We’ve all heard the phrase ‘don’t count your chickens until they have hatched’ and nowhere is this sentiment more true, than in business. If you’ve ever worked in a sales environment, you will know that you should never count a sale until the money is in the bank. You never know what might happen and things can still go wrong right up to the point that the transaction is completed.
Traditionally, sales reps would have celebrated a win (and the commission that followed shortly after) before moving on and getting stuck into the next prospect in their pipeline. Often they wouldn’t even spare a thought for what happens to that new client. After all, that’s what the customer service department is for, right?
Well, not any longer as it happens.
In sales and marketing circles, it’s widely held that it costs five times more to acquire a new customer than to retain an existing one. When faced with a tough economy and highly competitive marketplace, you simply cannot afford to waste any opportunities you may have to grab more sales.
In the first instance, it’s vital to figure out exactly what landing new clients costs you.
COA – cost of acquisition
This figure is an important KPI to measure and will give you an idea about how much it really costs you to get a new client. Everything you are doing to attract a new customer needs to be included here. It can be rather complex to calculate, but you need it in order to have a true picture of your costs.
The tricky part is when you do a lot of marketing and PR activities that are more about increasing general brand awareness rather than making sales or generating leads. If you are using content marketing and some form of marketing automation software, then you may sometimes be able to track back and tie a new client to certain activities or a specific campaign. But, if you can’t say for certain how each client was converted, then you will need to fill in the gaps in your figures.
Even if you track and measure all your activities and are mostly operating online where it’s far easier to do, the path a client takes is often anything but linear. They won’t always follow a predictable route. It is usually the result of a combination of touch points and activities conducted over a period of time that will eventually lead to a sale. This means it is important for you to figure out which of your marketing and sales costs you need to include in your COA.
Retaining a customer
Once you have a new client, there are many ways you can continue the relationship. You may renew a sale again and again, or agree on a retainer from the beginning. You may up-sell them a bigger product/service, or cross-sell them a different one. The key is understanding that once someone is your client you will have a lot more data at your disposal that can help you figure out how best to retain them as a client for the long term.
In fact, the lifetime value of a client is a crucial part of your sales velocity calculation – a KPI you can use to see how quickly you can convert new leads and that can help you in working out how to make more, or higher sales, in a shorter span of time.
When looking at lifetime values, make sure you are using the right figure. For example, if you sold a two year retaining contract, then the entire value of the contract would be the correct figure to use- not just the first monthly, quarterly or yearly payment that occurs.
However, there is another important figure which isn’t part of this initial conversion formula – the likelihood of further sales. Every new client should, in fact, go back into your pipeline for other, new opportunities. This is why a sale is no longer over once the money is in the bank. It’s just the beginning.
How to succeed at retaining customers
One of the main challenges that today’s B2B organizations face is that clients have a lot more options. It’s now a very small world and our economies are global, meaning anyone can get services and products from anywhere. It’s simply a matter of logistics.
Sitting back and taking your foot off the gas once a client is on board can be a risky strategy. Instead, here are some key points to consider after a sale is made:
1) Fulfilment of the order
If you fail to deliver what you promised, then your chances of securing any repeat business are basically blown out the water. It goes without saying that this issue is a top priority in general if you want to stay in business. Of course, the unexpected can happen and nothing runs smoothly every time, but what’s more important is how you handle such issues (see next point).
2) Customer service
Things go wrong, it happens. Sometimes it will be your fault as the vendor and sometimes it will be because the customer messed up. Either way, how you handle any customer service issues will either make or break your likelihood of securing future sales from a customer. Check out our blog on the 10 biggest customer services mistakes and how to avoid them for more inspiration.
3) Invoicing and debt collection
Despite being a vital part of business, only the most forward-thinking organisations tend to get their sales reps involved with invoicing and payments. It is far better for the sales rep who has an existing relationship to call up a client and figure out any issues. It also presents a huge opportunity to continue the relationship. Failing that, get someone on the team who is trained in customer service, to call the client.
This is because more often than not, the people picking up the phone have no training of this kind and can come off as rude or unfriendly to clients. Needless to say, your chances of forging a long-term relationship and getting more sales won’t be helped by that. Just remember, a customer doesn’t care which department they speak to. They will see you as one single company, no matter who represents that brand at the moment of interaction. What that means is that anyone who is going to come into contact with a customer needs to have had the right training.
4) Shared database
In line with the above point, it’s important to be able to take a 360-degree view of your customer. If you don’t want sales reps to chase payments, then whoever does so will need to know the history of the customer’s journey up to that point. That means having a central, shared database that is filled with the right data.
5) Testimonials and referrals
Testimonials are a powerful tool for closing sales. In longer sales cycles and/or longer project life cycles, producing a case study is going to be one of the best pieces of content you can have for converting new clients. Even just a one liner saying “Awesome service, thanks”, will be helpful. You can place these prominently on your website and to make them even stronger, use them alongside a photo and link back to the customer’s website.
You will, of course, need to choose the right moment to ask for a testimonial. The customer needs to have time to test your product/service out properly, in order to offer up any kind of testimonial.
And if things haven’t gone so great, never be afraid of unhappy customers. They offer you a great chance to earn a glowing testimonial if you treat them appropriately and solve the issue professionally. Managing to calm an angry client and working with them through the issue to solve it, will get you a very positive response and most of the time without needing to ask for it.
Referrals are a science unto themselves and will have varying degrees of effectiveness. The best thing that can happen is for an existing client to talk to someone else directly and convince them to give you a try. These referrals don’t usually come about by themselves, so help them along by encouraging your clients to let others know about you and your services.
6) Up-selling and cross-selling
An example of an up-sell would be that you’ve sold someone a basic software package but you then convert them to a higher package. A cross-sell in the same scenario would be selling them an extra training package alongside the booking for the software.
Look at your products and services and spot where these opportunities are. Marketing them well deserves a whole strategy of its own. If you are offering the kind of product that a client will only buy once in a few decades, then look at other ways and means for how you can be of service to them. That way they could be very helpful in getting new leads and clients for you.
7) Networking and relationship building
Don’t ever forget about your existing customers. Aim to continue to keep building the relationship and invest time in doing so. Even if a project has come to an end and a new one isn’t on the horizon, make sure you stay in contact and remain helpful. You never know what will happen or could come out of it. Remember, clients who have left happy as well as current clients are great people to invite to any in-person events you may be holding. They will help move prospects along your pipeline.
As you can see, landing the sale is only the start, and if you forget about a customer at that point then you could end up missing out in a big way. There are many other opportunities once you have a new client on board, so see where they are and make sure you’re making the most of them for super healthy sales figures.