by Kate Neri | Jan 17, 2023
In our last post, Jason talked about returning to fundamentals and the importance of efficient growth in the uncertainty of 2023. Client retention, specifically, should be one of our biggest focuses as we think about the current state of the economy and how businesses are approaching this year.
With the lower-than-expected pipeline performance and uncertainty around sales velocity and what client acquisition will look like this year, our best efforts should be focused on retaining our existing customers. Client retention is ultimately the key to long-term profitability and sustainable growth.
A higher customer retention rate leads to:
Acquiring new customers can cost 4X more than upselling an existing customer. Retaining existing clients is both easier and more effective than generating new ones.
The not-so-obvious reasons you should focus on client retention (and why it matters so much in 2023):
- Business intel. Clients that continue to do business with you can have some of the best business intel and feedback for you as you work to improve your business. You just need to ask them. The longer they stay with you and the more engaged they are, the more they can offer (and are willing) to help. They’re also typically the most willing to try new products or services.
- High-quality referrals. Clients that stay with you have a good reason to. If they are happy/satisfied with the relationship, they are much more likely to refer you to others and those referrals are typically high-quality referrals. Referrals are the best sources of new business.
- Internal impact. We don’t talk about this enough when it comes to client retention. When you’re continuing to grow stable, consistent, strong relationships with your clients, that has an immediate and long-term impact on the health of your team. It provides stability, consistency, and more ownership because they get to know the clients that they work with. They get to see the impact that they make through their work. This can be really motivating and energizing for your team.
The bottom line: The more clients you retain, the more value and growth you’ll have.
The current market environment is pressing companies to re-evaluate what’s important. If you want to achieve sustained growth, your clients are a primary contributor to this goal. We need to pay as much attention – if not MORE – to those who enable our company to thrive rather than trying to attract and convert new clients. There’s power in focusing on and retaining clients, especially in this rocky environment.
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by Kate Neri