How To Keep Your Clients
In our previous articles illustrating the life-cycle of the Reach Revenue approach, we have looked at creating awareness, attracting and engaging with prospects, and making the sale. Now we come to what may be the most critical part of building a successful business – retaining existing clients.
It costs almost five times as much in terms of resources to acquire a new client than to retain an existing one. And because existing clients already trust your organisation and its products, having a clear retention strategy that works can increase profits up to 95%.
And if that is not enough to convince you how important retention is, consider this: the increased chance of being able to sell to an existing client is up to 50% higher than a new one.
According to a KPMG report , the retail sector, which, thanks to online shopping is facing fierce challenges to customer retention, sees return customers as the number one significant driver in revenue growth over the next one to three years. One of the reasons independent stores are thriving compared to chains is they have long focused on creating a customer experience which naturally lends itself to repeat business (more on this later).
This article examines why clients continue to buy from a particular supplier and what you can do to increase your client retention.
In those we trust
The number one reason clients continue to buy from or retain a service/product from a particular company is that they trust the organisation. Trust is a fascinating emotion. It barely enters our thoughts when we have it. But if you lose conviction, be it in a person, employer or supplier, trust becomes everything.
Dr Anne Böckler-Raettig, Assistant Professor at the Institute of Psychology at Würzburg University, states that trust is difficult, dynamic, and indispensable. Psychologists and behavioural economists have studied trust for many decades. They have used very simple paradigms in which trust is operationalised and measured as an investment, in terms of time, effort, and/or money.
These studies show that when trust is high in a group (in sales situations, a ‘group’ is the account manager and the client), so is co-operation, leading to everybody getting what they want. But when trust is low, the opposite dynamic occurs. Therefore, it is imperative that your Account Managers stick to their promises when dealing with clients, and always follow-up what they say they are going to do.
Oxytocin – can the love hormone also work in the consumer sector?
Let’s go back to how independent retailers are coming up trumps against the embattled chain stores on the British high street. Traditionally, large chains, shackled by ever-increasing targets required to keep shareholders happy, have focused on moving stock fast, usually by offering endless price reductions. Independent businesses cannot purchase large volumes, meaning discounts are an unaffordable luxury. Therefore, they concentrate on providing a customer experience. Think of your independent bookstore with its cafe, book clubs, and regular author events. Or a local print store that knows the name of every business owner in the area. This may sound nostalgic, and there is a reason for that. Oxytocin, the ‘love hormone’ as it is sometimes known, is produced in the hypothalamus and is secreted into the bloodstream by the posterior pituitary gland. Secretion depends on the electrical activity of neurons in the hypothalamus – it is released into the blood when these cells are excited.
Upon release, oxytocin makes people feel a sense of social connection, bonding, trust, generosity, and overall happiness. This is why you are likely to return to a business who has taken the time to learn your name and a few details about your life.
Customers who get an oxytocin hit from returning to a particular store or business will spend generously and happily .
How to encourage retention
Your retention strategy should include elements such as building trust and creating opportunities to generate oxytocin in clients. But before this can occur, you need to understand the extent of churn.
Account managers should be alive to the signs of a client looking elsewhere. These include a reduction in orders, being evasive with communications, and complaining about service. Never let a client leave without asking them why. Collate these answers in a central location so they can be analysed for patterns.
Your CRM software will tell you who your top spenders are. These are the clients you cannot afford to see leave. The Account Manager responsible for these clients should have a deep understanding of their needs and be able to anticipate them quickly. For example, if you work in the business publishing sector, the Key Account Manager (or their equivalent) should be updating clients on the latest publishing schedule in advance of release and pointing out titles he or she knows will be of value.
Another factor in increasing client retention is to keep things personal. Never send blanket emails; make sure every communication with a client is tailored to them. We live in an age of automation; therefore, to stand out, ensure your clients are treated like the valuable people they are. Look at what your competitors are doing. Have they all but eliminated face to face meetings with existing clients? If so, see yours once a quarter, even if it is simply to find out more about their business. Personal contact is the only way to generate oxytocin, thereby creating a customer experience.
Reach Revenue’s Directors have, based on their combined four decades of senior sales and marketing leadership, crafted a way of working with any small, medium, or large enterprise, which reliably and consistently leads to the growth of a loyal and committed client base. They use data and science to help clients attract and retain new consumers in today’s digital world.
Reach Revenue works with business owners, leaders and investors to develop high performing sales and marketing teams aligned to the strategic objectives of their business. To find out how we can help you, please call 0203 858 8030 or email firstname.lastname@example.org.