There’s a general formula for success in B2B markets. In the first year, you expend resources – marketing, sales, management time, etc. – in an attempt to acquire new customers. Sometimes you win a deal, sometimes you lose. From the moment you begin selling, and before you even make the sale, a relationship begins. And in an ideal world, that relationship blossoms into a long-lasting, mutually beneficial and profitable relationship.
What makes it long-lasting, is clearly, client retention. The main benefit of clients staying with you is the continued revenue, but there are many other benefits reaped from retention. Your sales expenses go down, you know who the buyers are and they trust you. They act as referrals, lowering your cost of the next sale, and all the while, your cost of sales continues to drop. Sounds pretty great. The big question is, what can you do to dedicate more time to retention? Based on our research, here are four major things to focus on:
Know the Market
Step one, there are only three ways to get money: acquire, cross-sell and retain; however, sales teams shouldn’t necessarily execute in that order. The determining factor is market maturity. In a brand new market, customers are plentiful, sales is essentially a land grab and companies experience rapid early growth. This is the time to dedicate the majority of your resources on 'AXR': customer acquisition first, then cross-selling and retention as secondary goals.
On the flip side, for 99% of companies in the developed world, that early period of unrestrained, non-competitive growth is long gone. Mature markets are characterized by intense competition, where selling is more like 'hand-to-hand combat' and acquiring a new customer requires taking them from someone else. This is the time to flip the model and focus on 'RXA': customer retention first, then cross-selling and lastly acquisition.
Our research has found that sales leaders in mature industries disproportionally incent their teams to acquire new clients rather than cross-sell or retain existing ones. As a result, existing clients leave, and sales teams attempt to fill the bathtub with the drain open. By knowing the market and reversing their thinking to put retention first, sales teams can leverage existing client familiarity and incumbent status to drive profitable growth at a lower cost.
Listen for the 'F-Word'
With an RXA mindset established, sales teams should engage in active listening—especially for the word, 'fine.' "Fine" is the 'f-word' in business, signaling a lost deal waiting to happen. In a 'fine' relationship, there’s nothing particularly wrong, but nothing particularly right either. That customer who’s feeling 'fine' is not vested or motivated to maintain, let alone expand, their relationship with you. “Fine” often translates to "we’re evaluating other options,” implying that your customers are sticking with you for convenience, familiarity or lack of other options.
'Fine' relationships are also transactional ones, in which customers could be just as fine with one of your competitors as they are with you. Even more frightening, we’ve found “fine” and “satisfied” (or even “very satisfied”) customers to be one in the same. One of our B2B insurance found that 73% of their lost clients were “satisfied” or “very satisfied.” Simply stated, it is not enough to satisfy clients – you must make them loyal. Loyal clients are likely to say much more than the relationship is simply “fine.” They seek your advice, give you benefit of the doubt, put you in touch with colleagues, and share information to help you.
Measure the Value of Relationships
Just as famous psychologists past proved that they could measure the motivation of an employee to remain loyal to an organisation, there are now ways to measure the motivation of a buyer to be loyal to a seller. Yet even today, sales teams rely on a 'gut check' rather than quantitative data to 'measure' the value of their client relationships—and often, they’re wrong. We’ve found sales account managers tend to overestimate the quality of poor client relationships and underestimate the good ones.
To understand the true value of client relationships, sales teams should ask how clients feel about them. One tool for measuring client satisfaction is the Net Promoter Score (NPS). NPS asks one simple question: “How likely is it that you would recommend [brand] to a friend or colleague?” and delivers a single score, making it easy to measure, report and target. While NPS can offer companies a quick and easy way to get a temperature check on an individual customer’s loyalty, NPS and related metrics don’t paint the full picture. It is imperative to utilise metrics that delve deeper into customer feedback to improve business relationships and increase client retention—a sort of “NPS+” if you will.
Invest in Sales Training
Creating sales teams that are better listeners and better equipped to measure the value of client relationships takes training. Sales training is the lynchpin of client relationship building, helping sales teams turn rejection into success; but, greatness doesn’t happen overnight. A successful sales training program takes research, time and fine-tuning, and we’ve found the following resources helpful in building our own micro learning and virtual coaching programs:
- Get Creative: This article from Criteria For Success has some really awesome ideas to switch things up in your next training session. A lot of these tactics give your sales team to show off their skills while also teaching them to adapt to a new situation.
- Train Effectively: Andrew Fayad, CEO or ELearning Mind, presents 5 suggestions of how to effectively train your sales team. These tips help engage and motivate your employees.
- Become A Closing Expert: Entrepreneur guru, Barb Hauge, has some useful tips to practice your closing strategies. She has some really fun and useful ideas on how you can be in the 30% who close effectively.
- Train For the Future: Integrity solutions produced a really interesting article about what you can incorporate in your sales training to be prepared for how sales is changing. This will help your sales be ahead of the game and ready for what’s next.
Putting more effort into client retention is something that all sales teams in every industry can do right now. The extra dedication is something that will pay off in spades, and most importantly, result in happy customers and long-term relationships.
Have a question about client retention or a favorite retention success story? Share with us @salesEQUITY.
By Tom Cates is founder, CEO and Chief Storyteller of salesEQUITY, the first B2B platform that uses a proven quantitative methodology to measure and assess client relationships. Tom has over 15 years of experience leading consulting engagements focused on the customer-facing elements of sales, marketing and customer service functions in a wide variety of industries. Follow him on Twitter.