Client retention is an important metric for any business, especially those with a high customer acquisition cost (CAC). The old saying it’s always easier to keep a client you have than to go and find a new one is true! What if you could plan on not only keeping all your (profitable) Clients, but getting them to FURTHER commit to your partnership? Now we are talking about 110% retention!
How do you achieve 110% Client retention?
What happens to Client retention when you add real value to their bottom line? Not only do Clients stay, they INCREASE their commitment over time. At Stringfellow over 10% of our EXISTING Clients extended their partnership this year. This was business planning 101 for them. Why would you not lock in a partnership that delivers real value to your bottom line? Manufacturing companies have done this with suppliers for decades.
Too many businesses deliver a product or service that is “good enough” to keep 80% (or less!) of their clients year over year. It’s accepted that this attrition will occur. Sales and marketing work hard to go out and find their replacements. Once the sales team misses their numbers a couple of times, the focus then turns to improving “customer service” to the existing clients to keep them from leaving. Over time this will destroy your margins, especially if you are in a recurring revenue model.
This is not a good place to be! To keep this from happening work on these two items.
Invest in your capabilities in a proactive way.
Part of running a business is to continuously look for ways to improve your product or service. If this process stops, it’s only a matter of time before your clients start to look elsewhere. At Stringfellow we analyze the market and attempt to determine what products or services will benefit our Clients BEFORE they ask us for them. This requires an investment in training or research without a guaranteed return, but you miss 100% of the shots you don’t take!
A great example of this was recognizing that Tier 1 support was more about us keeping our support costs down, rather than delivering an excellent first point of contact experience. We decided that moving to a model where the first contact is an experienced, and more expensive, resource was better for everyone. And you know what? The increase in cost never materialized! Our Clients requests are handled faster, and our team members are excited to be able to “handle” whatever comes in versus the constant escalations that plague most call center operations.
Cyber-security has become a focal point in technology, and for good reason. We decided that providing our Clients with security education and training, at our expense, would be a great investment in our Clients success. Not only does this lead to more productive Clients, it also REDUCES our support time related to phishing, virus, and other scams. Investing in your capabilities is essential to obtaining 110% client retention.
“Value add” means to add value.
The start of the technology (sales) industry was based on the Value Added Reseller (VAR) model. The idea was that VARs would not only sell the hardware but would also add value by helping you determine WHAT to buy, and then installing it. Technology has now shifted to a services-based model and many groups have forgotten about the “adding value” part of it! The Managed Services Provider (MSP) is nothing more than a VAR for services….no value there.
Adding value means understanding how your services can impact your client’s business and PROACTIVELY bringing them options to improve their operations. Sometimes adding value for your client can mean changing how YOUR (service) business works.
An example of this was the shift from on-premise Exchange to Office 365. Many VARs (and all internal IT groups) fought this change for years. Their model was dependent on installing metal boxes, also known as servers, and then charging to setup and maintain them. No additional value for the client, but a lot of value for the VARs and job security for the internal IT groups. In 2006, we detemined email should be consumed as a service and that Exchange would be the email “standard” for doing this. Even though it cut into our margins, we moved 100% of our Clients from on-premise Exchanges servers to BPOS (now known as Office 365) by the end of 2010.
The win-win we are looking for!
Our Clients have benefited in numerous ways from our 110% Client retention strategies And what about all the profit we “lost” from not installing and maintaining those metal boxes? It never happened. Our Clients are more successful and have plenty of new opportunities for us to assist them with. The win-win we are all looking for!
Invest in your capabilities and always add value above and beyond what your clients expect. This is the way to 110% client retention!