Have you ever thought about how big your company might be today if you’d never lost a customer? It’s an interesting albeit slightly depressing exercise about your company’s retention rate. It’s kind of like looking at your retirement account and wondering, “What would have happened if I really had started investing at 21 years old? How much more money would I have now?”
Losing a customer is like siphoning funds away from your retirement account instead of putting them in. Every time you lose a customer, you lose all future growth and profits from that customer. What’s worse is that you accrue an expense to replace them. That’s like having to pay your financial advisor extra money to make up for what they already lost from your retirement account. To me, that scenario sounds like a special form of investment hell, but it’s exactly what happens when you lose customers.
If you’re good at what you do — if your product or service is needed or helps your customers — then when you lose a customer, you should take it personally. I know I do. When a customer leaves, they’re saying you’re not that good at your job, and that’s something anyone running a business should worry about.
Cut Through The BS
Before I jump into tactical ways to hang on to your customers, I want to point out one thing. Often, when a customer leaves, they’ll tell you they’re leaving because they’re broke. Most of the time, that is pure bs. Money is an easy excuse to give, but most of the time, it’s a smoke screen. No matter what reason you’re given, it’s important to dig deeper and get down to what’s real. Getting to that truth is how you improve retention at your company.
So, how do you keep more customers and improve retention? The reality is that it all comes down to two things. (No, one of the two things is not a newsletter — although newsletters are an important part of both strategies.) Those big-ticket items are the relationship you’ve built with your customer and the customer experience. The good news is that both are interconnected.
Relationship + Experience = Retention
One of the best things you can do for your company is to take inventory of the experience you’re giving prospects and customers. Try going through this checklist:
- What happens when a prospect calls?
- What happens when they walk in for the first time?
- Do they get a tour of the office, if appropriate?
- What happens after their first visit?
- How often do you do you send something physical to them that isn’t just an advertisement or bill?
- Do they get a new customer gift?
- How do you hand the prospect off from sales to operations?
Think about the advantage you would have over your competitors with the above items in place. How many more referrals would you get based on that relationship and experience combination alone? How many more prospects would convert to customers because you were the only one following up with them weeks and months after they first inquired?
Consumers have more choices today, so it’s important you stand out from the crowd. Creating strong relationships with your customers is the perfect way to do that. As an added bonus, it will be impossible for your competitors to copy your strategy, because you can’t be replicated. Once prospects and customers have a relationship with you, they won’t be looking to build a new relationship with someone else.
You don’t have to listen to me, and, frankly, many people who read this won’t — because it’s hard, or it’s expensive, or [insert excuse here]. But if you don’t take my advice, you will get left behind and your retention will plummet. The world is changing at a faster and faster pace, and valuable relationships and experiences are what matter now; it’s your choice whether or not you get on the train. If you choose not to, you do so at your own peril.
It’s Time To Change Or Die
Here’s one last thought. Once while I was in Pennsylvania to speak, I had drinks with a good friend of mine, Chad Madden. Chad runs the largest physical business-education company in the world, and he told me a story about a time when his dentist literally chased after him through the parking lot at the end of his appointment to ask for marketing advice.
For several decades, this dentist had prided himself on not having to market his business. For the last 10 years, he’d sat on the sidelines as his competitors innovated and technology changed, feeling smug that he didn’t have to keep up with the times. Now, his practice has declined to the point where he is struggling. It’s gotten so bad that his business is basically worthless. It’s a cautionary tale that can be summed up by two simple thoughts: “change or die,” and “grow or die.”
You have a choice. You can ignore my warnings about relationship marketing and retention and bury your head in the sand, or you can jump on board and create the customer experiences and relationships that you need to thrive. The world of business will continue to head in a more personalized, relationship-based direction with or without you. Choose not to change or grow, and you too will find yourself in a parking lot one day, asking for advice and praying your business will somehow be saved.