To a business, there is nothing more valuable than a good customer. Yet, ironically, most companies spend more time trying to find new customers than they do nurturing the ones they already have.
A few facts to consider:
- On average, it costs five times more to acquire a new customer than it does to keep an old one.
- The odds of selling to an existing customer average between 60 and 70 percent versus just 5 to 20 percent for a prospect.
- Existing customers are 50 percent more likely to try new products and spend 31 percent more compared to new customers.
- Forty-four percent of companies put more emphasis on new customer acquisition than customer retention, compared to just 18 percent who emphasize retention.
- Increasing customer retention rates by just 5 percent can increase profits by 25 percent to 95 percent.
To increase your company’s revenues and improve sales productivity, you should focus significant time and energy on customer retention. Regardless of your company’s size or industry, here are five tried-and-true ways you can get more business out of your existing customer base.
- Provide an Excellent Customer Experience. A great customer experience means more than just great customer service. It means consistently delivering a product or service that meets or exceeds your promises. It means proactively guiding customers toward purchases that genuinely satisfy their needs. It means behaving in a way that makes your customers feel wanted and valued. Of course, most companies believe they already do this. But according to a recent Bain & Co. study, while 80 percent of companies believe they deliver a great customer experience, only 8 percent of their customers agree. To close this “delivery gap,” you have to invest the time and resources necessary to learn who your customers are, design unique products or services that meet their needs, and develop internal feedback loops that allow you to learn and grow via customer feedback.
- Regular Customer Outreach. Remain “top of mind” with your customers via regular outreach. This can be done via emails, newsletters and similar printed or electronic communications. Web-based platforms such as Hubspot, Act-On, iContact and Constant Contact not only provide an efficient and economical means to distribute communications to large mailing lists, but also the tools to analyze how well your communications are being received. Your business also should regularly employ social media such as LinkedIn, Facebook, Google+ and Twitter to promote customer engagement. These platforms are perfect for eliciting customer feedback and supporting the retention process.
- Customer Loyalty Programs. Sandwich shops, frozen yogurt emporiums and movie theaters are known for their customer loyalty programs, often taking the form of “Buy 9, get the 10th Free!” punch cards or similar devices designed to encourage repeat business. Airlines and credit card companies encourage repeat business by allowing customers to accumulate “points” they can use to buy discounts, merchandise and other rewards. Depending on the nature of your business, loyalty programs can take the form of “points” toward discounts, products or services; “tiered” rewards that increase in value based on the number and size of repeat purchases; or upfront fees for “VIP” treatment – premium products/services/rewards available only to customers who pay for their elevated status.
- Customer Feedback Surveys. You should always be taking your customers’ temperature, looking for performance weaknesses and looking for ways to improve customer satisfaction. Regular customer surveys that target specific aspects of your business can help you elicit direct feedback and identify areas that need the most attention. Customers appreciate companies that actively seek their opinions, especially when those opinions lead to tangible improvements. You can find numerous online survey providers through which you can create and distribute e-surveys for little or no cost. Industries leaders include Survey Monkey, WorldApp Key Survey, Checkbox Survey, and Survey Gizmo.
- Pre-Emptive Contract Renewals. If your customers buy under terms of a close-ended contract, it’s essential that you commence renewal or renegotiation talks well ahead of the contract’s expiration date. Depending on how long your contracts run – and how long such renegotiations normally last – you will need to reach out to your customers several months – or even as much as a year – in advance. This outreach, usually in the form of emails and/or written correspondence, should be systematized, tied to a calendar triggered automatically when the customer comes within a year of contract expiration. Your goal is to get the renewal – in writing – well before the initial contract period expires. Failing to act in a timely fashion leaves your customers vulnerable to competitor entreaties.
Improving customer retention is key to optimizing sales productivity. Put as much emphasis on keeping current customers as you do acquiring new ones, and you’ll be well on your way to achieving sales success.
Tools & Technology to Improve Sales Productivity
The Peterson Group (TPG) specializes in helping companies of all sizes improve their sales productivity. Our Best Practice-based Tools that Sell® and Technologies that Deliver® help companies improve individual sales performance and generate more revenue over time.
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