Gaining a new customer is 10 times the cost of managing the existing customers. In this blog, I show the value of customer retention with my story and the strategies we adopted :
Back in my early days in my sales career, I learned a very valuable sales lesson
In those days we depended on footwork, no social media, and the only digital tool is the just-introduced mobile phone hanging around my waist in a pouch likes walkie talkie.
Well, here is what happened
One day I was traveling with one of my new sales executives, and we called on one of our old-time customers who had stopped buying from us.
After exchanging usual greetings, I asked him why we weren’t receiving any new business from him.
And this is what he said
There is no reason at all. I just gave a couple of orders to another salesperson who had been calling on me for a long time. I wanted to give him an opportunity.
But you people never met me after our first business, not even for courtesy’s sake. You have a mobile phone why don’t you call me once; I thought you were not interested in my business.
I have to put my head down and say “yes sir we are very much interested in your business “
We came out, I know, not a moral lesson for my new sales guy
As a salesperson, I know how hard is to gain a new customer and how painful is to let him go with a competitor
Do you think this is the end of the story?
No
A manager’s responsibility is not to ask sorry but to come up with initiatives and strategies to keep our customers and prove the value of customer retention
Before I share the strategies which made our customers loyal,
Let’s look at what a popular retail survey agency reports for customer churn :
- 68% of customers have no special reasons
- 14 had complaints which never attended
- 9 % customers lured by lower prices
- 5 % of customers were influenced by their friends to shop elsewhere
The majority 68 % has no special reasons, which means the company paid no special attention to its customers.
Whatever the industry you are in B2B or B2C, the degree might vary, but customers will move away if they are not taken care of.
Check this popular report by Frederick Reichheld of Bain & Company (the inventor of the net promoter score), what’s the benefit we gain from retaining customers.
For example, in financial services, a 5% increase in customer retention produces more than a 25% increase in profit.
Why?
The cost of maintaining existing customers is far lesser than acquiring a new customer. Loyal customers buy more over time and refer look-alike customers. For customers also, the cost of switching to a new vendor is far less.
So let us come back to my story. This is what we did in our company,
- We stopped selling commodities that anyone else could service, we bundled the products that need special care from us. This pushed customers to come back to us only, the best part is, we got additional revenue in Annual Maintenance Charge (AMC). All along the way, customers were happier while we take care of their problems.
- We motivated salespeople for bringing references and punished salespeople for losing a customer
To this day, this strategy is working for us.
Do you think our strategy is selfish?
Look at Apple, brand pundits don’t reveal the real reason for Apple’s huge success, they call it’s the Brand factor, but they hide the fact it’s the customer retention ecosystem Apple has created
The success of iPods is in their iTunes
The success of the iPhone is not the phone but its apps ecosystem, while the Samsung phones outsell Apple in quantity, however, Samsung is nowhere closer to the Apple revenues.
Did you get a clue?
The bottom line is this: the value of customer retention is the key for any successful business, in the one end salespeople are responsible, the other end it’s the management strategy to lock our customers creating stickiness in our product is the key to a successful business
Having problem in managing your customers, at GreatWorks we have a strategy for you, think before you call you will become our loyal customers
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