New business. New customers. New clients.
New. New. New.
That’s what most business owners say they want, right?
Well let me talk for a minute about why they’re WRONG.
OK, obviously, when you’re just starting out, new customers are key. And new customers will always be important.
But at a certain point, it’s more profitable to focus on retaining existing customers so they keep coming back over and over.
Here’s some impressive data from ‘Convince & Convert:
According to numbers procured by Invesp, 44 percent of companies admit they focus more on acquisition than retention, and only 18 percent claim to focus more on retention.
However, the same research points to the idea that customer retention is far more financially sound.
The research demonstrated that:
- Acquiring a new customer is five times more expensive than retaining an existing one.
- Increasing customer retention rates by five percent increases profits by 25 to 95 percent.
- The success rate of selling to a customer you already have is 60 to 70 percent, while the success rate of selling to a new customer is five to 20 percent.
- Customer retention is crucial for forecasting consistent growth in financial planning. If you can count on committed customers returning for the next financial quarter, anticipatory budgetary decisions are easier to make.
So what exactly does it mean to shift your focus from customer retention (instead of acquisition?)
Well, these 2 things go a LONG way:
Cultivate a Culture of Under-Promising and Over-Delivering
You may have heard this business truism before, but it bears repeating here.
We want to ingratiate ourselves with clients, so we often over-promise and then underwhelm a client with deliverables.
Even if we deliver exactly what was promised, it is a lost opportunity.
Setting customer expectations too high has no value, whereas surprising clients with over-performance creates a moment of attachment to your brand that has value.
Cultivating a moment of personal connection that goes beyond expectations gives a client the understanding that you are giving them individualized care and attention.
Some ways to underpromise include:
- Timing: While it’s important to attend to client needs as fast as possible, always significantly overestimate the amount of time it will take. If the task will take ten minutes, offer an hour; if it might take an hour, say you will get it done by the next day. By delivering much faster than offered, it gives the client reason to feel your investment in them specifically.
- Amounts: Underestimate returns on investment if possible, then deliver higher returns than expected.
- Resources: Deliver more time and people to accomplish a project than you promised, and clients will be impressed with your devotion to them.
Create a Moment of Joy
A huge motivating factor in client retention is giving them a surprisingly positive experience based on their individual needs.
Clients want to be listened to, and showing you’ve paid attention can pay huge dividends.
Martin Lindstrom, branding expert and highly regarded author, tells an anecdote about how, when staying at a hotel, the concierge purchased him CDs of his favorite artists.
It cost the hotel less than $25, but he’s told that story thousands of times in front of crowds of businesses, basically giving them large-scale free advertising.
They got this free marketing because of one small gesture that demonstrated that they were listening.
Even clients with negative experiences can become your best customers if you listen carefully to their feedback and implement changes based on their advice.
97 percent of customers are more likely to be loyal if they feel their voice was heard and real change was accomplished.
Ways to foster joy include:
- Pay attention to customer service: Giving great customer service is the best way to give clients joyful experiences. According to research, over 85 percent of companies say that efforts to improve customer experiences have positive business impact.
- People love the sound of their own name: Make sure that customer service representatives ask for and use the names of the people they speak with.
- Share common values: 64 percent of clients say “shared values” are a major reason for loyalty.
- Offer targeted incentives: As in Mr. Lindstrom’s story, proof that your company is listening can also be in the form of small offers that you know cater to specific clients.
You can read more about creating an amazing customer experience at Convince & Convert.
I know, I know.
You’re thinking: that’s easier said than done.
Well, that’s why I’m here.
So if you’re not sure where to start…
Or, if you’d like some 1-on-1 help,