So often, clients tell me “I need to increase my sales . . . help me find new customers.” And my response is: What have you done to get more out of your existing customers?
Retaining and growing your existing customer base (or simply put, getting repeat business) is usually the fastest and easiest way to grow your revenue; unfortunately, it is also the most overlooked. A customer retention program can be a powerful tool in the arsenal of customer relationship management. Retention is important to most companies because the cost of acquiring a new customer is far greater than the cost of maintaining a relationship with a current customer.
I like to call a company’s customer base The Golden Egg. If it’s watched over and kept warm, it’s worth its weight in gold, paying out dividends in the form of increased revenue (and profitability). Here’s why you need to focus on retention:
Don’t let your competitor steal The Golden Goose. That’s means, use retention marketing efforts to keep your profitable customers. For many firms, customer profitability is skewed in such a way that losing the most profitable customers has a very serious effect. In many banks, for example, the top 30 percent of customers, when ranked by profitability, can make up 100–150 percent of total customer profitability. That's right--the bottom eighty percent of customers may provide no profitability or, worse yet, destroy 50 percent of profitability.
Build customer knowledge. In addition to saving profitable customers, retention programs allow companies to collect data about their customers. All you have to do is ASK, and most customers are happy to respond. This data can be used to better understand, target, market to, and communicate with customers or to customize future interactions with customers.
Uncover ways to improve satisfaction. Through your marketing, you can solicit feedback from your clients. Although most people think of marketing as some form of direct solicitation for a service, the marketing itself can actually focus on improving client satisfaction through vehicles such as surveys. When you survey clients, you are communicating to them that you want to be as good as you can be. This is great branding for you, and the feedback you get can be invaluable to improve your services across the board and to fix satisfaction issues with current clients.
Keep mindshare (and walletshare) high. With your current clients, you can be sure of two things:
(1) If you're not in front of your clients, they're not thinking about you—they're focusing on the challenges of the day.
(2) Your competitors are trying to get your clients to switch from you to them. To make sure your clients continue to think about you, keep your messages in front of them when you, physically, are not.
Generate leads for new services. If you have multiple services or products you want your clients to purchase, one of the best ways to let clients know about them is to tell them, over and over, through marketing. The most likely buyers of new services are satisfied buyers of current services.
Meet their friends. One of the best ways to find new customers is through existing customers. Make it a habit to ask your clients if they know of anyone that could also use your product or service. And don’t wait until your relationship has aged, ask them early-on . . . even before they’ve bought from you. As Michael Walsh of Kaizen Consulting Services, small business growth strategy guru, likes to say, “It’s perfectly ok to let people know that your firm is compensated in two ways: money and referrals.”
Bottom Line: retention programs can be a relatively inexpensive means of making customers feel special, increase their purchases and recommend prospects.
I understand why many firms equate marketing with acquisition of new clients instead of retention and cross-selling of current clients. It's natural to want to add new clients to the fold. However, don't ignore the revenue growth and profit potential from your current client base. They already like you, and you already know that they buy.
Maybe you won the client last week. Maybe the client has been with you for 10 years. Either way, make sure you're still marketing to them. How often? More often than you think!
Michelle Lanter Smith is Chief Executive Officer of Hi-Impact Marketing & Sales Solutions, Inc.ing & Sales Solutions, Inc.
