Prioritizing customer relationship management and retention is crucial for business success, as satisfied repeat customers are a valuable asset and contribute significantly to long-term profitability.
Primary Implication
Your customer base consists of new and existing customers. The repeat customers’ frequency and amount of continued purchases from you are a leading indicator of future profitability and your company’s value. They are often the most profitable customers because you don’t have all of the marketing and sales costs associated with acquiring them.
Failure to convert your new customers into retained customers is often a sales failure associated with overcommitting and underdelivering. Failure to hold onto a repeat customer is often the failure of an operation tied to employees not caring about the customer. Either way, losing profitable customers from your customer base is a serious business failure that needs to be identified quickly, investigated, and corrected, or you will make less money.
Overview
Existing customers are your most important assets, yet few business leaders put forth the same effort to properly manage this asset that they do in the areas of finance and operations. Customer retention is the true backbone of business success. Everyone in your company, from the sales staff to the front-line customer service representatives to the CEO or owner, should be concerned with customer relationship management and satisfaction.
The customer is affected by every single interaction they have with your company. Failing to manage your customer assets properly extends far beyond the loss of the affected customer. Once the customer decides to walk away from your business, they are very, very hard to win back. The stark reality is that you are going to lose customers; the key question to identify is how you are losing them. The U.S. government study on “Why Customers Stop Buying” showed us that 68% of those customers who stop buying from you do so because they feel your employees don’t care about them.
Repeat customers are the veins of gold in your business goldmine. As long as the gold vein holds, business is good. When the gold vein you depend on peters out, you find yourself working harder, for less and less, until you find your next vein of gold to mine.
Unfortunately, all gold mines eventually run out of gold to mine, even those who were lucky enough to find the “mother lode.” No “mother lode” is endless. This is why gold mining companies spend so much money looking for their next pocket of gold to mine. The same is true in business. It is a never-ending challenge to keep the pipeline of customers full.
Retaining your customers is vital to making more money because finding new customers is the hardest thing to do in business. Consider how easy the functions of HR and Finance are compared to Sales. HR focuses on attracting, engaging, and retaining the employees you need to do the work. The most challenging task in Finance is pulling the numbers together to perform financial reporting and analysis.
Fail to persuade a sufficient number of people to buy from you and continue to buy from you. You won’t need people in HR to help you with your employee management, nor will you need Financial and Accounting professionals to work with your money because you won’t have the cash flow from sales to keep your business open.
You protect your business by protecting your customer base. You do this by making sure everyone in your company knows “who” the customer is, and “what” your company does to serve their needs and satisfy their wants.
