I work with many business owners who are very often so focused on customer acquisition that they forget about how important and cost-effective customer retention is. According to the Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Research by Frederick Reichheld of Bain & Company shows that increasing customer retention rates by 5% increases profits by 25% to 95%.
One strategic business approach that I often recommend is to go deeper with the clients you have rather than invest the time to attain new ones. I’ve outlined below several tips to help you improve your customer retention rate:
Are your customers leaving you? If you want to improve your customer retention rate, you need to be aware of how many customers are leaving (the churn rate) and determine what is causing them to leave. Ask yourself what as a company you are doing that is causing your customers to leave.
Customers don’t buy from companies; they buy from people. 60% of all customers stop dealing with a company because of what they perceive as indifference on the part of salespeople (Peppers and Rogers Group). Have your salespeople become complacent? Are you making an effort to make your customers feel valued or do you take them for granted? Are you rewarding your loyal customers for their business?
Listen to your customers. Talk to your customers – after all, they chose you. Invest the time to ask them how they feel about your products/services. Understand what they are looking for and what their plans are for the future. Personal relationships are powerful and inspire loyalty. The customer experience is key to your success.
It’s not all about price. Companies are often totally focused on being the lowest cost provider. While being competitively priced is very important, there will always be someone who can come in at a lower price. Price alone won’t keep your customers; delivering the best value will. Value is a combination of price, trust, customer service, delivery, relationships and support.
Has your company lived up to expectations? It’s one thing to win the business; it’s another thing to keep it. Make sure your brand has delivered on its promise and your product/service meet or exceed expectations. Take a look at creating a great customer experience. Managing customer expectations is an important part of customer retention. Set realistic expectations. It’s better to under-promise and over-deliver.
Communicate! Communicate! Communicate! Communicating with your customers will keep you top of mind. Remember, there is always going to be someone lurking in the wings to swoop in and steal your business. Find out how often and by what channels your customers want to receive information. Always address your customers’ concerns immediately. If you make a mistake, own it and fix it. Your customers will appreciate your honesty and your efforts.
Do you prize deliverables over results? Every deliverable must be able to show a measurable result that will positively impact your customers’ business and help them achieve their goals and objectives.
Bonus Tip: Conduct an exit interview. There is no company in the world that retains 100% of their customers, no matter how good they are. If one of your customers is leaving, take it as an opportunity to improve. Conduct an exit interview to learn why they’re leaving. This information is extremely valuable and can help you to make changes in order to avoid a similar situation in the future.
Are your customers leaving you? Want more advice on customer retention, or general advice from other business owners like you? Find out if a TAB Board is right for you!
As a business owner, you know how important it is to keep things fresh and innovative in your workplace, but when making changes, you’ll need to consider how your plans might impact your employees.
If you are in the process of job redesign where employees are assigned new roles that play into their strengths and contribute to a more successful business, these changes can be stressful to your employees. If someone has been hired for a particular job and then he or she is suddenly expected to perform a different role in the organization, tension and stress can result.
A recent report found that 46% of 1,018 Canadian employees recently surveyed had taken time off work or noticed other employees taking sick leave following workplace changes, a common symptom of a stressed-out workplace.
I’ve outlined below a few tips on how you can shift roles in your organization without contributing to employee stress:
- Share your vision.
Why are you doing this? What is this change going to accomplish for your organization? Sharing this vision with employees will allow them to understand exactly why this is happening, and help them find their part in it.
- Keep the lines of communication open in regards to role change.
Ask employees how they feel they can contribute to a new role and encourage conversation. By doing this, you can evaluate each employee’s strengths and weaknesses, while giving them an opportunity to work in a new role they would truly enjoy.
Make sure employees stay up to date as things begin to shift. For example, when you have made some final role decisions, send out an email to all staff informing them of the new structure. Keeping everyone in the know will ensure a smooth transition process.
- When your employees begin their new role, make sure they feel supported.
Assuming a new role can be challenging, especially if the employee doesn’t have a lot of previous experience in the position. Positive reinforcement can go a long way, as employees are less likely to experience stress when they report a positive and supportive workplace culture.
In today’s workplace, you need to keep things fresh, but maintain a balance against a backdrop of inclusiveness and communication. Learning how to handle change effectively is what will keep your team on the right path to growing your business.
How have you successfully restructured your business?
