All sales people have a finite amount of time to invest in their work. Should they use the time retaining or acquiring good customers? It’s a simple question worth evaluating.
What’s A Good Customer?
My best customers have integrity, place all the business they can with me, pay on time and refer me to other customers. This is the “A” list. The “B” list customers are those who have potential to be on the “A” list but haven’t been developed to that level. Continuing along the customer rating scale, prospects are those potential customers who have the same characteristics as a best customer but are still being evaluated.
Where Is The Balance Between Retaining And Acquiring?
There is much research about the difference in cost between retaining and acquiring customers. Commonly cited costs are 5 to 25% more costly to acquire a customer than retain one. Of course it depends on your business as to where you fall in that range. Once you know the cost difference you can decide your best strategy. My personal philosophy is to have a balance. Work hard at maintaining good customer relationships with the “A” list. Invest time in moving those on the “B” list to the “A” list. And strategically recruit new business.
What Is The Key To Retaining Good Customers?
For each transaction there are three potential out comes: A moment of misery, a moment of truth and a moment of magic. The moment of magic occurs when your performance exceeds the customer’s expectations. When the customer is satisfied they got good value for the investment, I call it a moment of truth. When I fail to deliver on the promise, it is a moment of misery. Key to retaining good customers is consistent moments of magic. Plus turning moments of misery into moments of truth at least or even moments of magic if possible.
What Is The Best Strategy?
When your territory consists of a few large customers the loss of anyone will affect the business. So focus most of your time on retaining those customers. And always be looking to add to the customer base to reduce the risk of losing a good customer. Should your “A” list consist of many smaller customers, the loss of one or a few won’t have a significant impact on your business. Nevertheless invest proportionally in retaining those good customers while aggressively acquiring new ones.
It’s All About People
The best way to retain good customers is by having outstanding communication with each of them. Practicing the fundamentals of good selling will not only retain good customers and by acquiring new ones will successfully grow the “A” list. Ask your customers what they want from you as the salesperson and deliver it. Work with them to solve the problems you can and deliver value for their investment. Continually create moments of magic and you will have good customers for life.
Don Crawford & Lois Carter Crawford