Sales academy keeping customers 13
Hold on tight Retaining customers is essential for developing business. Dr Bill Nichols offers some top tips It is almost four years since the banking crisis and most UK market is still flat or going backwards. The ‘R’ word is everywhere: not recession but retention, the feeling that what we have, we hold. Smart management teams pay it as much attention as acquisition and prospecting. They realise that it’s far from expensive lunches, deep discounts, or over-servicing. I refer to a five-step retention guide, which I call GEMMA. G for Goodwill First, understand your currency. If you just track satisfaction, it’s a bit like driving a car with only a petrol gauge for guidance. The complete dashboard, which emerged from detailed research over several years, is ‘goodwill’. In any considered market, where there is an extended sales cycle, regular contact creates perceptions. These perceptions flow from assessments of how you provide (weakest first) six key factors: general service, product utility, brand value, commitment, fair treatment and enjoyment. If a customer actually enjoys dealing with you, it’s your most powerful retention tactic. Collectively, these perceptions pay into and create your goodwill bank account. Defensively, keep each account nicely wadded with goodwill and you will ride out unanticipated issues like slack service response, delivery delay, quality problem or procurement review. Conversely, run the account down carelessly and one small incident may be terminal. On the upside, escalating deposits encourage desirable customer behaviours from retention and preference to recommendation. E for Engagement None of this adds up to a relationship, which is a serially-abused word. Not all long-cycle
customers are relationally-orientated. But, over time, goodwill factors can generate rapport, the substance of a strong relationship. Real business relationships mimic the complexity of personal ones. The major goodwill contributors are constructed from some very basic components. Hard, practical rapport, for example, is generated by consistent cross-firm process and presentation, effective and proactive reporting and, not least, clear strategic engagement in terms of problem recognition. As in personal life, it’s deceptively simple: your ‘partner’ wants consistency, transparency and to believe that you really understand them. And, as in life, these things don’t just happen. Managing each component requires the discipline you’d bring to traditional acquisition marketing activities, such as a product launch or new season’s promotional campaign. In practice, if you truly want positive engagement, ensure that every touch-point actually engages smoothly and effectively. No amount of social media magic can permanently offset the rude delivery driver or careless technician.
seeker’ (aka midnight caller). Often senior, knowledgeable and demanding, he expects highlevel contact and immediate responsiveness. Yet they may switch emotionally and without notice. Cherish, rather, ‘old reliable’. Senior but older, his commitment is sometimes inertia. He generates at best only average revenue and appears uninterested in firm, service or relationships. But he is a regularly overlooked strong suit and advocate in the client base.
M for Measurement It’s a management cliché but commonly what isn’t measured, isn’t pursued. You can track goodwill attitudinally, in behavioural terms (repeat, frequency) or financially – retained as opposed to new revenue. It can also align to financial modelling via the classic equation that market capitalisation less net assets equals goodwill. The goodwill model also helps you value an existing customer-base by conducting a new form of goodwill-based segmentation. Precise profiles vary but there are common types. Many will recognise the siren voice of the ‘relationship
A is for Advocacy The last step puts all willing customers to work as your auxiliary word-of-mouth or advocacy salesforce. Research suggests up to 50% of next year’s B2B/B2P new business is advocacy-based and that for every existing advocate another will surface if prompted effectively. Advocates like basics they trust: high utilitarian and general service satisfaction. The positioning of the advocacy response at the least-engaged base of the goodwill hierarchy explains the strange phenomenon of the ‘ex-client advocate’. Satisfaction drives advocacy but does not guarantee retention. Think goodwill.
M is also for Motivation For many, motivating target sales behaviour – maximum sales, optimum margin, most valuable segment – is a black art. Compounded across product-line or divisional silo, how do you motivate D-Division’s sales guy to facilitate retention of A-Division’s major customer? Certainly it’s about effective management of cross-hairs or incentive triangulation. But it’s also about evangelising retention. Too often, it’s afterthought. Try making it the hero. Ring the bell louder for the fifth annual contract renewal than for that possibly flaky new conversion.
august 2011
USP