Most company leaders can tell you exactly what their growth goals are. They can tell you what markets they are pursuing, what products they are creating, and what companies they are targeting. What many can’t tell you, is their plan for retaining and growing their existing customers.
Let me put it to you this way. If I told you I knew a sheep farmer who wanted to double his flock, but his practice was to leave the pen open when he went out to buy sheep… you would tell me he was crazy. Isn’t that exactly what you are doing if you don’t have a strategy to retain and grow your existing customers? You are losing existing clients while you search for new ones. That’s an expensive way to grow.
Here’s What We Know
The easiest and most cost-effective sale you can make is selling more or something new to a happy customer. A recent article by the CEO of Invesp puts the average cost of acquisition at 5 X the cost of retention. If that’s the case, being customer-focused will provide cost savings and growth to most companies. Crazy, but that same article shows that less than 18% of companies prioritize customer retention. So what if you did? What if you made customer retention a company-wide focus?
Tiffani Bova, the Global Customer Growth & Innovation Evangelist at Salesforce published a book called Growth IQ. In it, she explains the 10 growth strategies companies pursue. Interestingly enough, 3 of the 10 are customer-focused strategies, and throughout the book, she reminds us that no growth strategy is effective if you are not retaining the customers you have.
The 3 customer-focused growth strategies are:
- Creating a great customer experience
- Penetrating your existing customer base
- Minimizing churn
These are not just activities you should be doing, Tiffani identifies them as stand-alone growth strategies. In fact, when we work with clients who need more sales quickly, we always start by focusing on existing customers. It is the fastest, easiest and most cost-effective way to grow. That is not to say we ignore the acquisition of new customers. But since it is more expensive to get a client than to keep a client, keeping your clients just makes sense. Solely focusing on getting new clients in the front door while you lose clients out the back door, is neither sustainable nor profitable.
Being customer-focused means that when your company takes action, the customer is at the center. The alternative is to be revenue-focused or product-focused. When a company is revenue or product-focused, customer experience tends to fall to the wayside.
How do you retain and grow the customers you have? Start with these fundamentals.
4 Fundamentals to Customer Retention
- Wow them – Make sure their onboarding experience is a success
- Love them – Build and strengthen relationships
- Sell them – Get repeat business and up-sell
- Develop them – Turn them into a referral source
If you have a base of happy customers, growing them is likely the fastest way to grow your overall business. Moreover, it is the most cost-effective and easiest business to get. Instead of focusing solely on bringing in new business from new customers, focus on customer success, and account management to continue to build the relationships you need to retain and grow your existing accounts. The 4 Ps of Account Management will help you do that.
The 4 Ps of Account Management:
- People – Build relationships that will drive account growth
- Prospecting –Find future opportunities to help your clients reach their goals
- Planning – Plan the activities and timelines to grow relationships and uncover needs
- Participation – Involving the right people at your company and position them to build relationships