I was recently reading an article on the cost of customer acquisition as compared to customer retention. (You can see the article here: retention).
Some quick fun facts:
It costs 5 times more to acquire a new customer than to retain a current customer!
44% of companies are more focused on acquiring new customers as compared to 18% of companies that are more focused on retaining their existing customers.
Your existing customers are 55% more likely to try new products and will buy 31% more than new customers.
So, customer retention or minimizing churn is important right?
Then why are we so focused on celebrating new sales? We ring the bell for a new customer but how often do you see a reorder from an existing customer celebrated? Sales management are totally obsessed with sales pipelines and managing new sales. How do they think about and manage customer churn or attrition?
Sales organizations continue to grind on with a narrow view of their work and that being growing their business through selling new customers. But what if you are losing business as quickly as you are gaining it? If you put all that effort into selling a customer, you have to ensure that you keep it.
Certainly, you cannot retain every customer. Some customers will simply cease to exist as they close, relocate or change their processes. You need to acquire business to offset business that will naturally slip away. If you have growth aspirations you need to secure new business. But in that chase, you do not want to accelerate the departure of current customers through inattention as you focus solely on new business acquisition.
It is very important to find ways to keep in contact with customers so that they feel valued. It is a mistake to think this is solely the responsibility of your outside sales reps. They certainly play a role but if they are constantly visiting their existing customers, they will soon run out of capacity to seek out new business opportunities. Customers can be kept engaged and made to feel valued through follow-up phone calls (which turn into opportunities for add on sales) from customer service or inside sales representatives. Your customers may even prefer this more time effective method of support. They can also be kept informed through a regular email with offers and updates.
It just makes sense! You have done the hard work when you sold a customer on your company and your brand, is it not less effort to find more items to sell that same customer than trying to sell those same items to a brand-new customer? The more you sell into a customer the more loyal they become. An added side benefit is that your company becomes more efficient by having more lines or items on a delivery.
Here are some simple ideas that can help you retain and grow your business within your current customer base:
1) Have a customer “touch” strategy, that is identify various aspects of your organization to have a responsibility for maintaining contact and intimacy with your customers – this does not fall entirely upon your outside sales staff.
2) Identify your top, most profitable business lines and then look for existing customers who do not buy these items. What a natural place to expand your business!
3) Identify customers that are declining, determine the cause and if there is a corrective solution implement it! A solution may be as simple as having someone interact with the customer. So many customers whither on the vine because of inattention. What a waste!
If you want to grow your business then you need to protect, retain and enrich your current customer base so as to have a platform from which to grow.