4 Tips For Increasing Your Customer Retention Rate

EngageSelling.com

4 Tips for Increasing YourCustomer Retention Rate

Colleen Francis

EngageSelling.com

4 Tips for Increasing Your Customer Retention Rate

It's much easier - and more profitable - to keep an existing customer than it is to land a new one. Don't believe me? Just look at the numbers.Research tells us that most North American companies lose half of their customers every five years. We also know that as little as a 5% increase in customer retention can increase profits by a whopping 75%-95%. While this percentage can vary by industry, the overwhelming increase in profits is caused by three major factors:Lower costs - selling to existing customers is between five to fifteen times less expensive (and takes far less of your time) than acquiring a new customer;More referrals - satisfied customers are only too happy to refer you to their friends and colleagues, further reducing the time and cost of landing new business; andGreater revenues - every time you lose a loyal customer, you also lose the revenue stream they generated until you can find a new client to take their place. © Engage Selling Solutions Inc. 2

4 Tips for Increasing Your Customer Retention Rate

The key to keeping your customers happy is to find out precisely what motivates them, what is most important to them and what they want most. Then, simply find the product that gives them what they want at the best value.The following are four of the best practices used by some of the top firms in the country to increase their customer retention rates - and maximize their profits…

© Engage Selling Solutions Inc. 3

1. Measure Your Current StatusA very effective technique I discovered a couple of years ago is the third-party interview. Customers often won't tell you to your face the things you most need to hear, especially if it involves a criticism of your product or service. However, they're not nearly so reticent - or so flattering - when an independent third party asks them for their feedback.If you want to know what your customers are really thinking, consider hiring a professional consulting company or telemarketing firm to conduct customer-satisfaction surveys on your behalf.


2. Confirm the Criteria for SuccessDetermine what's most important to the parties involved - and make sure your definition of success is consistent with that of everyone else.To be certain you understand your prospect's real challenges, ask leading, open-ended questions (and click here to learn about three important questions to ask before every meeting) you that allow them to reveal their real needs. For example, you might begin a conversation with something like:"John, when I speak to executives like yourself, most often they tell me that although their business is going great, they have concerns about (name a problem your product addresses). Is this a problem for you?” OR"Mary, when I speak to executives like yourself, they find our products are able to solve problems in one of three areas: (specify the three key issues your product addresses). Are these problems ones that you can identify with?”


2. Confirm the Criteria for SuccessThis process helps you determine which product features or benefits you should focus on. The key is to pick a few serious or common problems that your product can solve. That way, you're almost guaranteed that your prospect will say: "Yes, that's a problem for me, too!" Then you can follow-up by asking them to be more specific about the problems they're facing.Remember: as a general rule, a salesperson should talk only 20%-30% of the time, and spend the remaining 70%-80% of their time listening.


3. Know Your CustomersTo serve your good clients well (and to decide which clients deserve the best service), you have to understand their strategic direction, how they operate and who makes their decisions.Your salespeople can collect this information by writing up detailed account plans for your top 30% largest or most profitable accounts. These plans should include a review of the client's industry and revenue projections as well as information on how you are positioned in their industry, the threats to your position, your most recent customer satisfaction results and plans for expanding within the account and building and maintaining executive relationships.You can also ask your salespeople to review the plan with your executives to get additional insights on how to maximize the opportunities presented.


4. Ask QuestionsSuccessful salespeople uncover specific problems first, and then align their products as solutions to those problems. So what are the right questions to ask your prospect?Those that move the prospect from an intellectual position of knowing they have a problem that needs to be solved, to an emotional state of trusting you to solve that problem for them.The right questions, in other words, are those that reveal true buying motivations and get the customer engaged in a conversation. Unfortunately, many people are often vague when asked what is most important to them.


Final ThoughtsIf your prospect still has trouble being specific, make some suggestions to help them. If they really don't know what they want, start by asking them what they don't want. Explain that your questions will help you better serve their needs, so they can take their own business to the next level.


4 Tips For Increasing Your Customer Retention Rate

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