Business writer, Rebecca Moore, explains why you should look to your existing customers, not new ones, to grow your business.
The surge of millennials in the workplace appears to have reignited the passion in established business; to look beyond the faceless corporate strategies and begin to be innovative about the ways that they grow their business, even if 2015 what that means is going back to business basics and care. Care about the social impact that they have, care about the company values and truly care about the customer’s base. Millennials have brought with them a fresh ideology that holds personal values, education and social responsibility in high regard. Ultimately, if employers want to harness this young talent and use it to drive their businesses forward they are going to have to reassess their current growth strategies. According to cimaglobal 49% of CFOs are concerned about growing their revenue, but only 29% are looking at their current business.
Relentless acquisition of new business is a poor business decision – on more than one level. I’ve worked for a business where they did nothing but focus on winning new business, without a thought for how they would actually deal with the large volume of clients afterwards, and it does not work. The team did not have any focus on the level of customer service that should be provided as standard, there was no human element, it was purely a case of wading through the workload and once the customers were beyond the sales process it was poor. Communication between the teams was fragmented to say the least, ultimately the customers were less than impressed with the ‘over promise and under deliver’ approach. These customers were tied into contracts with a minimum of 12 month terms so were unable to leave, but they WERE able to spread the word about the poor business practice of the company, damaging its ability to continue to acquire.
Focusing on customer retention rather than acquisition is far more valuable and beneficial to business in a number of ways. From a monetary point of few, it is far more cost effective to retain an existing customer. Marketing Metrics tell us that the probability of upselling to an existing customer is between 60-70% while the probability of converting a new customer is only a maximum of 20%; to further support this, more research shows that existing customers are likely to spend up to 33% more with you than new customers and Bain & Company found that increasing customer retention by 5% increased profits between 25% – 95% – the figures are there, don’t overlook the value of retention.
It’s a known fact that business breeds business, and by looking after your current base you are effectively being proactive at paving the way to acquire new business. We are all aware that word of mouth is by far one of the most effective forms of marketing, and by looking after your current customer base – they will shout about the service from the rooftops!
So, here are a few pointers on how to ensure that your existing customers are going to be your best strategy in growing your business.
Create an experience
What do you want to be known for? The little details are often remembered far more than a product or service that a customer purchases. Creating positive connotations will make a customer automatically feel good about coming to you. Training staff to notice minor details about a customer and their business means that you become attentive and tailor the experience. Something as small as greeting a customer warmly by name goes a long way, there are many phone systems where you can program in your customer base into the address book, this will enable you to answer the phone and greet the business by name; Load customer preferences and dislikes into a CRM system so that everyone with access can see the information. Send birthday cards and Christmas cards, even Easter gifts! Just always aim to give a VIP experience.
Become Data Informed
An invaluable source of business insight, but when it comes to your existing customer base you should not let data overrule your human instinct. You can gain insights on the both the behavioural and transactional habits of your customers and then let the data influence your decisions, enabling you to add a personal touch to the way you use the information. Gaining audience insights about your current customer base will mean that you can deliver a far more personal and creative experience. One way to collect these insights is to conduct bi-annual or annual surveys via email or an online portal, use this alongside audience insight reports that digital agencies can gain using social media profiles to gain a comprehensive view of your customers.
The explosion of the digital world means that businesses are often at the mercy of online reviews, in whatever form they may come. Not only is this a great incentive to ensure that every customer is kept happy to prevent this from happening but they are also a great learning curve. Complaints are not to be feared, they are a real time opportunity to make your business even better – however painful they may be at first. The first thing that you must do is respond to the complaint quickly and courteously, because it’s reported that 95% of disgruntled customers would returned if an issue as addressed and fixed.
Know the value of communication
80% of future revenue will come from 20% of your current customers, so keeping on top of their activities and keeping in contact with them on a regular basis is business critical. Setting up Google Alerts so that you are alerted each time a client is mentioned online means that you can stay on top of congratulating them on any successes and interesting news. Keeping in regular contact, not to sell, but to let them know that you are available will keep you on their radar; monthly newsletters, quarterly catch up calls and annual customer reviews will make sure that you are at the forefront of their mind every 90 days.
With all changes in strategy, refocusing on customer retention will require a top down approach and buy in from all employees. Customer retention is a long term investment, and the refocus will undoubtedly see a handsome ROI in the form of upsell profits and new business.