Could Customer Retention Be Your Biggest Opportunity This Year?

By Monika Götzmann

For this week, ISM will feature a Guest Blog Post from Monika Götzmann concerning Customer Retention.

When it comes to improving the performance of a business, the priority is often to increase the number of sales made and when attempting to do so, many companies place a focus on branching out and attracting new customers. Unfortunately, this sometimes happens at the expense of maintaining their existing customer base.

Yet, research suggests there are key advantages to prioritizing existing customers and trying to generate customer loyalty. Indeed, according to the book Marketing Metrics by Paul Farris et al., the probability of selling to an existing customer is 60-70 percent, compared to a less than 20 percent chance with new prospects.

Therefore, if carried out correctly, your customer retention strategy may actually provide your biggest business opportunity this year.

Attracting Customer Loyalty

It is important to understand that customer loyalty has greater value than just the probability of future sales. According to the White House Office of Consumer Affairs, loyal customers are worth up to 10 times the value of their first purchase. This means 10 loyal customers are roughly as valuable as 100 one-time customers.

Nevertheless, it is arguably more difficult to attract genuine customer loyalty today than it was in the past. Modern customers and clients are more cynical, have higher expectations and tend to come into negotiations with preconceived ideas about your business. Furthermore, they have more choice and are willing to switch brands.

With that being said, there are certain steps you can take with regards to training and workforce development, in order to maximize your chances of retaining customers for the long term.

Consistent Customer Service

Customer loyalty is the result of good customer service, first and foremost. According to Lee Resources, 91 percent of unhappy customers will never willingly do business with you ever again, which highlights the importance of treating customers well and ensuring they have a positive experience.

Generally speaking, customers want to deal with people who are polite, competent and able to make them feel like an individual. This means that product knowledge and personalization should be emphasized during training, while effective talent management should ensure there are no gaps in the collective knowledge of the team.

In addition to simply delivering good customer service, however, your service needs to be consistent. People want to know they are being treated fairly and that other people are not getting special favors. They also want their fourth and fifth time of doing business with you to seem as important to your business as their first time was.

Get Good At Communicating

Of course, customer loyalty is also the result of a genuinely strong relationship between the two parties and like any relationship, this requires good communication. In terms of workforce development, this means training your staff to communicate effectively across multiple channels, including social media, the telephone and email.

New Voice Media state that 60 percent of customers change their chosen contact channel depending on where they are and what they are doing. This means companies must be available on multiple channels and also requires a level of talent management, anticipating the necessary level of human capital to meet those demands.

People also expect swift communication and for your business, this means you need to try to eliminate unnecessary obstacles. Customers should be able to reach somebody over the phone quickly, social media questions should be answered the same day and emails should receive quick replies.

Conclusion

Retaining customers is hugely beneficial, because you are statistically more likely to sell to them again than you are to sell to a completely new customer. As a result, customer retention could be your biggest business opportunity this year and delivering top class customer service is the single best way to generate loyalty.

In our next post, ISM will return to the topic of Gamification.  We will discuss the overall impact of Gamification on Social CRM.

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Monika Götzmann is the EMEA Marketing Director of Miller Heiman Group, a global sales training and customer experience company. Monika enjoys sharing her insight and thoughts to provide better sales and leadership training.