In today’s B2B sales environment, a commercial strategy focused on the acquisition of new customers rather than on retaining existing customers is a flawed strategy. The probability of selling to an existing customer is 60-70%, while the chance of selling to a new prospect is only 5-20%. Sales teams not focused on the area that gains the most significant profit is wasting valuable resources. Sales teams must be incentivised to focus on retention as much as acquisition.
It costs 16x more to acquire and bring a new customer up to the same level as an existing customer. Sales teams that can retain ongoing customers relationships increase their ability to grow customer accounts by 48%. It is unlikely that the return on investment (ROI) on new customers will be as profitable because a 2% increase in customer retention lowers the costs by an average of 10%.
A Change of Focus Weighted Towards Retention and Growth Requires:
- Metrics, quotas and incentives usually geared toward acquisition rather than retention and growing existing customer accounts.
- Developing new opportunities for existing accounts presents risk-averse account management and sales teams with a fear of rocking the boat and spoiling the existing relationship.
- Sales organisations mistakenly believe that with little effort, other than the success of the current product or service, that the customer account will organically grow.
When 68% of customers leave because they perceive that the supplier is indifferent to their needs., neglect is a risky strategy. It always surprises me that leaders do not measure the percentage loss of a customer as much as the total loss of revenue.
The key to success is training to build sales team confidence in modern methods to nurture existing relationships, to build out the strategies and systems to consistently create opportunities for the existing customer accounts.
Most clients, when asked, say they invest in retaining existing customer relationships, but when I investigate this further, it is usually an inconsistent, reactive and impersonal retention process.
When a MacDonald’s service agent asks you “do you want anything else with that?” just before you pay for your happy meal, this is a pre-planned process and in the 101 training handbook. The phrase “Would you like fries with that?” has helped the company to sell 9 million pounds of fries every day globally! Similarly, when Amazon recommends similar items or asks for a review of your order, it is a consistent automated process. These are examples of helping existing customers to buy more, the people and processes are systematic, nonintrusive consistent.
Customer’s require a consistent personal service and when they do not get what they want, they are willing to go on Twitter and shout about it, or worse, quietly go to the competition. According to Esteban Kolsky, 72% of customers will share a positive experience with six or more people. On the other hand, if a customer is not happy, 13% of them will share their experience with 15 or even more. The challenge is that neglected customers do not tell you that they are not satisfied.
Your existing customers know like and trust you and will buy from you again or refer you to others but only if their post-purchase and ongoing experience is satisfactory.
For your customers to like you, you need to get to know them, and then use this knowledge to deliver personalised customer experiences across the entire customer journey and invest in giving customers the experience they want to buy again and again.
Research by Gartner identified continuous customer improvement conversations increased account growth by 48% and increase the likelihood of maintaining the same amount of spending by 94%.
4 Essential Elements of Customer Retention and Growth Strategic Plan:
- Know your customer so well that you can tailor and present a personalised offer that answers what’s in it for me (WIIFM). Provide customers with an ROI on their entire commercial relationship and customer journey.
- Personalisation must answer to the individual WIIFM, even if the next individual in the same organisation want the same or different benefits personalisation is about meeting their requirements and organisational needs.
- The Walker study found that by the end of 2020, customer experience will overtake price and product as the key brand differentiator. Experience accounts for more than product and price and Customers want to see the overall value of their partnership relationship, not just ROI on the services solution. You must understand what experience is essential to your customer is its reliability, value aspirational – the deliver it seamlessly.
- The past is history – treat an existing customer as a new customer. It would be best if you painted a picture of the customer’s future. The customer wants to know that the solution will create an improved experience in the future, even if you have sold to them in the past, they are looking forward to a better future.
When you have your systems set up to meet your specific needs, you will start to see stable growth in your business — followed by training to support sales and account teams to confidently build a personalised case to present to existing customer accounts. Sales leaders must create organisational systems and processes to support the new retention and growth focus with innovative strategies.
With existing relationships, sellers assume they know the customer and do not continue the intensive research once a product is purchased. Instead, you must start the clock again and continue to build the breadth of relationship and work to develop a deeper across the organisation with influencers, users and decision-makers. As soon as you deliver on the brief, you must develop strategies on the next three-year development opportunities and create engagement and implementation plan to secure the customer relationship long into the future.
Sales leaders must scope out sales roles that are measure on and incentivised to drive retention and growth by added relevant value and insights to the customer relationship, which will accelerate the business results.