05 Nov The Miracle of Client Retention – Part 1
The Miracle of Client Retention – Part 1
Most firms go to market focused on two primary pillars: client satisfaction and selling new business. Legions of literature and faddish management paradigms have emerged to guide companies in pursuit of these two goals. And, they’re important. It’s just that they’re not sufficient to differentiate a service-based company from its competitors in a manner that generates eye-opening profit improvement and category leadership.
Client satisfaction is simply a prerequisite. Today, it just gets you into the game. Doing things well is important, however client satisfaction alone is not enough to achieve breakthrough rates of return.
Instead, it takes an ‘out of the box’ thought process that recognizes that not only is there a third pillar to success, but that it will carry much more of the responsibility for profitable growth than either client satisfaction or new sales.
The third pillar of success …
This miraculous third pillar is client retention, in other words, reducing the rate of attrition in the base business. Consistent incremental improvements in retention generate immense economic leverage. In much the same way that compound interest and disciplined dividend reinvestment work to build wealth for investors who zealously attend to these principles, client retention fuels the economic profit engine by providing a springboard to leverage incremental growth. As this becomes more fully understood and appreciated, retention and loyalty marketing will certainly command even greater recognition and acceptance.
Recognize that client retention demands a ‘formal process’ …
An entirely separate set of intentional behaviors must be learned, embraced and practiced every day in order to keep the clients you’ve worked so hard to acquire.
Firms who are winning the client loyalty and retention battles have learned and applied the following competencies:
- A structured process for precisely understanding, reconciling, prioritizing, managing and documenting the pinpointed expectations of their clients
- A structured process for assigning the responsibility to establish and manage multi-level relationships and for enhancing their quality. The process ensures these critical relationships are owned, not only by the individuals involved, but also by the firm.
- A structured process for creating “Relevant Value” which goes beyond simply solving problems to delivering breakthrough innovation
- A structured process that effectively deals with people changes on both sides of the table
- A structured process that benchmarks the “Lessons Learned” by your most experienced and successful client managers and memorializes and shares their best practices with the newer people in the organization.
- A structured process of quantitative measurement that tracks the economic value of investments you make in improved client retention
Your competitor has a formal process…
You’ve probably noticed we’ve used the term ‘structured process’ quite a bit. OK. Well, the sobering reality is that your competitors have almost certainly embraced a structured and formal process to take your best clients away from you. Their best sales people lay awake at night thinking about ways to make that happen. They are well trained and highly motivated.
Retaining those key clients by successfully defending them from competitors requires commitment to a formal process. The process defines a set of behaviors that go well beyond client satisfaction. Why? Simply because, if you think about it, you’ve lost clients in the past who’ve scored well on satisfaction surveys. Unfortunately, you will continue to lose clients that your satisfaction surveys led you to believe were safe, unless you defend them properly and aggressively.
What does it take to make a miracle? (To Be Continued Next Week)