A healthy and vibrant small business will increase its sales by 15% to 20% a year with a goal of doubling profits over a seven to ten year period. At first blush, most business owners are overwhelmed by the prospect of generating 15% to 20% increases on an annual basis because they focus their growth plans on new customer acquisition. Acquiring new customers costs more in terms of resources (namely money and time which are already in short supply) than selling additional services to existing customers. So, I advocate that my clients master customer retention fundamentals as a pro-active means of protecting and growing existing client revenues. Here are three fundamental items that can help you retain and expand your relationship with your existing customers.
Never Forget: Business Starts with a Personal Relationship
You need to build rock solid personal relationships with your existing customer’s chief decision maker or makers. Customers work with people that they know, like, and trust and they know, like, and trust business owners that provide them with positive recurring experiences. You should always try to make each customer experience a positive one so that you can build your know, like, and trust capital. This makes it much easier to ask for repeat business or additional business because they already know you and your capabilities.
Taking a customer to lunch, a golf tournament, or a ball game allows you to develop your personal relationship with the customer because it gives you the chance to take the focus off business for a short period of time. This is far easier to do over a shared meal or experience because it allows you and the customer to let your guard down. Though business will inevitably be part of the conversation, there should be some time allocated to learning about your customer’s family, hobbies, and interests. It can be helpful to remember this information and ask about it at a future date to show some genuine interest in your customer’s personal life.
Business Continues with a Business Relationship
A customer can love you on a personal level. But, if you are not meeting their business needs, you will eventually lose the customer. Consequently, you need to focus on building the business relationship by delivering stellar differentiated services. If you are delivering high quality customer service and providing differentiated value, your customers will remain loyal to you and bestow you with additional business when you ask for it.
If issues arise with a customer, it is extremely important to resolve them quickly and to the customer’s satisfaction. There is no good that can come from an unsatisfied customer and you may have to fight the need to procrastinate or distance yourself from the problem. However, it is ultimately better to apologize for any mistakes made and fix the mistake than to leave the issue unresolved or resolved poorly.
Profits Are the Key to Customer Retention
At some point, a customer will attempt to figure out why they work with you. If the answer is that they simply like you, future business is solely dependent on maintaining a good relationship and providing adequate services. Under this fact pattern, you could be ousted from the current assignment if the decision maker changes or the relationship deteriorates. Your services could also be lumped into a cost pool that provides no quantifiable benefit beyond ordinary expectations. In essence, your service has now become a commodity and you are competing on price.
One of the best ways to insure customer retention and expansion is to help the customer increase its profits. A simple referral of business shows that you understand the customer’s business and want to help them grow their profits. Teaching a customer a new sales and marketing technique that delivers new business on a recurring basis will get you a client for life. Providing your services in a manner that reduces the customer’s variable costs will increase profits and position you as a valued added service provider. In each case, communicating how your actions have increased the bottom line will solidify your current position and potentially open up new opportunities to bring value.