Preserving Customer Loyalty

Building a successful client base is one of the most critical challenges we face in business. And while landing new customers is always going to be an important part of your business, retaining your current customers is even more crucial to your ongoing success. Unfortunately, sometimes we focus so much on earning new business that we forget to take care of our existing business. How can you ensure that you are providing the necessary service to your existing clients so they remain your customers for a very long time?

You’ve probably heard many times how much more difficult and expensive it is to acquire a new customer than to retain a current one. A survey by the Chartered Institute of Marketing indicates that it is between five and 10 times more expensive to secure a new client than to keep an existing one. Whether it’s five or 10 times doesn’t really matter. We can all agree that replacing the revenue from a top customer is extremely difficult and very expensive. My point is that your business cannot afford to lose any of your valuable customers to a competitor.

Notice that I have qualified those customers you must protect as your “valuable customers.” But what makes a valuable customer? Does it have to do with the amount of revenue generated annually by a given customer? This is, of course, one of the most important factors. If you’re a typical business in our industry, your top 25 customers will account for a significant portion of your annual revenue and you likely only have to go about 40 to 50 deep in your customer base to account for the large majority of your yearly sales.

Assuming this is the case, your ability to care for your customer base now becomes a little more manageable. These are the customers to focus on. Your top customers are the lifeblood of your business. Caring for these customers must be in the forefront of your mind in any decision you make in your business, whether it’s sales, marketing, production, asset acquisitions, logistics, management, or even changing your phone system. Always ask yourself, “How will this decision affect my top customers?”

Relationship Goals
So, how do you take care of them? First, try to create a relationship with your top customers that’s more of a partnership than a vendor-customer relationship. Your sales reps should be communicating with them on a regular basis, and should be viewed as valued consultants offering ongoing solutions to their challenges rather than mere “order takers.” Frankly, in our own organization, we have some sales reps who are, in fact, viewed as consultants or partners by our customers, and we have some sales reps that serve as basic order takers to our clients. You can imagine which of those sales reps are the most successful and end up managing our large customers.

But these successful relationships are not fostered by the sales reps alone. Your commitments to your customers are only as good as the execution from your operations. A sales rep’s promise to take care of a customer’s problem only works if your company stands behind it and takes care of the problem. This requires an ongoing and consistent effort from all aspects of your business. And this type of commitment begins with management. If your entire organization, top to bottom, understands that the customer comes first, then you will build continual trust with your customers, which, in turn, will forge loyalty – the foundation for a long-lasting relationship.

Top of Your Game
Providing your customers with innovation is another effective way to reinforce your customer relationships. For example, avoid assuming that your customers understand and are aware of new product offerings in the marketplace. We function in an extremely competitive environment, but understand that your customers also operate in a highly competitive arena. They, like you, are constantly looking for an edge over their own competitors. Your ability to assist them in achieving some advantages over their own competition can be critical in establishing a consultative relationship. Make sure your marketing efforts are focused on areas in which you provide your customers with innovation. If you aren’t introducing them to great new ideas for product offerings, I can assure you that your competitors are, and that they will be using those ideas as the edge they need to pry your customer away from you. Be certain that you, as management, and your sales team are on top of your game when it comes to understanding the ever-changing marketplace in which we all work.

We are all familiar with the business axiom, “grow or die.” I believe that to be true. But your strategy for growth will always be critical to your future success. Growing by adding new customers can and should be an important part of your business strategy. You just need to be careful that it isn’t your primary strategy. Caring for your existing customer base is the most effective approach to sustain your business growth and ensure that your future business growth is profitable.

“ What makes a valuable customer? Does it have to do with the amount of revenue generated annually by a given customer? This is, of course, one of the most important factors. If you’re a typical business in our industry, your top 25 customers will account for a significant portion of your annual revenue. ”