Research shows that acquiring a new customer is five to 25 times more expensive than retaining an existing one. That’s why, as sales professionals grapple with new business models in a post-COVID world, an easier way for them would be to focus on existing customers. Here are five simple steps to retain existing customers.
Sales is a tough job even during the best of times. Throw in a pandemic, with the resulting business disruption of quarantine and isolation, and salespeople now have the additional challenges of remote working that effectively cuts out the in-person experience usually necessary for a sale, new technologies, new offerings, and prospecting for new customers in a rapidly transforming business world. Understandably it may leave most feeling overwhelmed and frustrated. But as is often said: the show must go on.
So, while you as a sales professional grapple with new business models and chase new customers, an easier and better way may be to focus on the low hanging fruit — your existing customers — to grow your business and meet those daunting sales targets.
“As sales professionals, we put a ton of effort into lead generation, but we miss out on opportunities by ignoring customers we already have. It’s so important to redirect some of our time and effort towards those customers who already see value. They will thrive, and so will you,” says George Leith, chief customer officer at Vendasta.
Of course, this doesn’t mean you stop prospecting and chasing new customers. There is always attrition in an existing customer base. However, it is important to pay more attention to those who already do business with you.
So how to retain an existing customer? And what are the benefits?
Benefits of retaining an existing customer
Did you know attracting a new customer is five to 25 times more expensive than retaining an existing one?
It is a well-established fact that your selling success to an existing customer is 60 percent to 70 percent, while only 5 percent to 20 percent with a new prospect. Add the time and effort needed to prospect and close a deal with a new customer, and it’s clear why you should spend more time with your existing customers.
Studies also show that on an average 65 percent of a company’s business comes from existing customers, but most only spend 21 percent of their marketing budgets on them.
Sounds good, right? Wrong.
As Larry Myler, founder and CEO of By Monday, Inc., a consulting firm that accelerates B2B sales revenue, observes, there’s a worrisome statistic here. “According to a Bain & Company study, 60 percent to 80 percent of customers who describe themselves as satisfied do not do more business with the company that initially satisfied them. How can that be? Often it’s due to a lack of connection.”
1. Continuous engagement
“If I’m interested in keeping customers, I’m interested in understanding how many leave and the underlying reasons why they are ending their relationship with me,” says Jill Avery, a senior lecturer at Harvard Business School and an author of HBR’s Go To Market Tools.
It starts with continuous customer engagement. They are your existing customers – in some cases returning, too – because you have built an enormous amount of trust with them.
But, as Leith points out, rapport and trust aren’t the same thing. “I don’t think you get to trust without rapport. So you need to build that rapport, and as you build trust, it’s not something that goes away easily.”
It’s also something in which you need to continuously invest. There could be things that will erode that trust. For instance, if you deliver a product or service that doesn’t meet expectations you set during presale. It could erode trust you built with a customer. So, your primary focus is to deliver their ask first. Take continuous feedback and ensure they are satisfied at the end of the day.
You need to work with them on a regular basis — daily, weekly, monthly. If you have a client paying you on a regular basis and you’re not paying attention to them, they will likely leave you for a competitor.
“This is one of the key compelling reasons why you would want to ransack some of that marketing budget and spend it on your existing customer base. Because every single competitor out there is running their biggest budgets in an effort to attract that customer,” Leith says.
2. Consider their unconsidered need
Continuous engagement also gives insights into the existing customers’ other requirements. If you get to know that organization well, over time you begin to understand a lot of things about them. What are their other pains? How much more could they spend in their budget. Are they motivated by a discount? Can you bundle it in with what you’ve sold today to add value and get an incremental increase in spend?
As you start to know that client and build brand equity, you should start challenging them.
Leith believes you actually owe it to the customer. “I have found that customers I build the best relationships with are the ones to whom I can tell what they don’t want to hear sometimes, but they need to hear,” he says.
This is an important piece to the puzzle once you start to really understand a customer’s business — their street-level sales teams, the way they monetize their product offerings, the way they deal with their existing customers. And then suddenly you realize they aren’t applying an acquisition motion or a retention motion. That’s when you can deliver your other solutions.
