Every salesperson feels excitement when they land a sale. In B2B sales we’re normally selling solutions or software that can cost thousands of dollars or more per month. Just as fulfilling as making that big sale can be, it’s double the letdown if you cannot retain that customer. Studies have shown that losing a customer causes far more angst than the joy of winning a new one. It is also five to 25x cheaper to retain an existing customer than it is to acquire a new one (Harvard Business Review).
If you spend $5,000 to snag a new customer, you’ll only spend between $200 – $1000 to keep a current one.
It makes sense: you don’t have to invest time and resources finding a new client — you just have to keep the one you have happy. If you’re not convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.
Retaining customers is not just about keeping your customers either. When you keep your customers happy, they become a great source of referrals. This is critical because there is a higher chance of closing a sale with a referral.
According to HubSpot: “Most businesses experience closing ratios of 10 to 30 percent from other lead sources. Referral-based sales usually close at 50 to 70 percent (sometimes even higher).” So, how can you retain your customers to ensure they remain a source of income as well as becoming a referral source?
Here are two tips from a company built entirely on referrals.
1. Your work doesn’t stop after the sale…….it begins.
Most people think that the sale is the most crucial part of the sales process. While it’s undoubtedly essential, once the deal is finalized, the real work begins.
Deliver on the promises made, and go beyond.
There must be clear communication with your customer to increase their success and prove your value.
2. Consistently review results with management against the original goal.
We call this approach “Force Success.”
Articulate the original goals.
Identify what you could be doing better to assist the customer.
Make recommendations (tactfully) what your customer could be doing better to achieve the objectives.
Emphasizing clear communication with the client will keep everyone on the same wavelength to ensure goals are met.
Focusing on the original projections, the ones that caused them to come on board in the first place, measure and show progress.
These steps are simple, but incredibly effective. Focusing on these points listed above will help you start increasing retention rates, saving money, and building a great source of referrals.