Try searching ‘how to grow a business’ and you’ll find dozens of manuals written by people with no skin in the game. When you’re drowning in this much information, it’s hard to know which actions to take.
The underlying principles to grow a business are simple. Businesses have been around forever and the smartest guys in the room all know that to grow a business, you need to:
1. Acquire clients – by turning more new prospects into paying customers
2. Increase transactions – getting each client/patient/customer to buy from you more often
3. Increase value of each transaction – getting each client to buy more with each purchase
What To Do With This Information?
Now that you have these three business growth tenets, how do you act on them?
First, you analyze the tenets. The first item is all about NEW clients and the second and third are about EXISTING clients. The latter two focus on customer retention.
Marketers (SEO) and Lead Generation directories like Yelp will keep hounding you about not being found by prospects. They’ll keep saying that you’re missing huge opportunities when new clients can’t find their way to you.
They have a point, BUT, we’re here to say that the inflow of new clients is only 33% of the way to increasing your revenue.
The Largest Part of Growth is Customer Retention
If bringing in clients is only 33% of it, then it’s clear that the other two methods are all about leveraging your existing clients for growth and improving customer retention.
- Increase transactions
- Increase the value of each transaction
These two are focused on clients you already have, those who have already purchased from you and paid you. Your goal is to get them to purchase more often and provide more value with each purchase.
20% of Clients Will Provide 80% of Future Revenues
Now that we’ve established that existing clients are huge and that maximizing their actions is crucial, what do you think of this statistic:
80% of your company’s future revenue will come from just 20% of your existing customers. [Gartner]
We’re not saying that you need to forget about getting new clients. We want to raise attention to the importance of retention strategies and the value of existing clients. This group is almost always forgotten by business owners, always having been sold on the importance of NEW clients.
Customer Retention Strategies
How do you leverage that 20% and ensure that you are retaining your most valuable assets? Retention is key. How you direct your energy, capital, and time to where it’s best served is the secret sauce of a successful business.
This isn’t just Neovora’s thought process. Silicon Valley software companies and even age old commodity goods consider these as facts:
- Salesforce spends 49% of their annual revenue in sales and marketing budget on retention… and have 24% revenue growth year after year.
- Johnson & Johnson spends just over 27% annually on retention programs… and consistently has over 2.5% growth year after year.
There are a many methods that you can do to increase CLV, increase customer retention, and grow a business depending on your industry, your products, and your services. Let’s cover two methods:
In today’s interactions, customers are welcoming to offering their personal emails at the point-of-sale. If you can get a list of client emails, sending emails with valuable information frequently is a sure fire way to retain clients and increase CLV.
Send your clients periodic email touchpoints with helpful tips, industry information, and other useful tidbits in short and friendly emails. They’ll see your emails as value and won’t be obligated to read or respond to it.
Clients will constantly be presented with your brand name and see you as a leader in the industry, making them less likely to seek out other competitors when it’s time for their next visit or purchase. Your visibility also means they are prone to spend more often.
Get Valuable Insights And Improve Your Product/Service
Providing the best services and products to your clients is crucial. You know that you’re being measured when it comes to customer experience, and clients are more likely to stray if they think they can get better service elsewhere.
The easiest way to guarantee high satisfaction is to make sure you have no weaknesses in the experiences you provide! How do you find your shortcomings and identify your strengths?
Ask clients what they like and what they don’t like and improve product packaging, customer interactions, staffing, anything tangible and intangible about your operations.
You may have already been asking your clients questions like “Did you find everything alright?” or “Did we meet your expectations today?”’ but consider that people rarely like being confrontational in face-to-face interactions, let alone raise issues about you or your business.
Asking them for feedback via email is the leading way to receive valuable and truthful criticisms. With this, you can arm yourself with all the data possible to eliminate weaknesses and improve strengths, thus ensuring that:
- Clients do not stray easily to your local competitors.
- Clients’ interactions are highly pleasing, lowering their inhibitions about spending more frequently.
- You understand exactly what products and services your clients want, enabling you to provide more value with each transaction.
Now that we have the importance of customer retention strategies drilled in, how do you get this powerful system up and running!? Lucky for you, we offer just the service to send email touchpoints and email surveys so that you can improve your customer retention system. Learn about the power of Touchpoint 80/20 to retain more clients and scale a business!