A common mistake an entrepreneur can make is ignoring a client retention strategy in pursuit of new customers. The best customers are the ones who keep returning to your business — there is overwhelming evidence that client retention saves a massive amount of marketing money, increases revenue across the board, and generates new referrals for you and your business. Here is why:
Client retention is cheaper.
It costs five times less money in the marketing budget to retain customers than to acquire new ones. Adobe reports that an average of 80% of any digital budget is spent on acquiring new customers, while each 1% of customers who return will increase revenue by around 10%.
Returning clients spend more.
Selling to existing clients will result in them likely spending 31% more. Returning customers are also 50% more likely to try a brand-new product.
Revenue comes from returning clients.
According to a study by Gartner Group, 80% of a business’s future revenue will come from 20% of existing customers.
Particularly in an industry that provides lifetime policies, it is important to maintain great relationships with clients through annual reviews and milestones. Clients should know that they can trust you and you are on their side. The better your relationships, the more you are set apart from the competition.
How to Increase Client Retention
There are a few steps any entrepreneur can take to develop their client retention strategy:
Calculate your retention rate.
You must know your retention rate to work on improving it. Determine the period of time you want to calculate the rate for — say, a month or a quarter — then make note of how many existing customers you have at the start of that period. At the end of the period, count the number of those customers that you have retained. Then, subtract any new customers you attained from the amount of retained customers at the end of the period, and divide that number by the number of customers you began with. Multiply this by 100, and you have your retention rate.
Set sales and follow up goals.
Establish the number of sales you want to make and the number of follow-ups you want to achieve, aiming to keep your retention rate up. The more micro-goals you can make, the better — make quarterly, monthly and daily goals.
Follow a sales system.
Having a well-oiled process, from attaining a customer through following up and performing an annual review is essential. Use the Success Tracks™ courses in the Sell Principle to iron out your process. Courses like GET SELLING: Making the Sale can help you build a process, from the Needs Analysis through the application process through follow up.
Make a good first impression.
There is a reason the cliché exists — first impressions can influence a client’s image of you for months. Be sure to dress professionally, smile a lot, be polite, and be organized.
Use technology for a smooth process.
Technology now makes it easier to stay engaged with clients between follow-ups. Share blog posts and social media posts whenever you can. The FFS Edge app makes it easy to stay engaged with clients using our compliant marketing content.
Stay in touch
Check in on your clients for birthdays and send gifts for milestones like weddings and graduations. You want to make sure they remember you when they need you.
Ask for feedback
Make sure you’re giving your clients opportunities to tell you how you can help them. Then, be sure to act on the feedback!
Having a well-oiled process from attaining a customer through following up and performing an annual review is essential.
Retention Leads to Referrals
If you do a good job retaining your clients, referrals will start to appear like magic. A happy customer creates free word-of-mouth advertising. For example:
• People are four times more likely to buy from a business when they were referred by a friend.
• 92% of clients say they trust family and friends most when recommended businesses.
Good referrals come when you start exceeding the expectations of your clients. If you use the strategies listed above, you will be one step closer to delivering this kind of customer service. Word of mouth comes from clients who have been delighted to see you go above and beyond for their needs.
Good referrals come when you start exceeding the expectations of your clients.
Client Retention Grows More Important Every Day
The need to build great relationships and focus on keeping clients only continues to grow. Customers are bombarded by advertising every day as technology use increases and attention spans diminish. You can use to your advantage — with so many choices, people just want services they already know they can trust. Cut through the noise with a great client retention strategy and let them know that you can help them with their needs.
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