Customer Retention Strategies – Plugging the Leaky Bucket

Customer Relationship Management is a process not a program. And, customer retention is only part of the process known as Customer Relationship Management (CRM).

A two percent increase in customer retention has the same effect on profits as cutting costs by 10 percent, says Emmett Murphy and Mark Murphy’s Leading on the Edge of Chaos. If that statement doesn’t catch your interest, then read no further.  It’s a lot harder to fill a (revenue) bucket if it’s leaking as you fill it.  Focus on reducing the leakage to make sure more of what you sell makes it to your bottom line.

Keeping your customers is harder than ever in today’s competitive business world. There is a competitor behind every tree that will take your customers if they can. Given the cost of getting new customers, it is critical to your bottom line to keep as many of them as you possibly can. Sales costs to get new customers can cost 30% and more, so its common sense to up-sell and resell existing customers. You already know who they are and what they buy. You have a relationship and you are a known quantity.

Every business is different, but you already know what works and what doesn’t to keep your customers.  It’s about knowing what they want, delivering what you committed, making it right every time, and making sure that they know their business is appreciated.  It’s about providing value and making sure that YOU understand what is valuable to them. Finally, it’s about making sure they know about your other products and remember the value you provided when they are ready to buy again.

Make it a process, not an afterthought.

The real challenge is how you turn that special treatment into a process that gets executed for every customer. It begins with the sale and continues past fulfillment to ensure that the experience is exactly what they expected with no surprises. It helps to give that little extra to show they are appreciated. Finally, you need to ‘touch’ them on a regular basis after the sale to make sure they remember you when it’s time to buy again.

You may do it, but how do you make sure that everybody does it, every time? Once you have the process in place, it is important to review it and refine it based upon your results over time.

The best way to make this happen is to document your winning processes, examine and refine them. Next, provide a toolset that can help your staff to follow the process and remind them when to do it. The key is to make it easy to do and to increase productivity so that everybody buys in on it.  You must measure the performance and results of the process so that management can stay on top of what is working, what’s not, and why.

One of the biggest causes of lost customers is employee turnover. If the relationship is between the customer and salesperson, you can’t afford to loose all of the information about your customer when the sales representative moves to a competitor. It’s important to make sure that information about your customers is available to the appropriate employees and not kept in someone’s head. This suggests that you need to have a secure database of customer information that will allow access to the right personnel while protecting it from unauthorized eyes.

Customer Relationship Management is a process not a program.

Customer retention is only part of the process known as Customer Relationship Management (CRM). One popular misconception is that CRM is software, but CRM is actually a series of customized processes that have to be implemented throughout the organization. The software is only a tool to support the processes. The software must be flexible enough to support your business processes, store your customer information in a secure database and helps to automate your sales, marketing and service processes. Once you have documented your processes and implemented them in ‘workflows’, CRM software will then guide your staff through the process every time, for every customer or just the ones you have selected for extra special treatment.

Formal Customer Relationship Management processes are a great way to keep your customers. You already have a process, but if it’s not documented and monitored, you’ll probably find that it’s not consistently applied. Industry studies have shown that a CRM strategy can improve sales from your existing customers by 20% or more at less cost that it takes to generate the sales from new customers. What are you waiting for, start plugging that bucket. They are YOUR customers, hang on to them!

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About stephenvnoe

CRM & XRM solution architect and project lead. I provide CRM design, services, mentoring & support to all manner of front office solutions and CRM projects.
This entry was posted in CRM, How to, Uncategorized. Bookmark the permalink.

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