Consider: If one year you increase your customer base by 20 percent and retain 85 percent of your customers, your net customer gain is 5 percent. Suppose the next year you institute a customer-retention program. Your customer base increases by the same 20 percent but you boost your retention rate to 90 percent. You now have a 10 percent net increase in customers, double the previous year's growth.
Small improvements in retention can produce sizable benefits, which is why effective sales people always focus on retaining the customers they have. It's been estimated the cost to land a new account is as much as six times the cost to retain an existing one. Not only does retention reduce costs, it boosts your productivity by allowing you to spend more time servicing your customers and expanding your sales practice.
How do you know if you're doing a good job retaining customers? Look at your retention rate. Has it changed over time? How does it compare with your competitors'? If you have a mediocre or poor retention rate, you need to immediately start working on ways to keep your customers coming back to you.
1. Please your customers
To retain customers, you must focus on customer satisfaction. Rather than just making a sale and then moving on to the next customer, savvy sales people are turning themselves into account managers. They work at creating and maintaining an ongoing relationship with their customers. Never before have customer expectations been higher, and the salesperson who ignores these expectations and needs, will be replaced by others who understand them. To keep a customer, you need to get close to the customer and understand his or her wants and needs.
2. Manage expectations
But you need to manage expectations. Customers with unrealistic expectations of what they want and what you can deliver will never be happy. They'll waste your time and then take their business elsewhere. Your job as salesperson includes teaching your customers what they can realistically expect from your product or service. Ask the customer: Six months from now, how will you know if this purchase was a success or failure? With the insights you get from the answer, you can properly guide the customer's expectations and set yourself up for success.
3. Know your customer
This is part of a retention strategy that emphasizes the need to know your customer. Sounds simple, but it isn't. The better you know your customer, the better you can advise them and help them. Those who provide good advice and help are retained, while those who just sell are often dropped.
To know your customer, you must go beyond your contact person. Organizations are more than an individual, and if you want to retain customers, try to get to know others in the organization, and their wants and needs. This will give you a better picture of the customer's needs, and help you retain the account if your contact person were to leave the company.
4. Stay in touch
Maintain communications. Reach out to the customer four times a year, minimum. Call them, send an email or letter, take them out to lunch. Do simple things like mailing a thank you note or birthday card. If you come across an article or Web site you think of interest to the customer, send it along. Out of sight, out of mind, as they say. You need to regularly remind the customer that you're around and can provide valuable services and advice.
5. Keep consistent
Perhaps most important, don't take your customer for granted. If you provide good customer service at the beginning of your relationship, for example, don't let it slip -- you will eventually lose the customer. Don't ignore the customer. If you want to retain your customers, you have to treat them as you would like to be treated.
By Alan S. Horowitz