Customer retention should be your top priority. Period. And here’s why: Increasing customer retention rates by 5% increases profits by 25% to 95%, and that comes straight out of Harvard Business School. So why spend so much money schmoozing leads and potential clients, when you have a gold mine sitting right there on your books? Throw as much money as you want at getting new customers, but if new customers don’t enjoy the experience of working with you, they’re not going to hang around.
Only as recently as 2014 did we start to see top marketers turning their attention to streamlining and improving customer experience. Research by Gartner found that digital marketers in particular pile 45% of their spending into customer retention — almost as much as the 55% they push into the search for new business.
They do this for good reason, as Frederick F. Reichheld and Phil Schefter of the Harvard Business School pointed out:
“We showed that in industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns.”
Want some more numbers for thought?
- 80% of your future profits will come from just 20% of your existing customers. (Gartner Group)
- The probability of converting an existing customer is 60% to 70%. The probability of converting a new prospect, on the other hand, is only 5% to 20%. (Market Metrics)
Those are some pretty sobering figures, aren’t they? Especially if you’ve just signed off on another new-business campaign!
So how can you hold on to the gold that is your existing customers? Here are some ideas:
Be human and put your customer first
You hold doors open for others; you insist they go first when they’re in a rush; you smile and pass the time of day when you’re in line. So why not apply basic human interaction to your business?
Yes, they’re business clients, but they’re also regular people who thrive on human interaction and on being treated with the same respect you’d hope for. Business does not work outside society, it’s part of it.
So when a 2013 Forrester report on the bank and retail industries found that “customer experience is a more powerful customer loyalty driver than price-value perception and accounts for 55.1% of loyalty for banks and 46.5% for retailers,” you need to let those figures guide the way you do business. After all, high-street consumers when they’re on the other side of the desk are the people you are working with in B2B.
To build that customer loyalty, the report recommended that “retailers compete on customer experience, not price, and banks need to build trust in the transparency and fairness of their rates and fees.” Sounds like the way we’d all like to be treated, right?
Well, you’re not alone. Forrester’s Customer Index 2015 showed that “customer-centric companies gained 43% in performance compared to a 33.9% decrease for companies who have neglected customer experience.”
And if that’s not enough reason to put customer experience first, we can always go back to what we have all known for years: A happy customer will tell nine other people when they’re happy, but an upset or dissatisfied customer will 22 people. In other words, people talk, but they talk a whole lot more after a bad customer experience.
Look at the resources companies like McDonald’s pile into instilling in children brand recognition and value. Customer lifetime value starts from the first time you meet a new client – when they are still a lead. Show an interest in someone personally, a genuine interest, and they will warm to you.
One way of showing interest subliminally is with body language. Done subtly, it can be extremely powerful. Remind yourself of the basics of mirroring to build rapport
About the author
30+ years of experience helping salespeople transform their sales dialogues and engage with even the most challenging professional buyers.