Every business wants to improve customer retention—and for good reasons. It can be a more efficient and profitable to keep clients instead of spending precious resources to find new ones.
Loyal customers and clients tend to spend more, too: A new customer may not want to bet the bank that your business is as good as you say it is.
If you're looking for ways to keep your loyal patrons, it may be heartening to know that you can bring in repeat business whenever you give back to the community or a worthy cause.
That's right. It can be good business to be a business that does good.
There are numerous studies out there suggesting that it doesn't hurt your business when you help others. Take a 2017 study from Cone Communications for instance. (The study surveyed 1,000 Americans to get their opinions on corporate social responsibility.)
Out of those surveyed, 87 percent would buy a product because the company stood up or advocated for an issue that they care about. Seventy-six percent would refuse, however, to buy something if the company's beliefs ran counter to theirs. (Now you know why many businesses steer clear of controversial causes and topics.)
In any case, if you're thinking of doing good things with your business, giving back to the community is generally going to be a good call. As many business owners will tell you, it can improve customer retention.
Of course, there are other benefits to being a socially responsible company—and many of those other benefits could help improve customer retention as well.
1. Attract more employees by highlighting your do-good efforts.
You aren't likely to get repeat business if your employees have subpar skills or dislike working for you. (Customers tend to pick up on when employees are dissatisfied with their careers and lives.)
Customers recognize when your staff is happy with their job. If they enjoy interacting with the people you employ, they're likely to return again and again, which can improve customer retention.
There are many ways you can create a better work environment for your employees, but one underrated one is giving back to the community. Employees appreciate that, says Jeff Dudan. Dudan is the CEO of AdvantaClean Systems, a company that specializes in moisture issues in homes and businesses. The company, which he founded in 1994, has 225 franchisees in 32 states.
Granted, giving back to the community or a good cause won't automatically improve employees' morale or improve customer retention. But it can be an important piece of the puzzle. Dudan says that these days employees almost expect a company that they work for to be aligned with worthwhile causes.
—Jeff Dudan, CEO, AdvantaClean Systems
“Yes, we offer competitive pay. Yes, we have benefits. Yes, we invest in providing training and certification and helping people grow in our industry," Dudan says. "You have to do all of that. But people today, especially Millennials who grew up in a very enlightened environment, want to be proud of the company they're working for. Nobody wants to work for the bad guy."
The company has a foundation, the AdvantaClean Foundation, which helps fundraise for the research and treatment of childhood cancer. It partners with St. Jude Children's Research Hospital, among other groups.
AvantaClean also donates time and resources that go beyond fundraising. For instance, sometimes AdvantaClean franchisees will offer free residential cleanup and repair services to families who have children with cancer and weakened immune systems.
2. Land publicity by being more socially responsible.
Giving back to the community can sometimes be a story that the media finds appealing. And while that isn't why your business should give back, getting publicity for your efforts can be a great side benefit. Publicity can help you get the word out about your company, reducing your need to spend customer retention marketing dollars.
Eric Shannon is the founder and CEO of Big Barker dog beds, based out of Philadelphia. Shannon regularly sets aside a percentage of revenue to go toward donating their orthopedic dog beds to local shelters, animal rescues and police departments with K-9 units. Big Barker ends up donating about 100 beds a year, a retail value of around $28,000.
“We've had some television coverage of some of the donation events and some nice mentions in newspapers and other media," Shannon says.
The publicity may not ultimately improve customer retention, but it certainly doesn't hurt. Yet that isn't why he does it, Shannon adds. He says there are many other benefits to giving back, such as strengthening one's company culture.
“Using our success to help the dogs in need makes us feel good as a team and helps keep us connected to the fact that what ultimately matters isn't the day-to-day business stuff. It's all about the effect we have on others," he says.
3. Impress customers with your do-gooder actions.
Employees may not want to be paid by a bad guy, but customers are equally unenthusiastic about giving their money to companies that are just out to make a quick buck.
Scott Marquart is founder and owner of custom guitar string set purveyor Stringjoy Guitar Strings, based out of Nashville. Marquart donates five percent of his profits to support music education. He's done this ever since he started the business in November of 2014.
Has it helped improve customer retention? Probably, according to Marquart.
“Not all customers care whether a company they support is socially responsible, but a growing number of consumers do," Marquart says. "And for those people, it's essential to see that a brand they care about cares just as much about their community as they do."
Marquart says that he debated whether to donate a percentage of revenue or profits. Ultimately, he went with the latter.
“Choosing to donate out of our profits proved wise over time, as it didn't handicap us during any periods where profits were down," Marquart says.
Donating a portion of his business's profits to music education simply makes sense, he says.
“Ultimately, we view our social responsibility as a long-term investment," Marquardt says. “The music education programs that we support help to get more people playing guitar, which is good for the entire industry. All boats rise with the tide."
Of course, you might be afraid that doing good could hurt your company's bottom line. That it won't improve customer retention at all. (Or, perhaps, it won't move the needle enough to justify the investment.)
That could be the case. You could give away too much money or time to a charity and end up hurting yourself. But it's worth the risk, Dudan says.
“If you want to be perceived as a reputable company, you need to earn that," he says. "In our opinion, you need to earn that through service and heart. Yes, you're there to run a profitable business, but along the way, you can help people. And if you do, it's probably going to benefit you, other people and the brand."
But what if it doesn't? What if you don't improve customer retention and you end up taking a financial bath?
Again, Dudan says, that's a gamble worth taking.
“I believe part of leadership is being vulnerable," he says. “Maybe if I went to the legal department and asked if we should get involved in a cause and help people for free—maybe they'd tell me not to. But you know, if you're not living on the edge, you're just taking up space."
Running a successful business isn't just about the getting—it can be about the giving, too. And for those business owners interested in giving back, you may be able to improve customer retention and acquire new customers.
It's not a hard and fast rule, but paying it forward can pay off.
Read more articles on getting customers.