As a business owner you may hold to the traditional view that employee turnover is equated with failure. However, the days of working your entire career at one company and retiring with a defined pension plan, gold watch and a testimonial dinner are long gone. Employee turnover is part of the rapidly changing business environment that many of you face today. In fact according to CareerBuilder’s Candidate Behavior Study, 75% of full-time employees are either open to or actively searching for new job opportunities.
Employee turnover can provide many benefits.
An Improved Workforce
Every company has a percentage of employees who are subpar or have toxic personalities. However, many retain these employees and as a result lose top performers who are overworked and underappreciated. Jack Welch, former CEO of General Electric, implemented a policy of annually evaluating staff in order to “purge” and replace the bottom 10% of performers. The reality is that even employees who are performing adequately can become complacent after a time and are frequently resistant to change. On the other hand, new employees are excited about their jobs and work hard to make a good impression. They bring a fresh perspective and new skills, which may ultimately improve efficiency and profitability.
I’ve outlined below a few ideas that I hope will give you pause to possibly reframe your views on employee turnover in terms of being a benefit to your business.
A Boost to Morale
New employees can breathe new life into your workforce. While disengaged employees can hamper productivity and morale, new employees can inspire their team members to greater heights with their enthusiasm and energy.
Typically you’d pay long-term employees considerably more than a new hire. Hiring a new employee also gives you the opportunity to eliminate or reduce high-cost seniority driven benefits and perks – number of weeks of vacation, golf club and/or gym memberships, company car, parking spaces, Smartphones, etc.
Is There An Ideal Employee Turnover Rate?
Although there’s no such thing as an ideal employee turnover rate, 10% is the rate most commonly used. However, not all employees are created equal. If you’re losing your subpar performers, then you’re doing well, regardless of the percentage but if your rate for losing top performers is high, you have a problem.
Low Employee Turnover Can Be a Problem
Low employee turnover is not necessarily a sign of a healthy company. It can be a result of poor management, fear of termination, weak performance management or being slow to release surplus labour. Although firing or laying off employees is never pleasant, you should have a plan in place on how to deal with under performing employees.
Employee turnover can be very positive for your company as long as you’re losing subpar employees and not your top performers. I recommend that you carefully review the records of the employees that have left your employ in the last year to determine whether their leaving was of benefit to your company or if you have a problem that needs to be dealt with.
Regardless of whether a business is seeking to satisfy a major increase in demand, or strengthen its competitive position, growth is a vital step in the development of any business. From hiring employees and increasing office space to increasing production, expanding services or extending product lines there is a lot to consider. Growing your business requires you to take a bit of a leap. Look for these signs before you look to grow your business:
1. You are being approached by potential clients
When you find that you are receiving request and inquires from customers and clients, this is usually a sign that you are in a position where growth is possible. Your brand has now gained just the right amount of exposure to for growth to take place.
2. Your team is strong and ready to grow
It is vital to know if your company has the right staff in place for growth to be possible. Valuable leaders are important however, having a strong team of employees who are experts at what they do and are committed to your business, is crucial in the growth phase.
3. You have the necessary funds for growth
Knowing your sales cycle and what income you can expect on a regular basis will ensure that you do not experience a shortage in cash flow during growth. It is important to know this as you will not be able to successfully grow if your sales do not match with your income. Measure this before you grow.
4. You are personally ready to grow
Are you ready for the commitment that comes with growing a business? If you are not prepared, business growth can have affect your personal well being as well as your family and daily life.Your business may be ready for growth but it can only be successful if you are ready for it. Experts say business owners should assume a 12 month adjustment period to achieve normal balance in the business after a growth spurt.
5. You have realistic expectations
Know what your business can handle. It may be difficult to not get carried away if you’ve mastered a particular market or excelled in a specific area. You may think you have everything you need to do exactly this all over again but be realistic in what you hope to achieve and what you can handle. Consider the economic benefits, your existing infrastructure and current resources to evaluate if you will be trying to take on too much at once.
6. You have met and continue to meet set goals
Stop making excuses for failed goals and instead find alternate ways to meet them. Doing this will encourage confidence throughout all levels of your business and help overall growth in the long run.
If your business is growing, you’re doing something right. It’s also important to understand that growth is a disruptive force. A period of substantial growth will influence every single aspect of your company, which is why you need to adopt a strategic mindset.
