Keep customers happy and keep your customers
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
While you don’t necessarily want to be friends with your clients, longevity counts for a lot. Those friends you’ve known since you were a child – you feel so comfortable with them; you know each other as well as you know your family … maybe better. You can’t just not be friends any more. It’s the same with your clients. Treat them well, get to know them, and you’ll not be without each other. Become that ‘my guy in [your industry] – the same way we talk about ‘my accountant’, ‘my lawyer’, ‘my realtor.’
Be the person in your industry your client turns to and tells others about.
Check in from time to time
It’s easy to forget customers in the dash of day-to-day business, especially the smaller ones. As you develop your business relationships, though, keep in touch with them, as you would a friend.
Ask how the last product they bought from you went – if it was successful, you’re reminding them of the good service and product they got; if they weren’t happy, you get that all-important feedback that helps you improve your service, and in contacting them, you’ve made vital steps in repairing a damaged relationship.
Don’t just do it with a mass mail shoot or generic customer survey, though, do it face to face or do it by phone if you can’t meet. Only if absolutely necessary, reach out in a clearly tailored email that shows you know who your customer is as a person.
Something to think about: The chances are, up to 50% of your contacts or customers have been quiet for a long time.
Tailor customer experience
Here’s a funny thing: some people enjoy listening to Justin Bieber. Others love a good show tune. ‘My Humps’ by the Black Eyed Peas was voted by Rolling Stone readers as the Most Annoying Song in 2007, but it reached the top ten in fifteen countries.
The point? What will interest one buyer will turn another off completely. You have the data available to you to see what your customers buy and what they aren’t interested in. So tailor your sales accordingly. Don’t flog a dead donkey; feed the race horse with exactly what it likes, and it’ll come home time and time again.
Retention Science likens customers to gamblers in a casino. The big guns get private rooms and special treatment, so they bet big, and lose bigger. You don’t want your clients to lose, of course, but you do want them to feel special. When they feel cared for and special, they’ll come back to you and keep spending.
Believe in your value
In his Forbes article, Jerry Jao, CEO of Retention Science, quite rightly points out that "Competitive pricing has reached a boiling point, shifting customers’ priority from price to value. The difference is crucial: value includes the price of the item, but also the perceived value of the entire shopping experience. 66% of consumers would rather spend an average of 13% more with a company they believe provides excellent service over just the lowest price."
The numbers speak for themselves. Consider how beneficial just 30 minutes a day or even a week would be in just checking with your clients. Maybe you have something of value to share with them – a Nugget of Value about their industry you thought they might like to know about; something another client did with your product that might be of interest to the other client (with breaking confidentiality or stepping on anyone’s toes, obviously!).
Think of the referrals
If you stop thinking of yourself as a salesperson and focus on being someone that helps clients in getting the best they want, you’ll feel more comfortable about asking for referrals to new business.
At that moment you know the client is happiest with your product or service, go with "I’m so pleased it’s working out for you. I knew it would! Hey, if you know anyone else I could help, do put us in touch." Or maneuver the conversation to their friends or family, competitors or other service providers and listen for a situation you could help out in. Say a software engineer is getting annoyed by one of their contractors’ servers, for example, and you deal in servers – make the connection and … well … make the connection.
Only by asking or prompting your clients will you be on the ‘Oh, I know someone who can help you with that’ list.
Say thank you
You stay at friends' for the weekend, you send some flowers to say thank you. Mom sends a lovely gift for your birthday, you call or send a thank-you card. Why not do the same in business? Tiny gestures mean a lot, and they will make you stand out.
Keeping hold of your customers and keeping them happy will save you money and drive profits higher for many years to come. Customer retention is organic, viral marketing at its most natural.