Your Customer Retention Rate Is Your Future Growth

Your Customer Retention Rate Is Your Future Growth 

Guest writer Debbie Frakes tackles the all-important topic of customer retention in her blog post this week, “Your Customer Retention Rate Is Your Future Growth.” We are often encouraged to attract new customers and can overlook the value of keeping customers for life. At Learning Without Scars, we can’t emphasize this enough. It’s so important to us, we have an entire class on the subject!

Finding new customers is great for business—they help you boost your sales and generate more revenue. However, retaining existing customers is even more important. Machinery dealers know that it is far more expensive to locate new customers than it is to keep the ones they already have. Although we all understand the concept, not all dealers actually use programs designed specifically to keep and develop their customers. 

In this post we’re going to cover the six key retention drivers for growing your business: 

  1. Retain Customers with a Satisfaction Program for continuous improvement 
  2. Customer Internal Referrals more than double transactions each year 
  3. Lead Flow with the right customers in the markets and industries you support 
  4. Convert prospects predictably by selling what they purchase most often and saying “Yes” 
  5. Engage your customers with consistent contact 
  6. Measure and Forecast results

What is a customer retention rate? 

Customer retention refers to the rate at which customers stay with your company for a specific period. The average customer retention of an equipment dealer business is 95.5% per month. Although that may sound very high, what that number actually means is that you are losing 4.5% of your customers each month. Over the entire year, you lose 54% of your customers! 

On average, equipment dealers lose 51% of their customers each year. Only 29% of customers are retained for 3 or more years. Even though it looks like you are retaining most of your customers each month, you’re actually losing more than half of them throughout the entire year. And that pattern just makes business more difficult long term. 

On the other hand, an improvement in your customer retention rate of just 1% each month represents a 12% increase in annual growth. The question is, how can you make that improvement? 

How to boost your customer retention rate: a customer satisfaction survey

One of the best ways to improve your customer retention rate is to conduct customer satisfaction surveys. When they are conducted by a third party, these surveys allow you to learn about your customers and determine any issues before they turn into big problems. It’s important to have them completed by a third party, because customers tend to be more honest about a company if they’re not talking to someone from the company.

A customer satisfaction survey will help you understand your customers’ perspectives, why unhappy ones are unhappy, and how to serve them better. Plus, you’ll impress them by showing how proactive you are. 

Using Winsby’s customer satisfaction survey program, our clients have seen 20% higher retention, 49% more customers, and 123% greater revenue growth over 5 years compared to those who are not using the program. 

Customer internal referrals 

Focusing on customer referrals means making sure your customers are buying everything from you—parts, service, rentals and equipment. Equipment dealers have multiple departments that are almost like different businesses. The good part about that, though, is that a customer can come in for a part, and then they become a potential customer for the service or equipment. The more they purchase from you, the better your customer retention rate will be. 

How can you increase internal referrals? 

  • Understand customers’ expectations— turnaround time for parts and equipment deliveries and service protocols. 
  • Then, you can meet expectations, or manage them if meeting them isn’t possible. 
  • Always call the customer with updates before they contact you.

Ensure you have a consistent lead flow 

Another critical piece of improving your customer retention rate is properly managing your lead flow. Your sales reps need to identify customers at risk consistently, then contact and engage them. At risk customers are current customers that you’re in danger of losing. These are people who start purchasing less and less from you, and eventually they could go to one of your competitors. Customers that are at risk typically haven’t purchased from you in over eight weeks. By reaching out to them, you can encourage them to come back to you to fulfill their needs. 

Engage your customers and convert prospects

You should also be regularly sending out emails to your customers and prospects. In our experience, customers on an email list buy two to three times more often than those who are not receiving marketing emails. By putting your brand, products, and services in front of customers, you’ll stay top of mind and your retention rate will increase. 

First, call customers and prospects to confirm decision makers’ emails to expand your list and keep it current. Then, send emails at least twice a month and show all your capabilities: parts, service, rentals, new and used equipment. It’s also important to identify your website visitors. Distribute leads who engage with your emails or website to your sales reps automatically to reach out to and determine what they need. 

Plus, when you engage with customers, always answer your phone and always say “YES!”. 

Measure and forecast 

It’s important to look at your past to predict your future. When it comes to improving your customer retention rate and achieving consistent growth, you have to have an idea of where you’re at and where you’re headed. At Winsby, we forecast the growth of Active Accounts for the next 12 months, based on patterns during the past 36+ months, by branch and by department. You’ll learn:

  • Expected losses and gains of Customers
  • Expected number of transactions
  • Expected revenue

You can then use the forecast to develop a plan of the action to take to improve your customer retention rate.

