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Your Customer Retention Rate Is Your Future Growth

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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.
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Simple Steps to Big Results

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In our Industry, what is it that we DO?  What is the action that is involved in creating employee and customer satisfaction?  There are simple steps we can take to gain big results.

Employee satisfaction requires knowing what to do – if an employee can measure their own job performance, there is a sense of a job well done.  It may seem obvious, but it is worth mentioning: we all have to know what our job entails.  We need to know what it is that we DO!

This spills over into creating customer satisfaction, because the simple steps each of our heroes will take every day will be what sets us apart to our customers.  We become their partners in business, instead of a vendor or supplier.

There are simple steps to take, to gain those big results.

The time is now.

Your Stakeholders – Back to Basics

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This is our second installment in our Back to Basics theme, covering the topic of your stakeholders.  Last week, we began with the Balanced Scorecard and the customers.

The next piece of Back to Basics is the value that we deliver to the stakeholders.

When we talk about your stakeholders, who de we mean?

Simply put, your stakeholders means the employees, the company leadership, the owners, the shareholders, and the suppliers of your business.  Since you have all learned that I like to begin with definitions in order to have clarity in each topic, your stakeholders are the individuals and groups who invest in your business with their time, their money, their ideas, and their resources.  The customers benefit from the commitment of your stakeholders, and your stakeholders benefit from the growth and development of your company and your customer loyalty.

Here we go back to metrics and standards of performance, also known as Key Performance Indicators.  These Key Performance Indicators are Revenue, Profitability, Expense Control, Asset Management and how the department and business performs.

One of these metrics is Return on Assets (ROA). That leads us to next step in the Back to Basics – investments. The owners of the business have to continue to reinvest in the Company if they want growth. The effectiveness of the business to steward the company assets will allow the owners to determine the level of risk they want to take on relative to the future growth opportunities. If the management does not deliver performance then owners will not have much interest in reinvestment.

So how does this tie in to everything we do here at LWS?

Employee Development is a straightforward investment into the business, its stakeholders, and its vision for the future.  Employee Development correlates to employee satisfaction, which has a demonstrated impact on customer satisfaction.  Satisfied employees = satisfied customers.

As you can see, getting Back to the Basics comprises many aspects of your business.  But you will find that the results are well worth the work.

The time is now.