A customer as defined by Investopedia is “an individual or business that purchases the goods or services produced by a business. The customer is the end goal of businesses, since it is the customer who pays for supply and creates demand.”
Every organisation strives to achieve customer delight in order to retain them and yet despite its efforts, they still lose customers for a whole range of reasons. When reviewing customer longevity and retention, some very important points crop up.
1000 days of relationship
As they say, if a company/start-up survives for more than 1000 days, then it is well on the way to become a successful profit making business. Of course, there are many other dependencies that contribute to a profitable business but the first 1000 days of survival are imperative.
Considering the same analogy, and as noted by one of my colleagues, Saurabh Sharma, the first 1000 days of any new customer relationship determines the retention and organic growth of one’s own organisation. Every new customer is a start-up business for an organisation, regardless of the age of the company/service provider. With the increase in competitive and entrepreneurial booms, organisations need to be more on their toes than ever to retain customers. There is numerous research and facts reaffirming that the cost of generating a new customer is always greater than generating additional business from an existing customer. A research paper produced by The Chartered Institute of Marketing mentions that it can cost up to 30 times more to acquire a new customer, than to keep an existing one.
Organisations therefore need a clear approach on customer retention and this can be managed and determined by the following factors:
- Building trust:
Customer retention starts from day one of any interaction with the prospect/customer. People buy from others that they know, like and trust; hence, it is essential to focus on “relationship building” as a priority when approaching a prospect, rather than trying to hurry to close the deal on the first call or meeting. Multiple interactions not only increases knowledge about the customer, but also provides an opportunity for the customer to know more about you. This will ideally build trust and generate further dialogue. It’s also crucial that frontline/sales staff are clear on this objective. Ideally they will refrain from delivering massive sales pitches or sales carpet bombing techniques and replace this with the objective of developing a trusting relationship.
- Training - Client Relationship Management (CRM):
When a new customer comes on board, there is a change in the frequency of contact and the day-to-day relationship management is transferred to the respective department. Generally within the service industry, it is the front line staff who deal with customers most frequently and companies must therefore ensure they invest enough time, money and resources to train and develop staff on customer relationship management. Minor attributes such as empathy, sense of urgency and discipline have a substantial impact when managing clients. Customers want to be contacted and have their queries resolved asap rather than waiting for hours or even worse, having to chase the supplier to resolve their problem. This can be a death sentence for any business striving to make it big. CRM was, is, and always will be the most critical factor for any global business not only to survive, but also to scale up and develop into a profitable organisation.
- Emotional quotient:
Much time and effort is invested in every organisation on measuring KPIs, what we refer to as the transactional quotient (TQ). We believe that developing and having an effective emotional quotient better enables you to deliver an effective TQ. Travis Bradberry, a contributor to Forbes, defines EQ, also known as Emotional Intelligence as, “the “something” in each of us that is a bit intangible. It affects how we manage behavior, navigate social complexities, and make personal decisions that achieve positive results. Emotional intelligence is the single biggest predictor of performance in the workplace and the strongest driver of leadership and personal excellence.”
Taking a cue from point one, the level of trust between the organisation and its clients will determine the level of EQ a company projects.EQ considers factors such as how frequently your customer contacts you for advice/consultation, your involvement as a supplier into their business to resolve process/service problems, (particularly in areas where you are not normally involved), their sales and strategy meetings, etc. EQ can be developed by supporting clients with value additions instead of delivering just the basics. All personnel within an organisation need to understand not only the day-to-day delivery, but also the value they create for their customer. Providing valuable insights about their market, process improvement and so on will help to build a stronger bond between the client and the company. This in turn will lead to the organic growth of an organisation. The primary objective being that it will enable the suppliers/service providers to sustain a relationship beyond the 1000 days, resulting in customer growth and retention.
Finally, I end this blog with a quote by Simon Mainwaring “Companies and their brands need to reach out and speak directly to consumers, to honor their values, and to form meaningful relationships with them. They must become architects of community, consistently demonstrating the values that their customer community expects in exchange for their loyalty and purchases”.
The post "The art of customer retention" first appeared on LinkedIn. Ketan Gajjar is Director of QX Recruitment Services, where they provide consultative and highly scalable recruitment services for businesses in the UK.