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!
The Customer Relationship Management industry (CRM) has exploded. It’s estimated that 91% of business with more than 11 employees now use a CRM system. CRM is a term that refers to the strategies, technology, and practices that companies incorporate into their business to manage and analyze customer interactions and data. However, many businesses are not realizing the full benefits of CRM because they’re entirely focused on the data and ignore the human side of CRM. The data will tell you how to manage customers, but not how to build relationships with them. Computers don’t build relationships; people do.
In today’s highly competitive marketplace, the success of your business depends upon delivering customer-focused experiences and processes. I have outlined below a few tips I’d recommend for staying focused on the human side of CRM.
Don’t overlook the human side of CRM
“Helping is the new selling” are the latest buzzwords being bantered around these days. It speaks to relationships and a service-oriented mindset. Although CRM has the potential to provide deep insight into both individual clients and general trends, it’s imperative that you connect and engage with your customers in a meaningful way or you diminish the value of your CRM system. No amount of data can provide the human touch.
Implementing a CRM system doesn’t automatically deliver results
Databases full of client information are the basis on which to improve customer engagement, but never lose sight of the relationship-side of technology. The success of your business depends on the human element.
This is crucial in any industry. Your sales team are the ones that can help your organization achieve its revenue goals. The human interaction between your salespeople and your customers is what will ultimately differentiate you from your competition, and bring them back again.
This skill is highly underrated. Do your sales people listen? Do they understand what your customers value? Can they educate and inform? Can they close the deal?
In order for CRM to deliver on its promise, ensure that the data and the human element are fully integrated.
Want more advice on how to get the most out of your CRM system, or general advice from other business owners like you? Find out if a TAB Board is right for you.
As a business advisor I see the issue of poor performers come up all the time. If you’re a small to medium-sized business owner you want to be out there growing and developing your business, not mired in staffing problems. Without big human resources departments and manuals of policies and procedures to follow, I know you often don’t have a roadmap on how to deal with poor performers. The reality is that regardless of the size of your business or your particular industry, at some point you will have to deal with this issue.
What are the causes of poor performance?
Poor performance can be the result of many things including:
- Not understanding expectations
- Lack of ability
- Lack of motivation
- Not a team player
- Chronically late
- Bad attitude
- Personality issues
- Non-work related problems
- Health issues
Why is employee performance so important to your business?
Employee performance affects organizational performance. A poor performer can create a toxic environment in your workplace, dragging down your entire team.
How can I avoid poor performers in my business?
Here are a few measures that I feel may help you to avoid the problem of poor performers.
- The hiring process: Choosing the right employees is crucial to a successful business but it’s not easy. If upon re-evaluation, you’ve discovered that you’ve hired several poor performers, perhaps you should consider outsourcing the hiring process to an external agency. The money you pay to the agency may actually save you money in the long run.
- Job expectations: Be clear about exactly what the job entails and what your expectations are.
- The onboarding process: Onboarding helps new hires acclimatize and orient to your business so that they can quickly become productive, contributing members of your organization. Have an onboarding plan in place for new hires and make sure that the tools they need to do their jobs are in place on their start date. E.g. workstation, computer, security pass, etc.
- Regularly scheduled one-on-one meetings: One-on-one meetings between employee and manager can potentially head off problems. Speaking about issues as they arise or have the potential to arise is always better than leaving them to fester and grow.
What can I do if I have a poor performer?
In my experience I’ve found it valuable to try and ascertain the root cause of poor performance before any action is taken. If the reasons are personal or health related and have nothing to do with the job, perhaps a leave of absence is in order. If an employee is lacking in ability, perhaps upgrading their skill set or transferring them to a different department is the answer. If the problem is attitude or motivation perhaps setting performance goals will inspire the necessary change. Try instituting quarterly performance reviews to address any performance issues and monitor improvement. If all else fails, you may have no choice but to let the employee go.
As a first step, I suggest that you review poor performance issues you’ve had in the past or are dealing with now. Evaluate what action to take in order to rectify the present situation and what changes you can make going forward in order to avoid the issues of poor performers.
Are you suffering from vacation deprivation? If so, you’re not alone. So much has been written about the importance of a work/life balance, but not enough Canadians are living it. According to Dr. David Posen, author of Is Work Killing You?, “Humans were never designed to have stress all the time. Our stress reactions were designed to be turned on and then off. That’s the healthy cycle. But today we operate in a semi-permanent state of stress. Proper vacationing is an antidote to chronic stress. It is absolutely imperative that Canadians are vacationing each year – and not just one time per year.”
