Why you should spend more time focusing on existing clients than acquiring new onesby
Nigel Greenwood argues that firms should focus on their existing clients before chasing new ones, and offers some useful hints and tips on increasing customer lifetime value.
Think about why your clients chose you. It could be any of these (and it could be different for each client):
- They have a contract with you
- It’s convenient to do business with you
- They think it takes too much effort to change accountants
- You are currently the lowest cost provider they have found
- They like doing business with you
- They understand how much benefit they get from doing business with you – the value you add to their business
If it’s any of the first five points above, then you may have a problem in the future. They could look to change to a new provider offering lower cost, more convenience and a simple way to switch. They could even fall out with you or one of your employees about a minor issue that could prompt them to change.
But, if it’s because they see the benefit in doing business with you, they are much more likely to stay long term.
Existing clients can offer greater rewards
There have been many studies of marketing activity (mainly amongst retail consumers) and the consensus is that the probability of selling to a prospective client is only 5% to 20% whereas the probability of selling additional services to an existing client is typically 70%.
Therefore it makes commercial sense to maximise revenue from existing clients rather than focusing on acquisition. I have found that many businesses (across multiple sectors) typically allocate 80% of their marketing budget and effort to acquisition and only 20% to retention. Changing that to 80% focused on retention is likely to generate additional revenue and client lifetime value.
How marketing can help client retention
So, what are some proven ways that you can market to your existing customers?
Get to know your customers and their challenges or weaknesses. These could be lack of knowledge, expertise or process issues. What can you do to help and add even more value to them?
Become an expert: Start to write about things that will interest your customers and help their business. Sometimes this feels like giving away information and advice, but it helps your customers see you as an expert. This means they are much more likely to come to you when they need help.
Make sure you send them to clients through email or newsletters to keep them informed and continue to develop the relationship. Don’t forget to segment your audience though as it’s important you only send relevant communications.
Regular blogs work because:
- They build trust and show that you are an expert on the topic
- They add value to customers lives/businesses beyond the service/product itself
- They form a point of differentiation over competitors - that stops customers from switching.
- They give you more touchpoints to communicate with customers -that creates a stronger and more loyal business relationship.
Use white papers and ebooks to prove your expertise: This is an example of inbound or pull marketing rather than pushing your products. It can take longer to see results but it creates much better long term relationships with customers. It works because:
- Instead of being just a supplier, you become an expert source your customers depend on.
- Content is a great way to show customers what problems your products and services can help them solve - this leads to better expectations from customers.
- Educating customers about the services you offer is key to meeting customer expectations - no one likes a service that under-delivers, so set expectations, then try to exceed them.
Ask for and use client feedback: Remember to tell your clients what changes you have made due to their feedback as this shows that you listen to them.
Plan regular calls and visits: These aren’t an opportunity for you to sell something. The purpose is to keep in regular touch with your clients, to ask how everything is and what their plans are. If you see an opportunity for someone to help them, offer a referral if you can’t help them yourself.
Telling your employees to spend more time with clients might seem an expense, but it is invaluable. Many behavioural psychology studies have shown everybody is more positive about service experience when they don’t feel rushed or ignored.
Drive client loyalty for long-term returns
Improving the service or customer experience you offer will drive client loyalty, generating increased sales to the client as well as referrals and recommendations. To make sure the time spent with a client is productive, make sure your employees ask about future plans and current challenges – and keep detailed notes of each conversation as this will help you to have a deeper understanding of each client and which additional services they are likely to need.
All these suggestions take time and effort but, done in the right way, they yield a far greater return on investment than continually chasing prospective clients. Do you focus on your existing clients? If not, why not start now? If you do, could you do more?