Our last business coaching blog focused on the need to adopt a marketing mindset and to put more marketing strategies and programs in play in your marketplace ... similar to more fishing lines in the water to catch more
fish. Quite simply, you increase your customer-catching capacity with more marketing programs activated. However, don't mistakenly assume that all marketing should be aimed at attracting new customers. You also have to satisfy and retain your current customers, especially during any economic challenges. Said another way, instead of just trying to constantly add new water to your bucket, you also need to plug up the leaks (customer loss) if you ever want your bucket to fill to capacity.
As business coaches, we are constantly reminding our clients to avoid underestimating the vital need to satisfy and retain customers. Most businesses put too much money, time, and effort into chasing new customers and far too little resources trying to keep their current ones. Typically, winning new customers attracts lots of excitement in a company while retaining customers is almost taken for granted and seldom celebrated.
However, we all know that you can’t fill up a bucket if you don’t plug the current leaks. Real profits and stable revenue streams come from long-term relationships with and repeat business from your current loyal, profitable customers. Some experts declare that the majority of a company’s future growth comes from existing clients, if served and cultivated properly. As such, customer satisfaction and retention should be your #1 marketing priority in good times and bad. As the business owner and leader, you must make customer satisfaction and retention key measurements and reasons to celebrate in your organization. What gets measured, managed and rewarded gets achieved.
Remember, the purpose of a business is to attract and retain customers at a profit. You can’t grow and remain in business
without keeping the customers you currently have. How do you improve retention? First, you must measure your current attrition rate (loss of customers) and set a goal for dramatically reducing that rate. For example, let’s say, on average, that you lose 15% of your customers every year. A realistic goal would be to reduce this attrition rate to 7-10% over the next year. Bottom line, it's easier and nearly eight times cheaper to serve and retain current clients/customers than to pursue new ones. Besides, current customers already know how to put your company's name on the "Pay to the Order Of" line on their checks. You worked hard to earn that profitable trust; don't lose it.
To slow the rate of customer leakage from your bucket, you want to provide better service and get closer to these profitable and worthy customers. You want to better understand and identify their needs (problems and opportunities) and then fulfill as many of those needs as possible with additional products and services. Give them greater value and better solutions. Focus on them and their needs, not on your products/services.
To help you focus on their needs, repeatedly ask your customers the following questions:
- “How are we doing?”
- "How could we do better and provide even more value?"
- “What other needs (challenges or opportunities) do you have that we could help with?”
Finally, be sure to communicate with them often in person and via letters, emails (text, audio and video), your website, brief newsletters, seminars, executive briefings, social events, etc. Don’t worry, you really can’t over-communicate with your customers if you are providing on-going information and value that helps them make money, save money, or improve operational performance. They will only fault you if you under-communicate with them, ignore them or take them for granted. Therefore, keep them informed, involved, and inspired to continue doing business with you. Continually educate them and remind them why it's is their best interest to keep doing business with you.
While some of this business coaching advice is common sense, it tends to get ignored. Knowing what to do and doing what you know are two different worlds. Make sure you and your team put these client retention and satisfaction mindsets and strategies into practice and action. And by all means, don't forget to plug up your leaky bucket!
Daniel M. Murphy
The Growth Coach
Business Coaching Franchise System