As we head into a new year, most business leaders are working on plans for business growth.
The natural thought is to pursue more sales, but the primary source of where to acquire this extra revenue is often overlooked. Every business has a choice between focusing on acquiring new customers or increasing their value to, and therefore value from, existing customers.
The insights in this article are based around my personal experience of running a marketing agency – That been said I think these tips can just as easily be applied to any business.
With the right focus on account management or customer service, depending on your industry, I believe there is the greatest merit in focusing 80% of energy on existing customers and 20% of energy on acquiring new customers. As the common saying goes, a bird in the hand is worth two in the bush.
By showing your existing customers that you genuinely appreciate them, care for their success and wish to grow with them you can ensure a mutually beneficial outcome.
This isn’t just about increasing the value of existing customers to your business – it could just be about keeping and retaining your existing customers long term.
Having worked in the professional services space for over twenty years, and as Principal of a Digital Marketing agency for over ten years, I have always found that our agency thrives best as a result of truly looking after and growing with existing customers. With that in mind I have distilled my learnings into a nine-step system for customer retention and growth:
1. Know your business
If you don’t know your business, you can’t grow your business. In this scenario, I mean how well do you know your customers? Do you do regular satisfaction surveys and take the results seriously? Do you know your customer churn rate (i.e., how long an average customer stays with you)?
You must show the desire to know these things about your business and your customers to gauge where you are at today and establish what you need to do going forward.
2. Analyse your customer base
Every business will have ‘good’ and ‘bad’ customers. There is literally no exception to this rule. So your first task is to figure out who your good customers are and who your bad customers are because bad customers can be poisonous to your whole organization and stunt your growth.
I like to think of this as ‘pumpkin patching’.
At the start of the year, a farmer will plant 100 pumpkins in the field. Throughout the year a farmer must analyze all pumpkins, give them due care and consider their future. As the end of the year approaches a farmer must decide which pumpkins look like they have potential to be a prize pumpkin at the annual fair, and equally which ones do not have the same potential. As such, the efforts of the farmer will shift to the pumpkins that show the most potential for a positive outcome and stop spending time on bad pumpkins.
It’s simple – if bad customers are draining your time, profits, mind-space, and energy you will be fighting fires instead of growing your business. I’m not saying all bad customers should be thrown by the wayside – perhaps you can open an honest dialogue with them, explain the issues and try to make them a good pumpkin. If this does not succeed, you must make some potentially difficult decisions to focus on good pumpkins.
3. Build unbreakable bonds
When I reflect on my career to date and all the longstanding customers and partners that I’m lucky to have, the one thing that stands out to me is the truly unbreakable bonds of mutual respect that we have for one another.
Inevitably things will go wrong from time to time.
Human error, changing environments, new demands, and so forth… but truly healthy relationships will stand up to those tests because they are based on a bond of mutual respect and understanding. If you don’t have these with your customers, they will be less understanding when things go wrong and likely stop working with you.
There is no magic formula for creating these bonds – in my opinion, it’s just either something you focus on naturally, or you don’t. I believe it comes down to the culture of your organisation, always doing the right thing and being honest. Good clients will recognize this and reciprocate.
4. Being on the same roadmap
Certainly with any professional services business, it’s essential to have a vision and roadmap for all whom you serve. You are their guide, visionary and subject expert and therefore must create their journey for them. If a customer sees you thinking ahead both with and for them, they will know that you have their best interests at heart and when you suggest they do something, it’s for the right reasons and part of a logical plan. You must create and own this roadmap and journey for each of your customers.
5. Handle mistakes like a pro
Let’s be honest – mistakes happen in every business!
People make mistakes, systems break, things go wrong sometimes… but how you handle it will define your success or failure in the retention and growth of a customer.
My general approach for this is:
- Identify the issue proactively
- Communicate quickly – time is of the essence when something has gone wrong
- Focus all initial communication and conversation on the practicalities of solving the issue. This is not the time for debate or groveling – just get the issue rectified.
- Analyse the cause of the issue and make sure you understand how to avoid it in the future, and communicate this to your customer
Now is the time to deliver the truth and an apology.
On the subject of apologies, I’m a huge believer in ‘making it right.’ If you’ve made a mistake, you have to own it and make the ‘victim’ of the error feel better about it. This might be a cash refund, a coupon, something free in the future… whatever it might be. Usually, it’s the principle rather than the details that matter here. Finally, always stay composed and never point fingers! How you act under pressure and adversity shows a lot about your character to partners, customers, team members and so forth…keep your cool, solve the problem, communicate clearly and make it right.
6. Appreciate your customers
To retain and grow your customer relationships you must truly appreciate them. This sounds really obvious but if you see a customer just as a number or dollar value it will show in your behavior and relationship building with them.
If you learn to truly appreciate every customer and every cent that they purchase through your business, you will show this naturally.
By showing appreciation I don’t mean going over the top with niceties or gifts, but I do mean to make sure you always say thank you, take the time to show you appreciate them and from time to time do something nice if you can.
Small touches and thoughts go a long way in relationship building, but it must come naturally through a state of genuine and total appreciation.
7. Have their back
This one’s really obvious but not demonstrated often enough.
If you see something not working well for your customers, even if it means you’ll potentially lose out on some revenue, tell them! If you let your customers buy bad products or conduct unprofitable services you are putting yourself before them and ultimately creating the beginning of the end because they will eventually figure it out.
A good analogy is a car repair shop – a good mechanic will tell you NOT to spend money on certain things on your car, but a bad one will take you for all the money you’ve got. Would you go back if they did this to you? No.
8. Be easy to reach
Again, this is such a simple but often overlooked item in account management and customer retention.
Are you and your team easy to reach with clear lines of communication and SLAs? Or are you hard to get a hold of, erratic with response times and missing emails?
Any service based business should use a customer support ticketing system – period. This ensures requests are not lost, missed or overdue.
9. Consciously focus on retention and growth
Going back to the sentiments at the start of this article, you must consciously and deliberately focus on retention and growth.
If you look at where you currently spend your efforts in growing revenue, the chances are you’re mostly chasing new leads or sales opportunities. Inverse that to 80% retention and growth, 20% new business, even for just a month and watch the results happen!
I would imagine you’re already aware of most of the above practices but sometimes knowing is not the same as doing! Here’s hoping that some of these tips help you deliver your planned growth for the coming year. Good Luck!
This article was inspired by my colleague Jack Porter Smith. Jack heads up WSI’s global paid search division. He has been a top contributor on Google’s ad help forum for the past 10 years. A great speaker, he enjoys helping marketing executives and business leaders understand the complexities in the world of digital advertising.