Have you left your first love?
Are you still pursuing your current clients as if they still mean something to you?
Remember how it felt to become the “new member” at your health club? Personal trainers walk you around; show you the equipment; shower you with gifts (remember the “new member” T-shirt and workout towel? They do whatever it takes to make you feel like royalty! Now, fast track to your daily visit to the club six months later. Are you warmly greeted? Do they still help you when you ask questions? Do they continue to extend thanks mid-year for your membership? Mind you, we’re not picking on health clubs. The phenomenon is not limited to fitness. Now, let’s bring the point back to your own business. Are you spending more dollars, cents and time pursuing new clients than romancing current customers?
Client Retention vs New Customer Development
After opening the doors as a new business owner, your first thoughts turn to customer development. You know your company won’t go far unless you land a prized client base. Fast forward to now. You’ve been in business for a while and eventually face a tipping point. How do you continue to develop new business relationships while simultaneously making sure your current clients feel “special?” (After all, they were the ones that made you!) How do you strike that balance? Where is your time better spent? Pursuing new clients or romancing the current ones?
Client Development vs Client Retention: Which is more important?
According to the Harvard Business Review, it’s not even close. “Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. It makes sense: you don’t have to spend time and resources going out and finding a new client — you just (need to) keep the ones you have happy. Frederick Reichheld of Bain & Company research shows increasing customer retention rates by 5% increases profits by 25% to 95%.”
Although many business owners are aware of these statistics, most (44%) choose to focus more on acquisition than retention (18%) to their peril. Forbes blogger Larry Myler explains the folly in this approach:
“If we can keep a larger percentage of (existing) customers for a longer life cycle, we build on a revenue foundation that is more profitable and predictable; two factors that have created tremendous wealth for entrepreneurs.”
Customer retention research reveals that, on average, the reasons 68% of customers change brands is due to “perceived indifference.” In other words, they end up leaving because they feel as though the company didn’t care about their business.
Fortunately, there is an easy fix: “In today’s fast paced business environment there’s a disconnect, and it’s a big one. Business owners are consistently focused on acquiring new customers through ‘innovative’ marketing campaign, says Randy Garn, co-founder of a customer connection company. “They want a better go-to-market strategy, stronger billboards and catchier marketing phrases. But their customers have never felt more detached. With today’s technology, it is now possible to have a person-to-person relationship with every customer. The more personal and authentic the relationship, the more indispensable it becomes.”
How to Retain Clients
To make sure existing customers continue singing your praises, build a tight connection on the Internet and in person:
- Social Media – Develop a relationship with brand ambassadors by paying attention to review Respond to people who leave reviews – even the ones that are negative. Replying and working to address their concerns demonstrates that you value their opinion. This type of attention could pay big dividends.
- Old School – Don’t underestimate the value of staying in touch. Send a handwritten card or pick up the phone and talk to your clients instead of relying exclusively on electronic communication.
- Perks – Give special preference to current clients. Send birthday gifts, offer free Wi-Fi or offer sales tailored to them. We know you can think of something creative. But if you would like help, give us a call!
- Gifts – The nice thing about client retention is that you can tailor-make gifts based on the relationships you have cultivated over time. Let us help you choose a personalized reward, gift, greeting card or direct mail piece that will WOW your current clients.
About On Target Promotions
OnTarget Promotions is a national promotional products agency based in Riverside, California. We help clients use promotional products along with other media to design and secure quality promotional programs that meet their goals and exceed their expectations. Since we believe nothing is a greater reflection of success than a repeat customer, everything we do is designed with our customer in mind. Your focus is our goal. Call (951) 682-8427 or email us to start your project today.