Are you investing enough in client retention? You may think you are, but if you’re like most of your peers, the real answer is no.
Client acquisition gets the lion’s share of nearly every marketing budget. After all, new clients bring in new revenue. But research shows that client retention actually delivers better return on your investment. Consider these statistics:
- Acquiring new customers can cost six to seven times more than retaining existing customers.
Source: White House Office of Consumer Affairs
- The probability of selling to an existing customer is 60-70%, compared to just 5-20% to a new prospect.
Source: Marketing Metrics
- A 5% increase in customer retention can increase profitability by up to 125%.
Source: Bain Consulting
So how much of your budget should you shift from chasing new business to cultivating existing relationships?
There is no magic number that suits every business. You’ll need to test it out over time. But these key metrics, paired with benchmarks for your specific industry, will help you decide if you are investing enough in client retention.
Repeat business. This may be the most obvious measure of your retention efforts. Happy—and more importantly, engaged—clients will want to work with you again. But if you ignore them, they will quickly forget about you the next time they are ready to do business—even if they had a positive experience.
Referrals. That’s right, retention efforts impact customer acquisition, too. People talk about their experiences, both good and bad. Research confirms that word of mouth recommendations are by far the single most influential method of advertising.
Engagement. If you’re not interacting enough with clients, how can you expect them to remember you, let alone trust you with increased business? If you only call your clients to discuss industry news or to ask for referrals, you’re not engaging—you’re selling.
How You Can Improve Your Retention Efforts
Before simply throwing money into client outreach, make sure you have a strategy in place to achieve your specific goals. Here are a few suggestions:
Provide added value. People are overloaded with marketing messages these days. If you’re just adding to the noise, your efforts won’t do any good. To make an impression and build trust, you need to provide value with every interaction. Teach them something. Inspire them. Entertain them. Delight them. Just don’t bore them.
Stay in touch. Too many businesses see the sale as the end of the process. In relationship marketing, this is just the beginning. If you are not consistently staying in touch with them, they may not even remember you when that opportunity presents itself.
Segmenting your client list is a great first step in identifying opportunities to start conversations and make your messages more personal.
Expand your focus. You know that guy you only hear from when he wants something? Don’t be him. Start conversations about a wide variety of subjects that your clients care about, from recipes to life hacks to travel inspirations. The goal is not to sell, but to engage.
Diversify your communications. You have more ways to reach clients today than at any previous point in time. Make sure you take advantage of them. E-mail a newsletter or helpful articles. Use social media to share ideas, and listen to clients’ likes and needs. Send them something valuable in the mail.
Follow up. However you decide to reach out to clients, be sure to follow up with a personal phone call. Conversations are the best way to discover your clients’ preferences, build rapport, and inquire about opportunities. Be consistent in your follow-ups, and make yourself available when clients reach out to you.
Want to see the tool that has helped over 14,000 clients achieve these goals? Tour the magazine, or request a sample; let us help you improve your client retention tactics.