Conclusion 

Retaining your existing customers is just as important (if not more important) than gaining new ones. Use all the tools at your disposal: customer satisfaction surveys, internal referrals, email marketing, consistent lead follow up, and always trying to say “yes” to your customers. 

If you want to increase your customer retention rate and take advantage of all your possible tools, then contact Winsby today! We’ll help you implement a plan quickly. Contact Winsby Today.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Why Customer Satisfaction Surveys Are Important For Equipment Dealers

Why Customer Satisfaction Surveys Are Important for Equipment Dealers

Our new guest writer, Debbie Frakes, is the Managing Director at Winsby Inc. where she has been helping Business to Business (B2B) companies grow for over fifteen years. What works is constantly evolving, but Winsby is always testing new concepts to determine the most efficient and most cost-effective ways of generating business. Today she shares why customer surveys are important for equipment dealers.

The best way to improve your heavy equipment dealership is to understand what you are currently doing well, what is satisfactory but could use improvement, and what areas need to change in order to retain more customers. The easiest way to gain this information is through customer satisfaction surveys obtained by phone. A phone call assures that they are being thoughtful in their responses, rather than clicking through an email survey without reading the questions carefully. Plus, you receive excellent feedback about what went wrong and what went right in recent transactions. It’s important, too, to ask specific questions relevant to the type of purchase that was made—parts, service, new or used equipment, and rentals. You will have insights on how customers perceive your business and where you need to improve.

How phone surveys improve your service for heavy equipment

  • Increase your customer retention by 30% – 40%
  • Identify any problems quickly
  • Show your customers that you want to know what they think

If you’re wondering whether your dealership should conduct customer satisfaction surveys, take a look at the numbers. For dealers that conduct surveys regularly, compared to those who don’t, customer retention rates are about 30% to 40% higher. The reason is simple: those dealers receiving feedback on a regular basis can improve every part of their business, from heavy equipment service to sales to rentals to parts, because they discover what is wrong with their business, and they can react quickly.

With phone surveys your company can solve problem areas and issues before your customers take their business elsewhere, because they quickly become aware of the problems. If customers have issues with your services or process consistently, most of them will just leave without saying anything. When called for feedback on the most recent transaction, customers invariably are generous with compliments, which employees appreciate, and give honest reactions to any subpar performances, with details.

Why are phone surveys more reliable?

The feedback in customer satisfaction surveys should be obtained by phone, because customers typically provide more reliable answers, compared to email surveys. At Winsby, our team will usually reach a customer over the phone on every third call. And then once we are talking to them, about 97% agree to take the phone survey. This rate is much better than responses for email surveys, for which a good response rate is 2% of recipients. The other benefit of phone surveys is that they are interactive; your customers can fully explain any issues and the caller can ask follow up questions. For email surveys, we really aren’t sure whether they even read the questions!

It is more effective to use a third party to handle the surveys rather than someone from your dealership. The reason is that most customers are more honest with an outside person and will be more comfortable explaining problems to them instead of an in-house employee or someone they have worked with before.

How phone surveys work

The first step in developing a survey for an equipment dealer’s customers is to develop an effective calling script. Ask relevant questions covering what your customers care about and what is most important in your business. Key areas for dealers are typically heavy equipment service capabilities and availability, parts turnaround time, rental equipment availability, and new machine inventory.

Once you have your script, it’s important to speak with about 10% of the customers who were invoiced during the prior month. Record all the responses and follow up on any negative responses or negative scores immediately. Any departments or employees that are complimented need to hear the positive feedback. And any departments or employees that are named in negative comments should be told details as soon as possible. It is always better to contact the customer and apologize. Ask what you can do to make it right. Invariably, those customers are grateful that you cared enough to contact them and correct what the problems were, and they become extremely loyal customers. Had you not known about the problem, though, you would have probably lost them as customers.

How does your dealership benefit?

Customer satisfaction phone surveys make it possible to improve every aspect of your business, from heavy equipment service to parts to rentals to sales. These surveys help you understand what your customers think about you and your processes. The information you gain will allow you to fix problems fast and prevent any negative word of mouth or posting of online reviews.

Winsby compiles the 1 – 5 star scores and publishes one overall rating online, along with the individual scores and comments, providing feedback from actual, verified customers. Many of the online review forums, like Google, allow fake reviews to be posted from people who are not even your customers, and they make it difficult to have them removed. The compiled scores that Winsby sees for the equipment dealers are invariably over 4 stars. The reason is simple: anyone who is surveying their customers regularly cares deeply about how their customers are treated . . . and any problems are corrected quickly at the dealership. The result is retention of your customers increases by 30% to 40%.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

 

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