In business as in life, healthy relationships are worth nurturing. Humans tend to be more receptive to people and organizations they know, like, and trust, whether as consumers or when making purchasing decisions on the job. With a positive, mutually beneficial relationship in place, customers are more likely to remain customers and send more business your way.
Simply put, making a concerted effort to create and maintain relationships reduces selling costs and increases revenue.
Grow your business from the inside out
If you think building and nurturing relationships takes more time and effort than taking a transactional approach ... well, you’re right. But consider the payoff.
Retaining customers is highly worthwhile: just a 5% increase in customer retention can result in revenue increases of 25% to 95%, according to Bain & Company. Customers who enjoy a positive relationship with an organization are far more likely to buy additional products or services, extend a contract, or renew a subscription. In fact, the probability of selling to an existing customer is 60-70%, while the odds of closing a sale with a new prospect is a mere 5-20%, according to the book Marketing Metrics. By comparison, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one, per the Harvard Business Review.
The probability of selling to an existing customer is 60-70%, while the odds of closing a sale with a new prospect is a mere 5-20%
Loyal customers can reduce new business acquisition costs too, as they spread the word about your organization to others. (Writing this blog got us wondering how much of our own new business can be attributed to relationship marketing. Not surprisingly, we found that about 80% of Revel customers come to us through existing relationships, referrals, or other meaningful connections.)
Seven ways to improve customer retention
The benefits of nurturing customer relationships to retain customers is clear. Here are some tips that can help make it happen.
- Set and manage expectations, together. Make an annual plan, include key details in the contract, have frank discussions—whatever is appropriate for your business (and the customer).
- Ask for feedback. Customer surveys are an excellent way to let customers know you care about their satisfaction while measuring your success (or failure) at meeting expectations. Take advantage of less-than-stellar feedback to dig deeper and make the changes necessary to retain worthwhile customers.
- Share results! Don’t assume your customer fully recognizes the value you’re delivering. By doing what you said you’d do and making sure the customer knows it, you’ll build the trust and goodwill that leads to additional business. At Revel, we establish measurable goals and share monthly reports that keep all parties on track, with the added benefit of reminding our clients of the value we bring to the table.
- Revisit needs, plans, and expectations regularly, rather than taking for granted that customer needs are still being met. Continually reassess goals and strategies together.
- Share the love by establishing relationships between the customer and multiple folks in your organization. This way, if a main point of contact is promoted or leaves, there’s a team (and relationships) in place to pick up the ball and run with it, with minimal interruptions for the customer.
- Engage on an ongoing basis. Include existing customers in the same marketing efforts (company newsletter, emails, blogs) you’re directing to prospects, since they may not be aware of every product or service you offer. Developing worthwhile content and making resources available to your customers helps position your organization as a trusted source of expertise.
- Don’t let electronic communications take the place of personal interaction. Augment emails and newsletters with regular phone calls, handwritten notes, and face-to-face meetings.
Building and maintaining positive relationships with customers is key to growing and continuously improving your business. By truly understanding your customers’ needs and actively meeting them, you’ll prove yourself to be a valuable partner that’s worthy of additional business (and positive word of mouth).
Revel can help you develop and implement engagement strategies and tactics that improve customer retention and generate more business. Drop us a line or call us at 231.727.9778 to learn more.