What’s a customer worth? Fare more than the value of their original purchase from you. A customer represents a long-term dividend, not a one-time payout. If you provide good service and good value to a customer today, that customer will continue coming back to you in the future – and will tell others about the benefits of your products and services, likely resulting in referral business.
Customer retention is absolutely crucial in today’s business world. This is especially true when you remember that 80% of your sales come from 20% of your customers. For customer satisfaction to be high, promises and expectations must be met. This includes your ability to understand customer expectations and to do it right the first time. The ability to admit mistakes (they happen) and deal with problems as they arise is also a key ingredient to success.
Always make your current customers the highest priority; don’t take advantage of their loyalty and assume that they are not constantly reevaluating their advertising options. Consider this the next time you offer an aggressive incentive (e.g. rate discount) to new customers. Sometimes the juice (new customers) is not worth the squeeze (losing existing customers.)
For a perfect example of how NOT to treat your long-term loyal customers, look no further than wireless phone companies. If you sign a new contract you are given a large rebate or even a free cell phone. If you are a current customer and want to upgrade your technology, you have the privilege of paying full price for the same exact cell phone. It baffles me. With this type of thinking, aren’t the wireless companies just pushing current customers to seek services elsewhere when their contract ends?
Acquiring new customers costs 5x more (not to mention all of the extra time required to prospect!) than retaining current customers. There are many, many advertising vehicles in every marketplace; customer stickiness no longer comes naturally. Customers will jump from media to media to see what works and what doesn’t based on how “valued” they feel. And don’t make the mistake of thinking that reducing your rate is a customer retention strategy; I’m confident you’re your customers are less concerned with how much something costs than they are with how much something is worth. A bargain price, alone, just doesn’t do it anymore. And, regardless of price, if your product or service doesn’t provide any value for the customer, you won’t be successful.
Have a terrific week,
Dan
If there are specific topics you’d like to see discussed in a future issue of The Sales Cycle, please contact me at (612) 278-0223 or dan@mna.org