The barnacle is not considered a favorite creature of mankind. It fastens itself to the hulls of ships and slows their progress. But in business, barnacles…clients who stick with you through thick and thin…demonstrate loyalty… a dandy thing to have. Think of it this way. If your company routinely loses twenty percent of its client base annually, you are losing all your clients every five years. All the investment poured into client acquisition is squandered. Marvel at what would happen to a business’s bottom line if it were to reduce retention by one-half annually. The results would be staggering.
Client retention is certainly not a new concept; thus the wisdom of corporate leaders can never cease to amaze. Why does it take a slowing economy for now three-fourths of the nations fastest growing companies to initiate what they believe are important new and bold programs aimed not only at client expansion but…holding onto that barnacle…client retention? What appears to be occurring in both large companies and smaller enterprises alike is a wake up call that, compared to programs geared to attract new clients, a focus on retention initiatives…including loyalty programs…may be more efficient and effective for developing incremental sales. Because companies treat retention as such a novel idea, many companies, regardless of size, are challenged to:
- Document and measure how satisfied their clients are with product/service quality.
- Implement client recommendations that would add substantially to retention.
Common sense suggests that having the discipline to gathering and analyzing information about respective clients enables a business to identify opportunities to improve products and services, meet emerging needs and develop customer loyalty…which in turn helps bolster retention…learning to appreciate the barnacle.
Conversely, the inability to document coupled with the lackluster means at implementing client recommendations, generally leads these same companies full circle back to offering inducements to again attract one-time clients through sales coupons, discounts or other special offers. One-two time purchasing clients this sensitive to price will move on to another business as soon as the offer fades. These clients are like butterflies and are the least profitable client for any business…large or small. Seems to again make the case to focus on the barnacles.
For those companies, regardless of size, who emerge from off-site retreats to announce a major initiative designed to enhance client retention…one can simply smile and say, “This too shall pass”. The point they so often miss is this. To get clients to attach themselves to your hull requires making loyalty a key organizational mission statement that is measured. Anything less than this…well, just wait for your discount coupons in the mail.
Have a great upcoming week. Be safe. If I can be of any assistance, please call me at 541-926-9000, Extension 316.