What is the one piece of advice that Jonathan Farrington finds himself telling business executives over and over? Stop being commercially promiscuous. Farrington, a sales strategist and consultant who has worked with more than 100,000 salespeople and sales leaders, uses the term to describe the focus of many sales organizations on pursuing prospects.
The focus comes with a significant, often overlooked cost: spending too much time pursuing new customers means less time with current customers. After 25 years of leadership of his own consulting company, Farrington has found that many companies are very, very bad at customer retention.
“‘Commercially promiscuous’ is the term that I like to use, because chasing after new prospects and new business always seems so much more exciting—and yet most companies gain 80% of their business every year from existing clients.”
68% of Lost Customers Felt Ignored
Certainly there is some level of natural attrition, and a focus on prospective customers is always a critical part of business. But the majority of customers who leave a company do so because the company is not meeting their needs. More often than not, the customer simply feels ignored.
“Surveys show that 68% of customers who leave the incumbent supplier do so because they felt ignored,” Farrington explained (Institute of Sales and Marketing Management).
If companies don’t address customer retention from day one with a new customer, they may have already lost. Most customers will never tell you if something is wrong or they are unhappy. If they aren’t receiving what they want, or don’t believe in the partnership anymore, they’ll disappear, finding someone else to work with.
“Most people in most situations vote with their feet. They’ll never do business with us again,” Farrington said.
When sales leaders improve customer retention, they increase the overall Lifetime Value (LTV) of an account. As the customer-provider relationship strengthens, customers return to purchase again and again.
Be a Fisherman
The key to keeping customers for life? Act like a fisherman, Farrington explained. In a typical sales organization, there are hunters and farmers. The hunters move beyond the walls of the organization, looking for new customers. The farmers cultivate relationships with existing customers. Traditionally, the sales organization has consisted of these two roles.
To improve customer retention (and avoid commercial promiscuity), Farrington added another role to the picture: the fisherman. “If you think about what a fisherman does,” he said, “they can—or they need to be—very, very patient. They are putting in a lot of bait, and they need to strike at the right time. If they strike too early, they scare the fish away. If they strike too late, the fish is already gone. So what social media allows . . . Is to build the focus on the existing clients and see what they’re doing through the various social media platforms.” Then, sales will know when the customer is ready to consider a purchase, and can send the hunter in to win the new business.
Every sales leader has the opportunity to improve customer retention. It’s a mindset issue for everyone in the company—not just sales—but sales is a good place to start. Farrington recommends four practices to build happy, life-long customers:
1. Talk to your customers.
It sounds like common sense, but common sense is not common practice. Talk to your customers. Don’t just email a standard survey, either—this won’t uncover the depth of the issue. Instead, maintain consistent communication. Social media, especially LinkedIn, is making this easier than before.
“Get ahold of all of your clients. Reach out to them by whichever way they prefer to be communicated with. Email them, call them, write to them . . . And go and meet with them.”
2. Benchmark against the best—regardless of industry.
Many companies look to their competition to assess their own success, with the mindset that as long as our customers are happier than our competitor’s, the company is doing well. Unfortunately, most companies are setting the bar way too low by comparing themselves only to other companies in their industry.
“This is the reality: the majority of companies are so bad at customer service, that actually, you don‘t have to be that good to be better than they are,” Farrington said. Instead, he suggests looking to the companies who are excelling in the area of customer satisfaction and customer service—regardless of the industry.
For example, Farrington listed examples of companies excelling in customer service: Apple, Virgin, Amazon. “You know that when you engage with those organizations, you’re going to get a consistent level of excellent service . . . And that is precisely why they have loyal customers.”
3. Every individual is responsible–it’s a mindset.
Customer retention is “a mindset. And unless organizations actually bring this philosophy throughout the organization, it really isn’t just going to happen.” To establish a mindset, start with your team. What simple act can you do today to improve your customer’s experience? What can you do along with the rest of your team?
“It’s not one single act to retain a client. There is no one single act. You have to . . . look at every department and how the organization is viewing the value of existing clients.” It’s the value of existing clients that many leaders are underestimating.
4. Hold an account review.
A final way to improve customer retention is to hold consistent account reviews. Farrington suggests that with the year coming to an end, there is a window of opportunity to have an account review: “It’s a great time, right at the beginning of Q1, to sit down with [the customer] and say, okay, let’s have a frank exchange. How was it for you last year? What were we good at? What didn’t we do? How did we miss your expectations? What more can we do to strengthen this relationship that we value so much?”
At the end of the conversation, there is the chance to discuss any upcoming opportunities to do business together in the new year.
By doing so, “we have simply taken the time to show that we care, and we value their business, we value their opinion.”