Stop for a moment and think, how big would your business be, if you were still doing work with all the people you already did business with over the past five years. There is certainly a joy at the time of a new sale, but once it becomes a project it can quickly become an up-and-down roller coaster. New clients have their brains flood with dopamine during sale. But what moved from the sales process to actual project work this euphoria can quickly change to anxiety. This can even lead to the dreaded buyer’s remorse.
Do you have a system in place to deal with buyer’s remorse, or better yet prevent it all together? Salespeople build a wonderful relationship with the new client but then they hand this person off, frequently to a junior Account Manager. The salesperson disappears to hunt again, and your new client is becoming panicked after the deal is done.
Did you know that 32% of new bank customers leave in less than 12 months with 20% of them having not done a single transaction? Think of all the work that went into acquiring that client, but they’re gone during the first year. Other shocking statistics or 46% of people never go to new restaurant a second time, and 21% of customers break a cell phone contract within the first hundred days.
On average, varying based on your industry, 20% to 70% of new customers will stop doing business with you within the first six months. And yet most companies don’t track this at all. Everyone knows the cost of losing a customer includes a loss of future spend and loss of referral business. But, did you know that a customer that still working with you after six months will typically stay with your company five years.
So now you know the problem, what do you do about it? If you ask your head of marketing or sales, they can walk you logically through every step of their sales funnel. This includes everything from identification of a problem, identify needs, creating urgency, scoping the project and ultimately closing the deal. Most sales funnels have anywhere from 3 to 8 steps to move someone through. At every stage there are measures and identified corrective actions.
Why wouldn’t you also have a funnel to track client retention. Studies say a small 5% increase in customer retention yields more than 25% in profit. The reason for this is new sales have a very high cost of acquisition while existing sales have a lower sales cost and a greater profitability.
You as an organization need to look at what tools you can use to enhance new client retention.
Face-to-face in-person visits after sale or by far the most beneficial. But what do most people do is send email. Have you ever heard any new client say they wish they had more email!
Things to consider in your client retention first would be good old fashion snail mail people just don’t get the same volume of postal mail that they once did. A personalized follow-up letter targeted to the individual can be the key to success.
A second element to consider are phone conversations. It may be called a smart phone, but people seem focused on the “smart” part and forget about the “phone”. People don’t seem to know how to dial numbers on it anymore. If you simply call the client and talk to them just to see how they’re doing your retention increases dramatically.
A third and growing element is video interaction. Clients often indicated this is their preferred method because they feel the personal touch of seeing you on screen but don’t have to directly increase to the you and they can do it at their preferred schedule.
An effective combination of
If you say this does not apply in my business; think about how many of your customers used to work with someone else before they became your client. What you are doing to make sure you are not that someone else? Create a simple reoccurring plan for customer retention and watch your profits soar.
Please Note: The views and opinions expressed here are those of the authors and do not necessarily reflect the position of the Morris County Chamber of Commerce.
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