How to Increase Customer Retention, Lifetime Value and Reduce Your Cost Per Sale

If delivering exemplary customer service is a cornerstone to building your business, revenue, referrals and client retention, then why do most companies invest more time on customer acquisition instead of retention, fail at meeting customer expectations and ultimately lose business to competitors? Here’s your strategy to avoid time-consuming customer service issues and selling stress, while boosting sales, customer retention, satisfaction and loyalty.

It started out like any other day until you received that text, email and phone call from one of your top customers. In an instant, your day went sideways and blew up in your face. Needless to say, this customer wasn’t calling to give stellar accolades. They were mad, hostile and were ready to fire you and work with one of your competitors. Customers often recall the negative experiences over the positive ones. Even if you get it right 99% of the time, that one mistake could be enough for a customer to leave.

Hours later, promises made, and discounts offered, you were able to convince the customer to give you just one more chance before you lose them forever.

So, the eternal question is, “Are difficult customers and service issues inevitable or avoidable?”

Client Retention IS Your Growth Strategy

Unfortunately, today’s marketplace still hasn’t caught on to the fact that you can avoid problematic customers. Invesp reported that 44% of companies have a greater focus on customer acquisition, where only 18% focus primarily on retention. This is one of the main causes of this conundrum.

The Hüify agency found that the likelihood of converting an existing customer into a repeat customer is 60 to 70%, while the probability of selling to a new prospect is 5 to 20%. That same study showed that increasing customer retention by 5% could lead to an increase in profits by 25 to 95%.

This study also reported that it’s slower and costs five – seven times more to acquire a new customer, than to retain an existing one. Think about your hiring and onboarding process. It’s always more efficient and cost-effective to retain good talent and turn around an underperformer.

If you consider the lifetime value of each customer, Client Heartbeat reports that loyal customers are worth up to 10 times as much as their first purchase.

A Proven Retention Strategy to Boost Profitability and Exceed Customer Expectations

Here’s your retention strategy to improve relationships and set or re-set expectations with your customers. If you’ve never had this conversation with your current customers, it’s not too late! Otherwise, your costly assumptions will create the situations you want to avoid. This retention conversation will boost sales, customer satisfaction and loyalty, and insulate your customers from your competition.

First – Set Intentions to Ensure Alignment

“Hi Mr./ Mrs. Client. Thanks for taking the time to discuss the best way to work together. What I want for you is to ensure we’re delivering the level of service and the value you expect. We respect that every customer has different priorities and expectations around customer service. In addition, while we do our best to mitigate problems, we find that most problems are a result of communication breakdowns and not having a clear strategy around how to work together. That’s why I wanted to take a few minutes to discuss what we can do to continue meeting your expectations. Is it okay to ask you a few questions to ensure we develop and maintain a great relationship?”

1. Benchmark Current Performance

  1. Why did you decide to hire us?
  2. What are we currently doing well when it comes to delivering value and providing exceptional service?
  3. What’s your expectation or definition of exemplary, 5-Star customer service?
  4. If you were to rate our customer service with one being unsatisfactory and ten being exceptional, how would you score us? What do we need to do to score a ten with you?
  5. What stands out most regarding the quality of our service and deliverables?
  6. What data/key performance indicators or metrics do you use to assess the impact of our deliverable and customer service, and if your expectations were met? How do you collect this data?


2. Meeting Client Expectations

  1. How would you define a successful vendor partnership and engagement?
  2. What can we do to maintain our positive relationship? What role can you play in ensuring this?
  3. What would end our relationship?
  4. Can you share a positive experience with another vendor so that we can deliver on your expectations?
  5. Would you be willing to complete a customer survey at least once a quarter to ensure we’re meeting your expectations and uncovering what we need to improve?


3. The Customer Engagement Strategy

  1. When you need something or have a question, what’s your expectation around our response time to your requests (email, phone, text, and so on)?
  2. Can we take a moment to discuss our typical timeline/turnaround time around (customer service requests, delivery time, project completion dates, expectations around the installation/transition/system migration process, response time to questions, issues, and so on) to ensure they’re aligned with what you can expect?
  3. How often you would like us to contact you to ensure you’re getting the service, information and results you expect?
  4. Given our organization’s structure, we have people who initially work with every prospect and customer, then it’s our account manager who would be your point of contact to support you and answer your questions. And like every company, people leave or change roles. What is your preference regarding how you want to be introduced to your main point of contact and make this transition if/when there’s a change in who you would be working with?


4.  Strategies to Handle and Avoid Problems

  1. Can you describe a bad experience with a prior partner/vendor?
  2. If a problem arises, how would you want to work together and resolve it so it doesn’t happen again?
  3. If I’m not able to reach you to discuss something urgent, how else can I get in touch with you?
  4. Other than you, who else would you want us to contact in case of a timely need or challenge, whether it’s something you need from us or we need from you that if we don’t resolve, could delay the project and/or delivery time. What’s the best way to contact them?


5. Communication Strategy

  1. How much involvement and visibility do you want regarding the work flow and stages we’re at with your project/engagement?
  2. How often do you want to be updated? What specific data points? Format?
  3. How would you like us to share these updates? (Call, text, email, phone, social media)


6. Understanding the Company’s Business Cycle, Policies and Compliance Regulations

  1. Let me share how we bill and the expectations around payment. Can you share your typical payment process/guidelines so we align them with our billing process?
  2. There may be times when you experience fluctuations in your business. Do you have a busy season or experience downtime so we understand how you allocate your resources, how this would impact the way we work together and what to expect regarding response times from you?
  3. To ensure we stay in compliance, what business or regulatory compliance regulations, laws or policies do we need to be aware of as it relates to your industry and business?


7. Creating Future Selling Opportunities

  1. As one of the (decision makers, influencers, advocates, end users), what can we do to ensure we make you look great?
  2. Is it okay to reach out to you from time to time regarding product or service updates or new services that you could benefit from?
  3. As long as we continue to provide the value and results you expect, how open would you be around making introductions or referrals to other departments or people you know who can benefit from the value we deliver?

Then, conclude the conversation with, “What questions or concerns do you have, if any, around working together? Thanks Mr./Mrs. Client. I appreciate your time. This will improve and maintain our positive relationship and ensure we continually meet your expectations, while mitigating challenges that could arise. I’ll send you an email recapping what we discussed to ensure we’re aligned.”


8. Finalizing Your Retention Strategy

Document the conversation and send an email recapping what was discussed and agreed upon. Then, ensure you get a response to confirm alignment and avoid miscommunications.

Think about the additional revenue and countless, stressful hours solving problems you just saved by proactively managing client expectations. After all, if you’re not taking care of your customer, someone else will. When salespeople start transforming into better coaches for their customers, and sell with questions rather than answers, better opportunities, results and retention will follow.