Too many business owners run their companies like a bucket with a hole in it. They pour the water—customers—in at the top, but don’t pay attention to what’s leaking out of the bottom. As I explain in my book, The Predictable Profits Playbook, patching that hole is one of the best, and fastest, ways to boost a company’s profits.

In fact, according to a study published by Harvard Business School, increasing customer retention by just 5 percent can lead to a 25 to 95 percent increase in profits. Reasons for such an increase include:

• Retaining customers is less expensive than acquiring new ones.
• Happy customers are more likely to tell their friends and family about your business.
• Repeat customers spend more money but require less help.

What strategies can you use to keep those loyal customers coming back time and time again?

1. Provide Exceptional Customer Service

Buffer is an app designed to make it easier to schedule content to share on social media sites. It's hardly the only player in this industry; in fact, it even faces competition from free alternatives. How does it differentiate itself from the crowd? It provides exceptional customer service.

Buffer documents the progress of its satisfied customers in something called a Happiness Report. This report provides detailed statistics of how Buffer has helped its customers. Looking at January’s Happiness Report, we can see that 78 percent of people who emailed Buffer received a reply within just six hours.

The happiness report keeps Buffer’s team members accountable, while letting its customers know just how seriously the company takes customer service.

2. Use Email Marketing

Studies show that email offers some of the highest return on investment (ROI) of any form of marketing. According to The Power Of Direct Marketing published by the Direct Marketing Association, every $1 spent on email marketing provides an ROI of $41.

One of the main reasons email produces such great ROI is its ability to efficiently keep customers coming back to your business. Email can keep your company at the top of their minds while nurturing the customer relationship, introducing new offers and offering valuable content.

Lens.com is one example of a company successfully utilizing the power of email marketing. As anyone who wears disposable contact lenses knows, they aren’t items you can purchase once and then forget about. So to ensure customers use its service rather than a competitor's to refill their prescription, Lens.com sends email newsletters letting people know about discounts and special deals. These reminders keep Lens.com at the forefront of customers’ minds, and effectively make the company the first choice when it’s time to purchase new contacts.

3. Introduce a Loyalty Program

If you’re a regular coffee drinker, you’re likely familiar with the idea of loyalty cards. Each time you get a cup of joe, you’re rewarded with a stamp. Fill up the card with enough stamps, and presto, you get a free coffee.

Loyalty cards work because customers keep coming back to collect their stamps. One UK supermarket, Waitrose, has even gone a step further. Join its loyalty program, and you'll get  your daily coffee—for free.

Waitrose knows that when people stop in for a free coffee, they will usually purchase the rest of their groceries as well. It’s a great way to keep customers coming back and offer something of value at the same time.

4. Create a System for Complaints

Creating a system for complaints is a good idea for two reasons. First, if there’s a problem with the way you’re serving your customers, you need to know about it in order to fix it. Second, if your customers are still willing to talk to you—even if it’s to complain—you can still do something to make them happy again. If you’re able to fix their problems and impress them with outstanding service, you might just win an even more loyal customer.

Just because customers don't vent their anger to you doesn’t mean they aren’t going to talk about it. Social media has given consumers a megaphone that allows them to share their displeasure with a wide audience. You want to address the problems—and fix them—before your reputation is damaged beyond repair.

5. Develop an Outstanding Product or Service

The single greatest way to retain customer loyalty is providing the best possible product or service. To do this, the entrepreneur must focus on answering the question:

"What can I do today to provide my customers or clients with a greater advantage or benefit, to get them closer to the ultimate result they are after?"

In essence, when you provide your customers with the greatest possible benefit and advantage, you become the natural choice for first-time and repeat business.

The Importance of Loyal Customers

The customers who keep coming back to your business are your most valuable assets. The most loyal 15 percent of customers account for 55 to 70 percent of total sales. Making sure they stay happy is the secret to a sustainable and highly profitable business.

Charles Gaudet is the founder of PredictableProfits.com and the author of The Predictable Profits Playbook. He's an expert at helping small-business owners predictably grow their business through a series of effective marketing strategies. He is also a member of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs.

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