your business needs to partner with a lender that offers 24/7 financial advice and assistance — a lender like Idea Financial.
We offer lines of business credit of up to $250,000 with flexible terms. Idea Financial offers:
- Same-day approvals and next-day funding
- Low interest rates
- Applications that don't impact your credit score
- Repayment terms of up to 36 months