For better retention rates, create a “culture of new”
Retention rates. It is often used as a buzz word in companies when they discuss their customers. And well they should since it is five times more costly to acquire new customers than retain current ones. Not only that, but the probability of selling to a current customer is 3-12 times more likely than selling to a new prospect.
And companies know this. In fact, 70 percent of companies agree that it is cheaper to retain current customers than attain new ones1, but 44% of surveyed companies admit to focusing more on acquisition than retention2. So why do current customers get less focus than new prospects? How do you learn to treat your current customers with the same zeal to impress that you do with the new?
To improve your retention rates, you must create a “culture of new”. Treat every engagement with your clients as if you were still trying to win their business.
In order to change, you first need to know where you are. Take these steps to understand where you are with your clients and how to keep that chemistry alive.
Know where you stand
First of all, you have to know your current retention rate. Anecdotal evidence of customer defection isn’t enough to help you improve on retaining customers. If you don’t know what your baseline is, you won’t be able to evaluate improvement.
Do a deep dive into your numbers and determine exactly what your current retention landscape is to give you the benchmark for improvement.
Accurate assessment of current customers
This may be obvious, but you should begin with your current customers. And using general customer satisfaction ratings won’t be enough. If you are gathering an NPS score, you are only getting a small piece of the puzzle. Primary Intelligence research shows that 35 percent of customers that defect gave their previous vendor a 9+ in NPS. Just because they are satisfied doesn’t mean there aren’t issues that can cause them to defect.
Only 42 percent of companies accurately measure the customer experience life cycle3. Begin a customer experience program to find out your customers’ overall experience with your company and products. A customer experience program should delve into issues like integration experience, cost to value, ease of value, etc.
Customer experience programs bring areas of concern to the forefront long before they can derail your relationship and affect your retention rate. Bringing those risk factors to the attention of the account managers quickly can help them turn a potential loss into a loyal, returning client.
Building a “culture of new” for better retention rates
Consider the efforts you go to in order to attain that new customer. How does that compare with your efforts with your current ones? Familiarity sometimes breeds complacency. We assume that since we have an existing relationship that we can coast on our efforts. If you change your company culture to treat every customer engagement as if it’s an attempt to gain their business as a new customer, the focus improves dramatically on making a new first impression every time. That way, you can address existing concerns in the same manner you would if trying to sign them for the first time.
So, for better retention rates take these steps: 1) Understand where you are. Get the facts straight so you know where you stand. 2) Interact with your customers and gather feedback in multiple ways to pinpoint concerns before they become deal breakers. 3) With a “culture of new,” you can show a proactive attitude to potential defectors and re-establish loyalty by showing their importance to you and solving their problems with minimal effort on their part.