LinkedIn is the world’s largest professional network, with over 300 million registered users in over 200 countries and territories, so it should come as no surprise that LinkedIn is one of the most powerful business development tools available today. Business owners and key sale leaders can leverage the power of LinkedIn for forging strong connections and finding new business.
LinkedIn has become the new “Rolodex”, the go-to place for finding colleagues, current clients, potential clients and vendors. With a professional profile, image and regular participation in groups, your network will increase, which in turn increases your reach and exposure and potential business opportunities. Many business owners would agree that LinkedIn has great potential, but are either concerned about the time commitment or are unsure how to go about getting started.
Here are a few simple steps to get you started in engaging in business development activities on LinkedIn:
- Step 1 – Look Professional: Just like a face-to-face introduction, your profile page is your first chance to make a good impression. Users with complete profiles are 40 times more likely to receive opportunities through LinkedIn. This means:
- Invest some time in writing a professional summary
- Add your skills
- Have a professional picture taken (do not take a selfie)
- Add volunteer experience and any awards you have won
They have recently added a recommendation feature on LinkedIn, which is like having an endorsement for your services. Try to have at least 4 recommendations on your profile page.
- Step 2 – Make Connections: Having a long list of connections is essential for increasing exposure and the likelihood of others finding you, but make sure they are the “right” type of connections.
- Decide if there is an industry you want to target or a type of job title e.g. accountant – simply search for exactly what you are looking for
- Once you have a few potential connections, find out more about them by visiting their profiles, seeing if you have connections in common, where they are located, etc.
- Send them a connection request by introducing who you are and the reason for contacting them
- If they accept your invitation, be active and take the initiative by arranging a phone call or a face-to-face meeting
- Step 3 – Join Groups: Think of these as a local Chamber of Commerce. There are groups for every industry, and they function as a place to ask questions, perform research, make new connections, and get noticed.
- Search groups that you think your target audience will visit
- Join ONLY as many groups as you can manage. Groups tend to send notifications, which is good if you plan to keep up with them, but annoying if you don’t
- Participate in the groups on a regular basis if you can. Your audience needs to hear from you and see you being active and offering expert advice
- Comment on other people’s posts, “like” them, and most importantly see who the regular contributors are and see if there is opportunity to work together or connect in some way
- To connect with them, follow Step 2
In addition to using LinkedIn as a business development and marketing tool, the platform can also be used for recruitment. Whether it’s sharing a job posting on your company profile, or paying for a job posting or sponsored job ad, LI allows you to see in a click of a button a more complete look at your candidates.
As you can see, LinkedIn has a lot to offer but the biggest step is making the decision to give it the time it deserves to foster and manage potential leads. From personal experience, investing time in LI as a business development tool will yield results that far outweigh that time investment.
Do you use LI for business development now? How much time do you dedicate to it and are there other features of LI that you have found helpful for business development?
Being your own boss can be one of the most rewarding career paths, but without a doubt, it can also be the most challenging. Regardless of the size of the business, the leader at the top is not an expert in everything; it has been my experience that they are experts in a field. This means that there are many questions – operational, HR, financial, marketing, sales, and strategic questions – that will need answering.
A few years ago, I met a business owner in the creative field who wanted to grow his business from a home-based operation with no employees to a fully functioning business with a team of dedicated staff. This was something he had been struggling with and didn’t know how to achieve or whom to ask for advice.
Through our discussions, it quickly became clear that in order to truly make changes for a lasting and successful business, this creative entrepreneur needed a business strategy and resources. The owner and I established a series of meetings over the following months to create and detail the business strategy including goal-setting, creating a framework for the business; establishing what services will be offered to maintain and grow the revenue, creating pricing models, and examining additional product lines.
While developing the strategy, we also began planning for the resources needed to implement, support and drive the strategy including assessing locations, rental costs, reviewing staff requirements and duties, bookkeeping and accounting needs, invoicing systems, phone and internet systems, and IT support and back-up.
Once he executed on our strategic and resource planning, his business has not only grown, but is thriving! This business owner is typical of the entrepreneurs I see as a business advisor, where they have a clear vision of what their business is and where they want it to be, but what they need is the proper strategy, resource planning, and business advice to help them realize that vision.
Just as “two heads are better than one”, achieving success and reaching your goals often requires expertise beyond your own skill set. Calling on a business expert will help ensure your business needs are calculated and understood so that your business results align with your vision.
Do you have a business advisor or coach? How valuable have they been in helping you grow your business? I look forward to a lively discussion!