In todays competitive business environment, it can feel like your sales team are on a never ending treadmill to try and get more customers. For sales and marketing teams, their most important statistic to focus on each month is usually new client numbers. “New sales drive the business”, is a common phrase. But what about client retention, why does It get such less publicity and even less focus internally?
What has a bigger impact on improving your bottom line? More sales, or better client retention?
Constantly finding new clients is hard work. You need to get in front of a potential client, differentiate yourself from your competitors, follow up, maybe attend meetings, compete on price and more. For existing clients, you just need to do one thing, keep them happy.
Studies have proven that it can easily cost five times more to get a new client, than it does to keep an existing one. It also takes less time and stress to keep a client than it does to find a new one.
Here are some basic benefits of retaining customers
Loyal clients are more likely to refer others to you
Keeping clients costs less than finding new ones
Lower client churn rates boost morale in your business
Holding on to clients takes less time than finding new ones
High client retention usually equates to less negative feedback about your business
Long term or repeat customers are less likely to be price sensitive
Often when companies start to think about client retention, or reducing churn, they have left it too late. It might not sink a business, but it will certainly limit growth potential, due to clients that have already been lost. Once you have your first customer, it makes sense to proactively try to retain them for as long as possible.
Why is it that more companies focus on acquisition than retention?
There are many reasons why new sales get more hype. The main one being the personal or team satisfaction of getting a new client or making a new sale. This is particularly true in the marketing department. If you have a process in place to reduce your churn rate, this celebration can be even bigger. New clients will be worth more.
Another reason given for delaying the implementation of a retention strategy, is that measuring client retention can be difficult. The lifetime value of a client seems like an obvious statistic to track, but many business owners may not know what that number is for them. Knowing this figure helps planning, goal setting and confidence.
These reasons should not be what stops those in charge from working on their retention strategies. If keeping a client is so much more profitable than constantly finding new ones, it surely has to be a high priority.
The biggest reasons clients leave, is because they feel a business does not care about them. Focusing on retention, often means improving your service and communication. These are two great ways to make your customers feel like you care, and the most simple way to get back on the path to profitable growth.
Using client churn management software, or other tools to help identify when clients leave, what the critical signs are and other key factors to customer loss is one of the key steps to preventing loss. When you know the warning signs or key times to communicate, you can be proactive about keeping clients happy when it counts most. You can focus your marketing and sales resources more efficiently by directing their efforts towards customers most likely to leave you.