Having successfully gained some customers – how do we keep them?
This is a crucial question - companies lose half their customers in 5 years (according to the Harvard Business Review) and it costs 7-10x as much to get a new customer as to keep an old one.
The Cranfield Benchmarking study tells us that the average UK company just keeps pace with the fall-off. So we really need to pay attention to retaining those valuable customers. So apart from giving them that really good service that will build your reputation, deliver you referrals and make a friend for life – what else should you be doing?
Well the fancy name for it is customer relationship management (CRM) but for most of us this is going to mean having a customer database and a communication strategy that is going to keep reminding them of who we are and what we do. The first thing you must do is to have permission to contact them but that's easily achieved.
Then you must recognise the stages that companies go through in their relationship with us. Basically there are 3 phases.
Acquisition of customer - This is essentially sales activity that moves the customer into forming a business relationship with us. This is likely to use various marketing channels as suggested in the related article '7 ways to find new customers'.
Consolidation of Customer – Here we make sure that the initial delivery or implementation goes smoothly and that the customers appreciate the excellent performance of the organisation. We may need to identify some key after sales points and make sure that we draw the customer's attention to these. This is generally part of the transaction but additional selling opportunities can be built into the interactions.
Developing the relationship - This means systematically developing a process to give the customer more buying opportunities. These could be additional services, loyalty programs or chances to cross sell and up sell. If yours is a product that involves an ongoing maintenance programme, then try and ensure that the information in your sales and service systems inter-relate. This can help you
a) Allow your service people to act as sales people and feed back to the company about expected sales
b) Feed back to the sales force if there are problems that need attending
c) Get the sales force to look good by calling out the cavalry
Many of us miss a trick here because we are too busy looking for new business and delivering the business that we've got to plan our on going communication. We also don't look at our customer base in the way that more sophisticated database orientated marketers do.
So let me share a few of their secrets with you.
1. They will know who their top customers are. This could be the top 50 if it's a specialised business to business company or it could be tens of thousands if they are a retailer. More than that they will know what business or consumer segments they represent. Small businesses often don't organise their accounts to follow the profit profiles of their product or customer types – but it's an exercise that we should all undertake. The more sophisticated will identify the key characteristics of their top customers and actively go looking for more of them.
2. They will work out what the lifetime value of a customer is. This means multiplying what their top customers spend by a number of years (usually between 2 and 5) that depends on the type of business.
3. Then they might rank their customers by multiplying together size of spend, recency of purchase and frequency of purpose. This will identify different categories of customers who will need to be communicated with in different ways and maybe with different stories. For instance a company selling marketing services would emphasize different issues to a business services start-up than to a 50 employee food manufacturer.
So having analysed their customer base they will come up with a different set of relevant pieces of information, offers and education experiences that can be communicated to their customers to tie them in and get them to come back.
So here are 7 things that a small business can practically do.
1. Offer an e-zine that can be emailed every couple of months or so. It doesn't have to be long – 500 words are enough but it should contain information that will be useful to your customers. No-one objects to you making concrete business offers but they need to be relevant to the target group and embedded in some content that genuinely adds value.
2. If you can build some kind of maintenance or support contract that is paid for monthly or quarterly with an automatic renewal on direct debit – this is the best way of ensuring an ongoing relationship with the customer.
3. For key accounts make sure they are telephoned regularly. And don't always leave it to the salesperson – do it yourself – just say that you are keen to make sure they get the best service possible and that as the owner you are doing a bit of informal market research. As long as you mean it – it will work wonders.
4. Run workshops and seminars on relevant topics. If you can add enough value you can charge for them. You might be bringing them up to date, providing a guest speaker or just helping them to work through some issues.
5. Don't forget to use your website as a key resource for keeping customers up to date – if you can regularly refresh the content with fact sheets, Frequently Asked Question Sheets or other valuable content, it will give them a reason to get back in contact with you.
6. Involve your customers in surveys from time to time. Email surveys are very easy and inexpensive to organise using services like Zoomerang.com which allows you to invite your customers to feedback to you. Again it should be part of a structured communication strategy and not used too frequently - but used intelligently it can be a powerful tool
7. Source other complementary products that can be sold via your website or by telephone that enhance the value of your whole product. Most companies don't do this. A recent survey from Pannell Kerr Foster showed that 3 times as many companies try to find new customers for their existing products as new products for their existing customer. Even though the costs of getting new customers are so much higher. So look around for other things that are useful and offer them. The customer will appreciate it and keep coming back.
Responsiveness to clients is one of today's key differentiators but most companies are not very good at it. The opportunities for companies who can come up with simple robust solutions that are useful to their customers are very good. Just make sure that you use the database to keep track of what you've done. And don't over do it.
Good luck.
Dr. Alan Rae is Managing Partner of How To Do Business which focuses on helping small businesses grow. If you want to do some further work on these issues you should consider our Sharpen you Pitch Sales and Marketing course for the owner manager. Find out more at http://www.howtodobusiness.com |
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