I understand from many of the business owners I work with that you worry about leaving your businesses because you feel nobody else can do your work, and although that may be partly true, I can guarantee that if you burn out – you risk not having any business to run.
Make this the year that you take a vacation – consider it preventative medicine – and instead of just thinking about taking a vacation, prepare for actually taking one by following these 4 tips:
- Plan your vacation during a slow period. It will definitely reduce your stress levels about going away.
- Deal with all time sensitive issues before you go. In theory, anything that arises in your absence should be able to be dealt with by your staff or wait until you return.
- Contact your clients well in advance and let them know you’ll be going on vacation. If they have anything that requires your special attention you’ll be able to take care of it before you leave. Delegate a point person for them to contact in your absence.
- Empower your employees to step in and step up while you’re on vacation. Delegate specific tasks or duties. Leave detailed instructions about how to deal with situations that may arise. If you’d feel more comfortable with regular status reports, have a staff member email you at a predetermined interval with a report of the company’s activities during your absence. Let your staff know that they can reach out to you under certain circumstances and be clear as to what these circumstances could be.
All work and no play is a recipe for burnout. We all need time to relax, recharge and reconnect with family and friends. What are you waiting for? Start planning your vacation!
Let’s be honest, we all have our favourite clients. I know I do. More often than not, our favourite clients are also some of our best clients. These are typically the clients with whom we have great partnerships and an understanding that together, we’re responsible for success. The question is do we, or should we, treat all clients equally?
How we differentiate clients
For some, client favouritism is already built into many of our business models. It’s common practice to tier clients based on the amount of revenue they generate. We routinely see companies offering different levels of service typically called Gold, Silver or Bronze, similar in idea to consumer credit cards. The clients that spend the most have Gold cards, then Silver level, and then Bronze for “basic level”. Does this differentiation set us up to treat our clients differently instead of focussing on delivering great customer service to all of our clients? Is client favouritism itself two-tiered – clients we like and clients who generate the most revenue? How are we treating clients that don’t generate the most revenue but are still solid performers?
Can client favouritism be a bad thing?
Client favouritism is not a good or a bad thing. It’s perfectly fine to dedicate more time to the clients you have great working relationships with; the ones that are profitable, appreciate your work and do what they say they’ll do. But if you’re only focussed on your highest revenue generators and let others fall by the wayside, you may be alienating some good clients. Not all of your clients are going to be rock stars in the revenue department. However, I do suggest that you nurture solid, steady, long-term clients that deliver consistent revenue, in addition to the few rock stars. These steady clients speak about your service to others, and can be a good source of referrals, so maintaining a relationship with your clients, where each feels like they are the “only” client, is the ideal.
As a business owner, it’s always very difficult to turn away business, especially in challenging economic times. However, the reality is that not every client is a good client. In fact, some clients make unreasonable demands. You know the kind of client I mean; we’ve all had to deal with them.
In my experience providing advice to business owners, I’ve heard hundreds of stories of unreasonable clients, yet many owners are unclear as to how to improve their relationship with these clients.
I’ve outlined below some of the classic unreasonable client requests and some steps you may want to consider trying to better the relationship.
1. They expect you to be available 24/7.
Unless this is the type of service you offer, you should clearly define your boundaries. Let your client know what your working hours and days are.
2. No matter what you charge, it’s always too expensive for them.
An unprofitable client takes time away from your profitable clients. Set your pricing and be prepared to negotiate but only within preset parameters. Be prepared to say no and walk away if necessary.
3. They consistently pay slowly which has a negative impact on your cash flow.
If you’re spending a lot of time and energy chasing a client for money, this may be a client worth letting go – unless you can afford to wait for your money. This type of client will not change their paying habits until you enforce your payment terms. You may have to hold back on your deliverables to make your point.
4. They keep changing their mind about what they want.
If you have a client that keeps changing their mind about what they want after you’ve done the work, start charging them for the changes.
5. They don’t respond to your calls/emails/texts in a timely fashion.
Ask if there is another person who perhaps has more time to be responsive. Let them know that the lack of response may delay timelines and keep a paper trail in case it does.
6. They rarely turn up at meetings or cancel at the last minute.
Your time is valuable. If your client is consistently not turning up at meetings or cancelling at the last minute, start billing them for your time.
I recommend that you try to convert an unreasonable client into a good client, but that’s not always possible. When all of your best efforts fail, it may be time to fire the client.
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.