Fixing the leaky bucket
Last week I had to renew my car insurance so I phoned my current provider (after checking out the best deals) and they showed little interest in trying to keep me as a customer. They didn’t even attempt to match any other quotes that I received so I said goodbye and moved to a new suppler.
It has always amazed me that utilities companies such as car insurance make little effort to retain their clients and instead, focus all their marketing money on winning new clients. This is not a good business model for any agency or service based business. Yet what efforts do we make for keeping our clients? Of course we want to continually do a great job for them and we know that if we do, we will give ourselves a good chance of retaining them but what else should we be doing?
So let me ask you a question – “How often do you stop, take stock of your top clients and take a high level strategic view of them to work out any risks and opportunities for growth?” If you are like a lot of my clients, the answer is probably ‘not often enough”!
Client retention v client acquisition
Yet it costs 5 times as much to win a new client as it does to keep an existing one. I think we have all read a stat like this somewhere, so why don’t we focus more on developing existing clients?
There are a number of reasons that I hear:
- We don’t have the time; we are too busy delivering work
- The account team doesn’t have the skills or confidence to upsell into existing clients
- We don’t know how to identify new opportunities in existing clients
Here is another interesting and thought provoking stat: If you can increase your client retention by 5% you can increase your profits by 25-95%! Surely that is worth investing the time to train your accounts team to do some Account Development Planning?
I know when I ran my agency, CIT, we didn’t have this in place and just believed we could keep our clients by going the extra mile (there is SO much wrong with that statement!) but every now and again we would feel really cheated because we had worked extra hard (read that as over serviced) for a client and suddenly we had the rug pulled from our feet and they went else where. Could we have prevented this? Maybe, if we had done some proper strategic Account Development Planning.
To successfully do some Account Planning, we need a formalised structure for reviewing existing accounts, identifying threats and opportunities, and creating an action plan to go after those opportunities (or mitigate the threats). I appreciate many agencies don’t have this structure in place or don’t even know where to start so it’s one of the topics I cover in my new Client & Account Management Mastery Course. its a big topic so it gets a whole section to itself.
So back to my car insurance – it’s just going to take one of them to buck the trend and ‘swim in the other direction’ and put their focus on customer retention rather than (or as well as) customer acquisition to make them really stand out from the crowd – and no doubt customers will flock to them! As an agency, we need to ensure we are also doing the same.
Until next week, enjoy the rest of your week.