Finding new customers is never a simple feat. With a recession upon
us, the task becomes downright nasty. But don’t let that depress your
targets for this year. There’s an easier way to boost sales and profits
in bad times or good.
How? By convincing current clients to send more business your way.
And nothing shouts "stick with us" better than exceptional
customer service.
Given the immense benefits of customer retention, it’s shocking how
much energy some firms put into winning new clients. If you think
new clients are the best clients, consider how much keeping good customers
can benefit your business:
Higher profitability. It costs more to find a new customer than to
keep an existing customer. How much more depends on your industry,
but it’s estimated that landing a new account costs 5 to 20 times
more than selling into an existing relationship.
Bigger revenues. Every time you lose a customer, it takes time to
find a replacement. Meanwhile, your top line suffers.
New business development. Reputation is central to your new business
development campaigns. It’s hard enough to open new doors without
the stigma of a poor or non-existent reputation. A solid reputation
and enthusiastic referrals from long-time customers are the tickets
to fast growth.
Clearly, customer retention deserves all the attention you can give
it – even at the expense of your efforts to attract new clients. To
improve your customer retention, and create an environment where your
customers will want to act as references, participate in case studies
and purchase additional products or services from you, it’s crucial
that you constantly monitor and measure your customer service practices
to determine what works and what doesn’t.
Here are some of the best practices of firms that excel in client
retention:
Measure your current status. A device I discovered a couple of years
ago is the "third-party interview." Customers often will
not tell you directly the things you most need to hear. However, they
won’t be so reticent – or flattering – when a third party asks them
for feedback. Consider hiring one of the many consulting companies
or telemarketing firms that will conduct customer satisfaction surveys
on your behalf.
Provide superior service. Find out what your competition does and
out-service them. This may include implementing a 24-hour toll-free
help line, building a value-added Web site, publishing a product newsletter
or delivering customer education seminars. Hire top-quality people
for your customer service organization, and empower them with the
training and responsibility to deliver great service. How will you
fund these initiatives? Consider diverting some of your new business
development budget to customer retention.
Know your customers. To serve a good client well (and to decide which
clients deserve the best service), you have to understand how they
operate, who makes their decisions and what is their strategic direction.
Your salespeople can collect this information by writing up account
plans for your largest or most profitable accounts (those in the top
30%). Include a review of the client’s industry, the client’s revenue
projections, how you are positioned in the industry, threats to your
position, a plan to expand within the account, your most recent customer
satisfaction results, a plan for building and maintaining executive
relationships, etc. Ask your salespeople to review the plan with your
executives to get additional insights on how to maximize the opportunities
presented.
Pay better. No, you don’t have to pay your salespeople more. However,
too many companies offer generous rewards for new business development,
while providing no tangible incentive to maintain and strengthen existing
customer relationships. Ensure your compensation scheme is in line
with your customer retention goals.
Show appreciation. Recognize your top customers with client appreciation
parties, gifts, personal notes and so on. Don’t treat all customers
equally: follow the 80/20 rule.
Adopt your customer’s goals. Customers will value you more if you’re
fundamental to their success. For example, if you’re a manufacturer
that sells to retailers, give those retailers tools that can help
them sell your product to their customers, such as point-of-purchase
displays. Their success is your success.
Have an escalation procedure. Front-line employees can’t solve every
customer problem, so let them know who they should contact for help,
such as a product manager or senior technician.
Selling successfully in today’s tough market is critical to your
company’s long-term success. Focus your sales and service efforts
on existing customers, and selling becomes a lot easier.