Winning Loyalty and Keeping Clients

Philip Atkinson looks at the importance of client retention in a period of recession

Organisations that seek to prosper require to grow their client or customer loyalty over time. Few organisations can survive without a strong and committed client base willing to pay for services. The danger for many is they don’t see the threat of falling client numbers and if not addressed quickly they will find that their continuation of business is at risk. Most organisations exist in a competitive environment with customer migration a constant threat. Clients that you may have had retained for years may suddenly migrate to another supplier – sometimes without any warning.

In normal economic times your business may be resilient and replace lost customers easily – but in recessionary times it will take time to prospect for and win new clients and in the meantime, you may have to take urgent remedial action by reducing headcount and overheads.

Ask yourself and your colleagues some Client or Customer Focused Questions

What is the life time value of your clients and customers?

Have you segmented your customer base and assigned € or £ values to your bottom line?

Do your staff understand the implications of their actions in losing customer loyalty and how it impacts the bottom line?

What customer facing processes are currently not supporting you in developing long-term loyalty with your customers?

Have you categorised your process improvement initiatives into internally facing and exterior facing?

Who polices your processes and if a serious error occurs, what process is administered to resolve the immediate problem and put a long-term fix in place?

Do you know how much time it takes to recruit new clients after others have migrated?
What processes do you have in place both to prospect for new clients and to harvest them?

Do you have joined-up business planning that unites sales and marketing of your core skills, competencies or services?

Where are you currently most at risk at losing ‘big ticket’ clients and do you have a recovery plan in place should they migrate? Have you set up corrective actions to minimise your loss?

What are the most common reasons why you lose clients and what data do you keep setting business improvement in place?

Information, Data and Metrics on Losing Existing and Winning New Clients

Many companies have no metrics that will tell them the average time that is required to win typical clients nor will they know the cost of winning them. There is considerable additional expense to win new clients and the turnaround time or time lag between initial contact to a new client purchasing your services can be lengthy. It makes sense to develop a detailed and analytic approach to your core client base to examine new ways for building value, while maintaining a strong commercial relationship with your client while at the same time examining areas where you may be at risk of losing that client.

Many large businesses have specific account managers to assess the commercial relationship with their clients and their customers but equally many do not. SMEs often rely on ‘personal relationships’ rather than adopting an analytic approach to building value for the client and perhaps winning additional business through cross-selling or partnering with the client to help to develop their business.

What’s the Life Time Value in £’s of your typical Client or Customer?

Not many organisations calculate the life time value of their customers. As an example, for motor vehicle purchase, the average middle class family will purchase 13 cars during their lifetime with the average cost of vehicle anywhere between £12-£20k, amounting to a huge life time value of £156-260k with an additional £25k+ spend on repairs.

The average family spends between £8-10k per annum with a life time value over 25 years of between £200-250k on groceries. As you know, the supermarkets are pretty slick at customer management developing loyalty schemes whereas motor manufactures and their suppliers of finance are generally not.

Depending on your industrial sector losing clients or customers can be a huge problem. Clearly, people supplying big ticket items such as vehicles, or lease contracts for a variety of assets, purchasing service contracts such as corporate legal services, property, insurance, IT, telecoms etc are going to have to be pretty adept at not losing their clients. In such markets with a decline in demand, these companies are very much as risk because others are competing for a dwindling number of clients. Those who are most customer or client focused will be the ones which take action to win loyalty and avoid the worst of the recession.