Your customers are your biggest asset, but are you making the most of your relationships?
Winning new sales is of course important, but most businesses spend five times more on acquiring new customers than they do on customer retention. The reality is that the average business loses half its customers over a five-year period. If you can reduce the number of customers leaving you by even 5%, you can have a dramatic effect on your profitability. So how best to address customer retention?
Let me offer you three questions to start the process:
• How many active clients do you have, i.e. have they bought something from you in the past 12 months?
• What do you do to engage and communicate with customers after their initial purchase?
• To what extent do you have your customers and prospects in a sales and marketing database?
If you can answer these questions it then becomes important to identify who your best customers are. So what makes a customer attractive? Below are some criteria that you might want to consider:
- Amount of spend
- Good margins
- Future potential (increased “share of wallet”)
- Good payers
- Need that you can satisfy
- Other locations
- Value the relationship and services you provide
- Referral opportunities
The simplest customer attractiveness criteria are:
- Which of your customers consistently need your products and services?
- Which of your customers are interested in satisfying that need?
- Which of your customers can afford to pay for your product and services? So how well do you look after your customers? A satisfied customer is highly likely to buy again, but an unhappy customer won’t repeat buy and they will likely tell others about their dissatisfaction.
Below are some tips that you might like to consider to help you sell more to existing customers.
1. Give them great service
2. Systematically communicate with them in a way that adds value
3. Develop customer and prospect database for marketing
4. Cross sell your other products and services
5. Upsell enhanced products and services
6. Ask for referrals
7. Contact lost customers to encourage resumption of business
8. Introduce time-limited promotional offers
9. Identify key accounts to proactively contact and develop relationships
Let me offer you two other perspectives for successful customer retention. First from Peter Drucker who commented, "The purpose of a business is to create and keep a customer." Second from Michael LeBoeuf in his book How to Win Customers and Keep them for Life: "A satisfied customer is the best business strategy of all."