Why Client Retention is Vital to Your Success



The 2022 housing market has had its share of ups and downs … but mostly downs. Home sales have plummeted, interest rates are sky-high, and both homebuyers and sellers have taken to the sidelines. With sales volumes down, what can you do to ensure your business weathers the storm?

In times like these, retaining your current customers is vital to your long-term success. Instead of working to attract new leads, shifting your focus to client retention will help you generate referrals and repeat business opportunities, both now and in the future.


 

Your customers aren’t just valuable when they’re an active prospect. In fact, previous clients increase in value over time because they have the potential to buy from you — and refer you — again and again. One of the worst things you can do when you complete a sale is let the client fade away into forgotten territory. You have a 60% to 70% chance of successfully making a repeat sale, compared to a mere 5% to 20% chance of selling to a new customer.[1]


From a cost perspective, acquiring a new customer costs anywhere from five to 25 times more than retaining an existing one [2], and when business is slow, you need to be strategic about every marketing dollar you spend. That’s why customer retention is a worthwhile investment. Ramping up your customer retention activities by 5% can boost your profits by 25%, making it critical to your bottom line. [2]


 

So how do you nurture relationships with the customers you already have? These basic strategies have been proven time and again.


Get to know them personally.

Getting to know clients on a personal level builds a deeper sense of trust. Make room for small talk in your business conversations. Ask about their family life, career, and hobbies to find areas where you can make a mutual connection. And don’t be afraid to share facts about yourself or what’s happening in your life. Ideally, this should be a part of your strategy before you close the sale, since that’s when you’ll have the most opportunities for verbal or face-to-face dialogue. But if you’re beyond that point, reach out to see how your clients are doing, share what’s new with you, and let them know you’re available when they need you.

Say thank you after the sale.

Sending a hand-written thank-you card and even a small gift is a great way to show your appreciation while delivering a personal touch. But don’t stop there. Providing an opportunity for clients to share their feedback will help them feel heard and valued. After each transaction, send a thank-you email that includes a customer satisfaction survey to understand what went well and where you could improve. If there was an aspect of the customer experience that they disliked, use that opportunity to reach out and apologize or address their concerns further. It’s easy to celebrate the things that went well, but being vulnerable enough to address the things that went wrong will demonstrate authenticity and cultivate stronger customer loyalty.


Stay top of mind.

Consistent communication never goes out of style, and for good reason. Have you ever heard of the recency effect? The recency effect is a psychological phenomenon in which a person tends to remember the most recently presented information better than older information. Staying in front of your customers regularly can ensure your brand is the one they recall when they’re in need of your services. Over time, this repetition turns into brand recognition and brand loyalty.


Your communications strategy should include a mix of outreach types. Email newsletters, social media, mid-year check-in calls, and direct mail provide a healthy balance of touchpoints. For example, your outreach plan might look something like this:


  • Monthly email newsletter that includes market updates and home or lifestyle tips

  • Daily or weekly social media posts that share a behind-the-scenes look at your business activities

  • Annual phone call to touch base and see if the client’s needs have changed

  • Holiday and birthday cards and other direct mail ads (depending on budget)


Be their go-to resource.

It goes without saying that you want customers to come to you when they have questions related to your products and services. But if you can provide value beyond the scope of your expertise, customers will perceive it as an exclusive perk. For example, let them know that as your client, they have “inside access” to your network of professional contacts, and they can leverage you to facilitate connections with other service providers. When you go above and beyond for your customers, especially when they’re not in a position to buy from you, they’ll notice it … and they’ll remember it.


 

When you nurture the relationships you already have, you’re sowing the seeds for future growth. Investing in your existing client base will make it more valuable over time and help you generate the referrals and repeat customers your business needs.


Sources:
[1] Farris, Paul, et al, “Marketing Metrics: The Definitive Guide to Measuring Marketing Performance,” 2010, Pearson FT Press.
[2] Harvard Business Review, “The Value of Keeping the Right Customers,” 2014.