Plumbers, HVAC and other business owners, I have a question for you. As the end of the year draws near, it’s time to look at our budgets for our businesses in the coming year. What percentage of your marketing is earmarked for current client retention vs new client acquisition?
Over at the SBA, Small Business Administration, it is recommended that, ‘In order to successfully grow your business, you’ll need to attract and then work to retain a large base of satisfied customers.’ The key phrases here are ‘work to retain’ and ‘satisfied customers’. Yet the largest percentage of business and sales people, spend most of their time in a ‘repeat the new client sales cycle’. Often ignoring and too often never addressing, what they can do to retain their current client base.
I’ve often been asked, ‘Why is it critical to factor this into my businesses marketing?’
Studies have proved that keeping a customer is cheaper than acquiring a new client. Studies further prove that business that have at the minimum of a 10% increase in client retention see a 30% or more increase in their profit base.
I am not arguing that acquisition isn’t meaningful, just that an increase in concentrating on retention is as relevant. Why? 80% of your future profits will originate with 20% of your existing customers. Those customers, you have retained.
Current Client Retention vs New Client Acquisition Comparision
- Educating – quite a large amount of time is spent bringing the prospect up to speed; and the more complicated your product & services are the more time this is.
- Warming – people do business with people they know, like and trust; and it takes a significant amount of time to do this, again depending on your service or product.
- Education – some or all of this will already be done; all need now is to reinforce the current information and bring them up to speed on new information.
- Appreciation – clients that have come to know, like and trust you and your business, become happy repeat customers. This only happens because of the extra added value that you give to your existing clients.
Increasing Your Retention
How do you determine what % you should be concentrating on retention? It’s up to you.
Yet, let’s be realistic. Changes will not happen overnight.
It will take time determining what, where and how to spend your marketing money on retention. A good plan of action is to identify strategies that work in your industry. That being said, once you have a strategy in place, you can tweak the % of increase as you go.
Suggestion for working on strategy involve:
- Do an A/B campaigns
- Look at case studies
- See what your competition is doing
- Ask what your competition is doing, in another non competing market
- Hire a coach or consultant to work with you
Once you determined a realistic strategy and implement it. Review and revise as needed. Habits do not change overnight and finding what works, takes time.
It is time to consider what your New Year goals will be for your business. Is increasing your client retention a goal you will be focusing on? Would getting professional consulting be advantageous? I don’t know. But, what do you think? What is it worth? Contact me for a complimentary consult.