In the aftermath of the global recession, acquiring customers is no walk in the park. As a result, much focus has moved from acquisition to retention as companies battle to maintain their share of client spend. And that’s not a bad idea. According to the Harvard Business Review, a 5% increase in customer retention could increase the value of your average customer by 25% to 100%. That means that if you earn R50 million in profits each year, by increasing your customer retention rates by just 5%, you could increase your profit by R12 million to R62 million.
Here’s why: new customer acquisition costs are huge and order processing costs are higher. Also, long time customers tend to spend more, they are often prepared to pay more, and happy customers refer colleagues and friends.
It’s therefore critical, during these tough times, to ensure you have an adequate number of farmers on your team. Traditionally, you may have employed more hunters than nurturers. In that case, you are going to have to retrain members of your team to ensure that they understand what a retention strategy comprises. Be warned though – the personality profiles of hunters and nurturers are so different that it may be impossible for one to take on the role of the other. Understanding why sales people act and respond differently is a core objective for any senior sales manager.
The hunter’s focus is the now
A sales person focused on new business goes in and makes an impression. They are outgoing, gregarious, unafraid of asking for the order, and they’ll do it 20 times if they have to. Their people skills are good, but they are different from those of a customer retention expert. They are usually terribly impatient because they want to get the deal now. In some companies they are called ‘acquisition sales people’ – they actually go and buy business, that’s their job.
Once they have the customers, the nurturers or farmers move in and take care of them for the long term. If you have hunters on your team who are working in areas or sectors that can no longer support their go-getting attitude, you may have to restructure their target markets and give them a bigger pool to swim in.
The farmer looks at the long term
The nurturer, on the other hand, is used to looking after the details and being patient with the client. They have high levels of tolerance, and they are far more people-oriented. They communicate well and they don’t get ticked off easily. Their nurturing quality enables them to go to the customer and help the company to maximise its return from your product.
Profiling customers and sales people
Another interesting development is that companies are starting to profile customers to ensure that they assign the right sales people to their account. When you are restructuring your sales team, profiling becomes crucial. This is really to do with personalisation. Some people simply do not respond well to the pressure applied by pushy sales people; they prefer to deal with someone who is less aggressive or insistent. It’s important for sales managers to ensure that there is a good fit between team members and the clients they are targeting.
If you think about it, you are trying to personalise the contact with the client to the nth degree. You are putting all the resources in place to understand both your client and your sales exec, so that you are constantly segmenting and matching because that is how to drive sales today.
The personal touch
The focus on customer retention is also evident in the number of marketing initiatives and the spend that is going into marketing support. Everywhere websites are being upgraded, search engine optimisation is being applied, and social networking strategies are being rolled out. Companies are using telemarketers to retain constant contact with clients and ensure they remain uppermost in the user’s mind. That is really what retention is all about.
It’s important to mention sales methodology, processes and technology. CRM plays a huge role in enabling a business to profile its customers. You need to understand the hierarchy within the company, so you know who to contact, when to contact them, and who must contact them. A good CRM system will be able to trigger all the events that you have pre-programmed for that specific customer and is a vital component of a well developed customer retention strategy.
Personalisation
The key to a sales strategy that works
Customer retention specialists are different. They don’t fit the stereotype of the smooth talking salesman. Instead, they tend to be less extrovert and more focused on finding out what customers really want and need. That’s what makes them so suited to a sales environment where personalisation is the watchword. They are inquisitive and interested. They’re also willing to listen and will often let the customer dominate the conversation.
With so much information freely available on products and services, taking a client relationship to a deeper level requires something other than just handing over more information. The true nurturer collaborates with the client and works with them to improve the product or service that is being sold for their mutual benefit.
Increasingly, sales people are also being required to be subject matter experts. They have to know more about the business sector or area they operate in rather than just homing in on sales.
Negotiation plays a role too. In the past, sales people simply convinced clients to buy. These days it’s more about negotiating and reaching an agreement about what works best.
