If your business keeps its customers happy, your profits could increase. In fact, research shows that a 5% increase in customer retention could lead to a 25 - 95% increase in company revenue. It's more costly to acquire a new customer than to keep an existing one. Think about what your business' customer retention rate measures:
- Your success at attracting and acquiring clients
- Your success at keeping those clients
- Your success at building loyal fans who will likely recommend you to others
For your consideration, here are client management strategies to increase your customer retention rate.
Build Trust During the Sales Process
The sales process is always happening, even from the first moment a client hears about what you do. During the "getting to know you" phase, both parties are discovering if they can work together. If your business has case studies or other customers for reference, share this information with your potential new client. Give them an inside look at how you work, what to expect and your procedures for meeting their needs.
Set Expectations and Boundaries Early
Part of building a trusted partnership or business relationship is setting expectations and boundaries. You'll want to let them know the scope of your relationship, how and when they can contact you. You'll clarify your own expectations of their responsibilities as well. Start talking to your clients about money, so it won't be uncomfortable later. Transparency is powerful when building a new relationship.
Know Your Customer
If you know your customer, you know how to treat them. Knowing your customer also protects your business. For instance, a client that has a low credit score will likely be extended a smaller sum of credit by your credit manager. While this may seem counterintuitive to customer retention, it actually allows your business to work with them but within boundaries. Setting boundaries reduces the need for guessing or holding resentment if your client isn't able to come through on something.
Ask for feedback throughout interactions including sales, services and when your client has a complaint. The customer may not always be right in every situation but they at least want to be heard. Track trends from all of your clients to determine if there are weaknesses in your processes and procedures. Maybe some areas need more leniency. Perhaps others, more clarification. You may believe you're doing right by your customer; ask them to verify that you are.
Communicate at all levels of your organization. From your sales staff to the accounts receivable department, communicate with your client so there's no loose ends and nothing left unfulfilled. If you're working on a project, offer tracking and reporting regularly so your client knows the status. If they've asked for a quote, get it to them quickly. As well, if they haven't paid their invoices, follow-up and make sure your contact realizes that you're expecting something from them.
Keep Records of Communication
The use of a CRM or another customer relationship tool can be valuable for understanding your customer. This information can also be invaluable if there is any question about your relationship. For instance, if they agreed to pay you for a project or service, it should be in writing in a signed agreement. If you are communicating with them via phone or email, keep notes so you know when to upsell or other opportunities for improving your relationship.
Work Together Through the Tough Stuff
As with any relationship, there will be challenging situations that require difficult conversations and negotiation. These situations could be turnover, an acquisition or bankruptcy. There might be a misunderstanding or a project that didn't meet their expectations. You may be raising your prices or changing how you do things. They may regularly be late when paying your invoices or simply haven't paid at all. All of these circumstances could cause strain on your professional partnership. If you want to retain this customer, find a way to work through the tough stuff. Unless the relationship just isn't worth saving - maybe you're not a good fit after all - take responsibility for your part and do what you can to turn things around.
A happy customer can be a great referral for future clients. Follow these best practices to retain your best clients and keep your business growing.