When it comes to business growth, the natural thought is to pursue more sales, but the choice between where to get more sales from is often overlooked. Every business owner has a choice between focusing on acquiring new customers or increasing their value to, and therefore value from, existing customers.
With the right focus on account management or customer service, depending on your industry, I believe there is greatest merit in focusing 80% of energy on existing customers and 20% of energy on acquiring new customers. As the common saying goes, a bird in the hand is as good as two in the bush.
By showing your existing customers that you genuinely appreciate them, care for their success and wish to grow with them you can ensure a mutually beneficial outcome and grow your business.
This isn’t just about increasing the value of existing customers to your business – it could just be about keeping and retaining your existing customers long term. Think of it this way – if your target is to earn $100k per year, and the average value of a customer to you is $500 per month, you need roughly 17 x clients per month. Once you reach your initial 17 client or customer target, would you instead focus on retaining them or replacing them every month? If you can only ‘keep’ 1 in 3 clients long term because you’re focusing too much on new sales and not enough on customer retention, you would need to make 51 sales to be ‘left’ with 17 customers throughout the year.
Having worked in the professional services (marketing) industry for over twelve years, I have always found that my business thrives best as a result of truly looking after and growing with existing customers. With that in mind I have distilled my learnings into a nine-step system for client retention and growth:
1. Know your business
a. If you don’t know your business, you can’t grow your business. In this scenario, I mean how well do you know your customers? Do you do regular satisfaction surveys and take the results seriously? Do you know your client or customer churn rate (i.e., how long an average customer stays with you)?
b. You must show the desire to know these things about your business and your customers to gauge where you are at today and establish what you need to do going forward.
2. Analyse your client or customer base
a. Any business will have ‘good’ customers and ‘bad’ customers. There is literally no exception to this rule. So you as a business owner must figure out who your good customers are and who your bad customers are because bad customers can be poisonous to your whole organization and stunt your growth.
b. I like to think of this as ‘pumpkin patching’; at the start of the year, a farmer will plant 100 pumpkins in the field.
Throughout the year a farmer must analyze all pumpkins, give them due care and consider their future. As the end of the year approaches a farmer much decide which pumpkins look like they have potential to be a prize pumpkin at the annual fair, and equally which ones do not have the same potential. As such the efforts of the farmer will shift to the pumpkins that show the most potential for a positive outcome and stop spending time on bad pumpkins.
c. It’s simple – if bad clients or customers are draining your time, profits, mind-space, and energy you will be fighting fires instead of growing your business.
d. I am not saying all bad clients should be thrown by the wayside – perhaps you can open an honest dialogue with them, explain the issues and try to make them a good pumpkin. If this does not succeed, you must make some potentially difficult decisions to focus on good pumpkins.
3. Build unbreakable bonds
a. When I reflect on my career to date and all the longstanding clients and partners that I’m lucky to have, the one thing that stands out to me is the truly unbreakable bonds of mutual respect that we have for one another.
b. Inevitably things will go wrong from time to time. Human error, changing environments, new demands, and so forth… but truly healthy client-provider relationships will stand up to those tests because they are based on a bond of mutual respect and understanding.
c. If you lack these bonds with your customers or clients, they will be less understanding when things go wrong and likely stop working with you.
d. There is no formula for creating these bonds, in my opinion, it’s just either something you focus on naturally, or you don’t. I believe it comes down to just being a good person, always doing the right thing and being honest. Good clients will recognize this and reciprocate.
4. Being on the same road map
a. With any professional service business, it’s essential to have a vision and road map for all whom you serve. You are their guide, visionary and subject expert and therefore must create their journey for them.
b. If a client sees you thinking ahead both with and for them, they will know that you have their best interests at heart and when you suggest they do something, it’s for the right reasons and part of a logical plan.
c. You must create and own this road map and journey for each of your clients or customers.
5. Handle mistakes like a pro
a. Let’s be honest – mistakes happen in every business! People make mistakes, systems break, things go wrong sometimes… but how you handle it will define your success or failure in the retention and growth of a client.
b. The steps I take to do this are:
i. Identify the issue proactively (if you can, rather than the client noticing it for you)
ii. Communicate quickly – time is of the essence when something has gone wrong
iii. Focus all initial communication and conversation on the practicalities of solving the issue. This is not the time for debate or groveling – just get the issue rectified.
iv. Analyse the cause of the issue and make sure you understand how to avoid it in the future, and communicate this to your client.
v. Now is the time to deliver the truth and an apology.
c. On the subject of apologies, I’m a huge believer in ‘making it right.’ If you’ve made a mistake, you have to own it and make the ‘victim’ of the error feel better about it. This might be a cash refund, a coupon, something free in the future… whatever it might be. Usually, it’s the principle rather than the details that matter here.
d. Finally, always stay composed and never point fingers! How you act under pressure and adversity shows a lot about your character to clients, partners, customers, team members and so forth…keep your cool, solve the problem, communicate clearly and make it right.
6. Appreciate your clients or customers
a. To retain and grow your customer relationships you must truly appreciate them. This sounds really obvious but if you see a customer just as a number or dollar value it will show in your behavior and relationship building with them.
b. If you learn to truly appreciate every client and every cent that they purchase through your business, you will show this naturally.
c. By showing appreciation I don’t mean going over the top with niceties or gifts, but I do mean to make sure you always say thank you, take the time to show you appreciate them and from time to time do something nice if you can (buy a round of drinks, a small gift basket, a small free bonus product, etc.).
d. Small touches and thoughts go a long way in relationship building, but it must come naturally through a state of genuine and total appreciation.
7. Have your client’s back
a. This one’s really obvious but not demonstrated often enough.
b. If you see something not working well for your client, even if it means you’ll potentially lose out on some revenue, tell them!
c. If you let your customers buy bad products or conduct unprofitable services you are putting yourself before them and ultimately creating the beginning of the end because they will eventually figure it out.
d. Think of it with a car repair shop – a good mechanic will tell you NOT to spend money on certain things on your car, but a bad one will take you for all the money you’ve got. Would you go back if they did this to you? No.
8. Be easy to reach
a. Again, this is such a simple but often overlooked item in account management and customer retention.
b. Are you easy to reach with clear lines of communication and SLAs? Or are you hard to get a hold of, erratic with response times and missing emails?
c. Any service based business should use a customer support ticketing system – period. This ensures requests are not lost, missed or overdue.
d. Furthermore, I am an avid user of Calendly, a meeting scheduling software that takes all the hassle out of arranging meetings or conference calls and is made available to all of my clients and partners.
9. Consciously focus on retention and growth
a. Going back to the sentiments at the start of this article, you must consciously and deliberately focus on retention and growth.
b. If you look at where you currently spend your efforts in growing revenue, the chances are you’re mostly chasing new leads or sales opportunities. Inverse that to 80% retention and growth, 20% new business, even for just a month and watch the results happen!
I bet that you already know most of what I’m telling you in the article, but you’re likely not doing it all.
The good news is these are behaviors and changes you have all the power to implement, and I wish you the best of luck!