Hold On Tight: The Importance Of Client Retention In 2020 (And Beyond)
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I think we’ve all probably seen the statistic that it’s approximately five times harder and more expensive for a company to acquire a new client, compared to retaining an existing one. I suspect that this multiple will have increased significantly in the last nine months as a result of COVID-19 since fresh commercial opportunities have become so scarce in so many industries and new business pipelines have been drying up.
As such, the value of client retention is even more important this year and companies that have managed this well will be in far better shape than those that have not. In essence, the whys and wherefores haven’t really changed compared to "good" years, it’s just that the stakes are so much greater in 2020 and have the potential to make an even bigger impact.
Empathy is certainly more important in 2020 than ever before, and comes, essentially, from knowing your client, having a relationship and understanding what makes them tick, so that you are aware of their pain points and how they are faring. The simple approach of checking in on an informal and unscripted basis for a catch up and general chat (an old school un-diarized phone call works best!) both serves to inform and shows that you are indeed concerned– and it is such a simple and effective means of building a relationship with your client.
The information you glean from these interactions is invaluable for you to plan how to manage your client and whether you need to take action on potentially awkward situations, like invoicing, if they do indeed report that they’re in distress. But let’s also be clear: Client retention is not about discounting, swallowing debts or cancelling billing– that simply transfers the problem to you and will almost certainly lead to a deterioration of the relationship when you end up resenting them as a result.
However, if your regular check-ins do inform you that they are struggling with their business in the current environment, being able to look at ways to restructure payments or alter your contracts in a way that works for you both is undoubtedly positive. Whilst you don’t want to take on their problems, nor do you want to add to them. This requires creative thinking and, being forewarned of the issue, enables you to plan from a positive and proactive position. It is obviously a much more favorable account management approach, than having to react once the proverbial has hit the fan and you’re trying to both chase debts and hold on to whatever you can in terms of the relationship.
Your regular client communications should also help you to identify innovative new strategies around product development that will both help you keep your current clients and provide for new BD angles to the market. The impact of COVID-19 has been so seismic for so many of us, that simply plugging away with what’s always worked before is, in many cases, proving to be a lengthy approach to commercial suicide.
This isn’t innovation for the sake of it, but rather, based on first-hand feedback from companies whom you know and trust - the best possible business intelligence that you will ever get. This is your client telling you what you can do to keep and grow their business and, if it works for them, the chances are it will work for others too. It’s commercial gold dust.
Just as the likes of Uber and Airbnb were forged in the depths of the Global Financial Crisis in 2008-9, I honestly think that we’ll see a similar crop of global leaders emerge in the next few years whose genesis came through this crisis and was most likely accelerated by adapting their business model and offer as a result of the fast moving market changes to which they adapted. Even if you don’t have unicorn pretensions, there’s a lesson to be learned here!
At the time of writing, we do appear to be seeing a light at the end COVID-19 tunnel, but the lessons we have learned about staying close to our clients, listening and adapting to their concerns and innovating based on feedback are –or at least should be– maxims that we would apply to our businesses even once we return to "normal" times. Remember those?