Traditional business advice will tell you the importance of retaining customers by locking them into your products/services, but...
I so often see this concept grossly abused and believe there is a more wholesome interpretation that should be adopted. For example, using contracts and T&Cs to brute force or trick customers into a 12-month contract.Image by Russ Cargill
Sure, it ensures you have 12 months of business, but is that actually your main priority? What do you do with that 12 months? What do you do to ensure you maintain a great, happy and healthy relationship with that customer? Both for the customer, your employees and yourself?
There's a good chance nothing.
Because you have no need to and you'll have other priorities distracting you. Like getting the next customer signed up for 12 months. You'll do nothing for the first 11 months anyway. The likelihood is, at 11 months you'll then have to resort to desperate tactics to convince them to sign up again.
Customer service hacking
Personally, I much prefer the approach of:
Make it easy to leave, but difficult to want to leave.
For example, being able to say:
"Interested in alternative providers? No problem, we only make you commit to one month at a time."
"Tie you down with financial commitments? Nope, just pay for what you use. Or pay for a year and be refunded the difference if you cancel before then."
"Want to take your data with you? Here's a handy export tool, go nuts :)"
So where's the sense in this? Surely this will reduce the chance of you retaining customers? Well, it will make you better. By offering such freedoms to your customers, you're putting pressure on yourself to perform. You're putting the quality of the product/service you offer directly in the firing line and if you don't deliver, you'll lose out quickly. So if there's an issue, you know you'll be on top of it. If a customer is dissatisfied with something, you'll give them the attention they deserve. You'll start to think ahead of your competition because you need to build the benefits to your customers they won't get elsewhere because of it.
And your customers will value you for it. They'll become more loyal because they also know you're betting your bottom line on the experience you provide and not hoodwinking them with empty promises and sugar coating. You will be naturally retaining customers because they won't even consider going elsewhere.
And if they don't, well that's likely not the customer you want to be dealing with anyway. It can be incredibly liberating to know you're offering the best possible service, great value and are confident in your place amongst your competitors to be able to say "Okay, no problem" when challenged with a customer threatening to move on. Equally, if you're not striving to do your best and knowingly putting your customer relationship at risk, maybe this is a sign to yourself that you're the one that needs to move onto something different that does compel you.
Retaining customers by doing what you do best
Put your energy into the things that you know you do well, that makes your customers happy and that you find fulfilling. Don't sacrifice this for shallow efforts that result in a poorer experience for everyone involved.