Customer Retention for Sales Professionals11 Jun, 2008 By: David C. Ramos imageSource
Customer Retention for Sales Professionals
Consider: If one year you increase your customer base by 20 percent and
retain 85 percent of your customers, your net customer gain is 5 percent.
Suppose the next year you institute a customer-retention program. Your customer
base increases by the same 20 percent but you boost your retention rate to 90
percent. You now have a 10 percent net increase in customers, double the
previous year's growth.
Small improvements in retention can produce sizable benefits, which is why
effective sales people always focus on retaining the customers they have. It's
been estimated the cost to land a new account is as much as six times the cost
to retain an existing one. Not only does retention reduce costs, it boosts your
productivity by allowing you to spend more time servicing your customers and
expanding your sales efforts.
How do you know if you're doing a good job retaining customers? Look at your
retention rate. Has it changed over time? How does it compare with your
competitors? If you have a mediocre or poor retention rate, you need to
immediately start working on ways to keep your customers coming back to you.
ONE | Focus on Customer Satisfaction
To retain customers you must focus on customer satisfaction rather than
simply closing the sale and moving on to the next prospect. In our industry the
sales people too frequently put a customer on a 48 month lease then never call
on them for the next 36 months. Savvy sales people turn themselves into account
managers; they work at creating and maintaining an ongoing relationship with
their customers. They accomplish this by managing expectations and driving
value of the products and services throughout a contract life cycle. Never
before have customer expectations been higher, and the salesperson that ignores
these expectations and needs will be replaced by others who understand them. To
keep a customer you need to get close to the customer and understand his/her
wants and needs.
TWO | Manage Expectations
You need to manage expectations. Customers with unrealistic expectations
will never be happy. They'll waste your time and then take their business
elsewhere. Your job as a salesperson includes teaching your customers what they
can realistically expect from your company’s products or services. Ask your
customer: Six months from now how will you know if this decision was a success
or failure? With the insights you get from the answer you can properly guide the
customer's expectations and set yourself up for success.
THREE | Customer Intelligence
This is part of a retention strategy that emphasizes the need to know your
customer. Sounds simple, but it isn't. The better you know your customer the
better you can advise them and help them. Sales professionals that understand a
customer and provide good advice are retained, while those who just sell are
Use a clipping service from Yahoo or BizJournal in order to stay up on
current events affecting your customers and their specific industry. In place
of always having to go search for the information, setting up a clipping service
with pre-set criteria on the type of information you typically research, and
having it automatically sent to you when there is a story germane to your
customer type, is a valuable time saver.
To know your customer you must go beyond your contact person. Organizations
are more than an individual and if you want to retain customers, get to know
others in the organization by utilizing your contact as a sponsor. I refer to
this as getting higher and wider in the account. Team based selling approaches
using your sales manager and VP of Sales, and or product/services specialist, is
a great approach to penetrating accounts at multiple touch points. This will
give you a better picture of the customer's needs, and help you retain the
account if your contact person were to leave the company. So, remember higher
FOUR | Customer Touch Program
Maintain communications. Reach out to the customer a minimum of four times a
year. You can call them, send an email or letter, or take them out to lunch. You
can do simple things like mailing a thank you note or a birthday card. If you
come across an article or Web site you think will be of interest to the customer
send it along. However, the most critical part of a customer touch program is
the quarterly review.
Quarterly reviews are the most important vehicle a sales executive has to
continually remind your customer base of the value of doing business with your
firm. A quarterly review agenda covers the services you provide, the support
you provide, and your firm’s ability to meet all the prescribed metrics you
established in the sales cycle prior to closing them. The old adage of out of
sight out of mind doesn’t hold true when you are sending an invoice for
thousands of dollars every month. You need to regularly remind the customer
that you provide valuable services.
FIVE | Consistency
Perhaps most important: Don't take your customer for granted. We have all
heard that you are only as good as your last service call or billing error.
Don’t allow the opportunity for a competitor to gain a foothold in one of your
accounts by taking a long-term relationship for granted. Remember the cost to
land a new account is as much as six times the cost to retain an existing one.
Retention reduces costs and boosts your productivity.