“If things are going great and we are making good money on that client, I find a lot of salespeople say ‘I don’t want to upset that apple cart, I’m just going to stick with what I have today.’ And when that happens you leave the door open for them to find what you don’t offer from a competitor,” Leith warns.
So don’t be lazy, because that customer has trusted you for a period of time with a regular spend. You owe it to them to continue bringing other solutions that help them succeed in today’s world — probably one of the most competitive environments we have ever faced in the history of entrepreneurialism.
3. Be an innovator
You need to continuously innovate and adjust according to changing market conditions to offer value to your clients and mitigate the threat of a competitor sneaking in.
If you are still selling to them the same package they bought 14 months ago, with no added innovation or value, then a customer is bound to have forgotten the amazing pitch made to them the first time. Now you are just the person who calls once a month to check in. But the customer likely has different challenges and needs different solutions to succeed.
“That’s why I don’t like the idea of ‘hey, I’m calling to catch up’,” Leith says.
There’s little benefit for a customer in “catching up with you.” A call with an existing customer where you don’t bring additional value actually wastes his time.
This doesn’t mean you should bombard them with new products and pitches. The trick is to keep innovating with your product line and adjust to market needs. But again, optimize your offerings. Don’t clutter your business with low-sales items and confuse your customers.
Author Barry Schwartz in his book The Paradox of Choice: Why More is Less describes “buyer’s remorse” as an outcome of too many options, and suggests eliminating choices to reduce consumer anxiety. A study published in Nature actually finds that the optimal number of choices is 12, and too many can be detrimental if the cost of choice outweighs its benefits due to “choice overload”.
4. Become the trusted expert
According to Nielsen, 92 percent of people trust recommendations from someone they know over any other type of advertising. So, as you build brand equity, aim to become a trusted expert within the community you serve.
Being an expert means listening to customers and their ecosystems. It starts with the basics – good old research. So dig deeper into your ideal customer profile, talk to your existing customer base, dive into Google Analytics and social media to find out who spends time on your website and social media handles, what are they looking for, and what are the most popular topics consumed. You also need to keep an eye on your competitors, figure out their lead magnets, their offerings, and the buyers they are trying to attract.
The pandemic has drastically shrunk the business space, both in terms of fewer businesses in the market and fewer opportunities.
“Yet, this presents an opportunity to rethink not only what you sell, but how you sell it as a means to increase revenue, margin, or market share,” says Scott Edinger, author, thought leader and founder of Edinger Consulting.
To stay afloat in this new business environment, many sales professionals must overhaul their age-old thinking.
Leith agrees. “I believe you have a moral obligation to help your customers grow their business,” he says. “I also think that folks who are always like, ‘yeah, everything’s going great, just let it go’ are lazy. You owe it to your client to continue bringing them innovation to help them grow their business.”
It’s not always about the upsell and how much more commission you make. Sometimes it’s making a recommendation that will improve their business. You need to take on the role of a trusted advisor. By doing that you establish yourself as the expert in your domain. And in the end, you protect the base revenue of existing clients.
5. Onboard at every stage
Onboarding a client doesn’t just happen after the first contract signing. It needs to be continuous and evolve.
If you have numerous deliverables you feel could help a customer, it may not be wise to deploy everything at the beginning because the client or the market may not be ready. But always be prepared, since as the trusted expert, you have the knowledge and insight of knowing when the time is right.
“I will never forget what renowned sales trainer Jim Blendell, who has trained a lot of folks in the Canadian media space over the years, once told me — that being the trusted consultant is like landing a plane,” Leith says. “Being a former pilot, he used a flying analogy. When you land a plane, you don’t look at the ground, you look at the horizon. And that’s what outcome-based selling is all about. It’s talking about that horizon and looking down the road. It’s about adoption, selling the outcome, and always bringing value.”
In the end, growing a business requires customer analysis by professional salespeople every single day. It’s not merely a stage in a sales funnel.
So pay attention to the customers you have today. You need to retain them and expand the business they do with you. With an existing customer, you have already done the work of building rapport and establishing a relationship. You have been in the trenches together and you understand the customer’s strengths and weaknesses.
You have become a trusted expert in the battlefield.