Before investing manpower, technology and money on customer retention strategies, you might want to make certain you have a retention problem.
100% Retention is a stretch goal. The chances of your business – or any business for that matter – retaining 100% of their clients from year-to-year is low. Really low. Highly improbable.
Why? People die. Companies go out of business. Needs change. (And with those first two, there isn’t a whole lot you can do with a retention strategy to win that business back!)
So, if you’re searching for a plan to retain 100% of your customers, stop.
You can’t retain what you never really had. What is a customer? Someone that bought from you? Or someone that considers you to be the primary and/or exclusive source for the products and services you offer?
Let me give you a good example. I buy computer equipment for my company and I always buy from your competitor. Today, I have an emergency and my competitor is out-of-stock on the equipment I need ASAP. I call you and you can get it to me tomorrow morning so I order it.
And I never call you again because my primary source almost always has what I need, when I need it.
Am I a customer that you failed to retain? (Hint: No. I am a customer you failed to move past first-time buyer to repeat buyer and, eventually, to loyal customer.)
So what are you supposed to do? You need to understand who left and why – and determine if that customer could be brought back into your company or if the reason they left is something that’s beyond your control.
Like death. Or bankruptcy.
Then you need to determine what it would cost to bring them back and if that cost is worth the return.
For example, a company used to buy wooden pallets from you in order to stack and ship their products to their wholesale and retail customers. However, their largest clients informed are now requiring plastic/recycled pallets – a product you don’t offer and that would cost millions in plant space, equipment, materials, and employee training for you to offer.
You decide not to make the investment until you can build up greater demand for plastic/recycled pallets. That’s a customer that you can’t retain – but perhaps later, if you move to plastic/recycled pallets, you could win-back.
But for now, why spend money on a retention campaign when you can’t offer what they need?
The reason I wanted to share these thoughts with you is that I am seeing a lot of companies automatically add a retention strategy into their marketing and sales plans – and investing some serious money, technology and manpower. But they aren’t sure what the potential is with the former customers because they really don’t know why they left. Sure, you know what they used to spend and why but you really don’t know if you can still solve their needs.
So, before putting together that retention strategy, I strongly recommend a little research that will help you identify what your potential is – so you can then focus your resources on goals that are realistic and attainable.