Author: Dave Walmsley, MD, Palletways UK
When I decided to write my first blog, I thought what better way to start than exploring the value and importance of ensuring a strong growth strategy in a business.
I have always broken it down into 3 key elements.
• Retention (of your clients)
• Penetration (or ensuring a full share of wallet)
• New business development
For any company to secure long term sustainable growth, in my humble opinion it is important that they are fully focused on all 3 aspects of this growth strategy. In the coming weeks I plan to share my thoughts on all 3 subjects and hope they might add some value to you.
The importance of a customer retention strategy
Do your existing customers matter to your future growth?
Over the past few weeks I have been doing a bit of reading and the stats I am seeing are speaking for themselves. Whatever industry you belong to, one of the big mistakes made by many companies is to forget about the customers they have while they attempt to grow through new customer acquisition. Or worse still, rest on their laurels while business is good without focusing on ways to increase levels of customer satisfaction and as a result retention.
It’s true that a lot of companies don’t place the same value on their existing customers as much as they do on obtaining new ones. This is a dangerous view to take. You should never make the mistake of underestimating the value of retention. It is time to focus your marketing on relationship building, customer service and best in class communications, to ensure a well-defined retention strategy.
For those who feel that customer retention plays a minimal role in helping a company grow, there are a few stats that entrepreneurial expert Alex Lawrence pointed out that they should pay attention to! ‘A 5% increase in customer retention can increase a company’s profitability by up to 75% (Bain and Co.) If those numbers don’t make you think more about retention, then think about the fact that that up to 80% of your company’s future revenue will come from just 20% of your existing customers (Gartner stats)’. Look at your own situation and I can almost guarantee you will see similarities in your business. Still not convinced on why customer retention so important? I will be focusing on this question in my next article, so watch out and we can delve into this in more detail.