By John Joe McGinley, ideas and action planning consultant, Glassagh Consulting
What retention policy does your business have in place to safeguard your long-term relationship with the clients that provide your business with most value and profit?
Many businesses spend a lot of time and effort on acquiring new clients. They will have a sales and marketing plan that identifies the turnover required to ensure profitability and the continuing existence of the business. However, once these prospects become clients how many businesses plan to retain them for the long-term?
Every profitable client in your business who leaves or ceases to trade with you deprives you of a profitability stream that might otherwise have continued for many years. In plain business speak; losing clients hurts the bottom line.
Replacing a lost client requires additional investments in time, marketing and even acquisition discounts to your normal service proposition. As many businesses have found in our sector these acquisition expenses may well offset revenues from existing client engagement for a year or more.
If the cost of acquiring clients to your business are high in terms of time and resource then retention is even more important.
LISTEN TO YOUR CLIENTS
Talk is cheap but figures count and a famous study on retention from famous business analysts Frederick Reichheld and W Earl Strasser Jnr highlighted the financial importance of retention. They reviewed companies in nine diverse sectors and found that a 5% reduction in the loss of clients boosted profits by a high as 85%. These are huge profit improvements and demonstrate why retention is the new marketing of our decade.
Here are some things you can do to develop your own retention strategy:
- Clearly focus your marketing efforts on existing clients. This is where your time, energy and financial resources will be best spent since it takes less time, money and energy to retain a client than to acquire a new client.
- Stay in touch with your clients in a consistent and professional manner.
- Do what you say you will do. This will earn their loyalty and trust.
- Know your customer finding out more about them helps you to mould a service proposition for them.
- Commit to being a life-long learner. As you focus on gaining new knowledge, new skills, and new experiences, you will have more to offer your clients. The more you have to offer, the more they will benefit. And the more they benefit, the higher your value to them.
- Seek feedback and suggestions from your clients. By asking what they think, you are demonstrating that you value their opinions and ideas.
- Be a resource for your clients. Share ideas, resources and contacts that will provide value to your clients.
- Have a loyalty scheme for clients; this can be a real opportunity to be creative without spending a large amount of money.
Replacing a lost client requires additional investments in time, marketing and even acquisition discounts to your normal service proposition
I would urge you all to keep looking for ways in which to surprise and delight clients. People pay for what they value and remain in a relationship when they receive this. Identify what your clients value and you won’t go far wrong.
Next month I will look at how you can develop your retention strategy further with the implementation of a retainers programme.
About the blogger
John Joe McGinley is passionate and highly motivated marketer and business change consultant with over 29 years’ experience working with businesses helping them with marketing, business change and social media.
After many years working in the UK for major life insurance companies as a business consultant, he has relocated to Ireland with his family and is in the process of establishing his own social media and business change consultancy in the heart of the Donegal Gaeltacht, Glassagh Consulting.