Sales retention strategies are important for three main reasons. Companies may lose a number of their customers each year through natural attrition or defection to competitors, with a consequent fall in revenue and profitability. It’s therefore essential to minimize the risk of loss to competitors. Retaining customers also provides an opportunity to maintain or increase revenue and profit through incremental sales of products and services. Finally, by focusing on selling more to existing customers, businesses can grow without investing in new customer acquisition.
Analyze the Customer Base
Different customers vary in their value to a business, so a retention strategy should focus on the most valuable customers, particularly those at risk of defecting to competitors. The most valuable customers are those that represent the largest proportion of a company’s business. The loss of one of these customers would threaten a company’s financial stability, especially if the customer represents a large percentage of sales. One important step is to analyze the customer base and categorize customers in terms of their value and level of risk. With this information, a company can develop a retention strategy that focuses on keeping the most important customers and providing the highest level of protection to the business.
Develop a Contact Plan
Regular contact with existing customers is an essential element of a retention strategy. Customers may only meet a sales representative when they are negotiating a purchase or finalizing a deal. If the customer buys high-value products, such as capital equipment or consultancy services, there may be long gaps between purchases with no intermediate contact. To prevent this from happening, develop a regular contact plan that keeps customers apprised of what's happening with your business. The plan might include regular email newsletters, keeping customers up to date on developments in the company, or special offers tailored to individual customers’ purchasing needs. For high-value customers, you can offer invitations to events, such as seminars, as a way of strengthening personal relationships.
Allocate Sales and Marketing Resources
Sales and marketing teams both play a role in customer contact and retention. The retention strategy should include a sales force plan that rewards representatives and account managers for growing existing business, in addition to winning new customers. The marketing plan within the strategy should include a program of communications designed to determine the ongoing needs of existing customers and encourage them to buy more.
Companies can strengthen retention by providing added value to customers. For example, collaborating with a customer on a product development project that reduces its costs or improves its performance can strengthen the relationship. Also, setting up dedicated electronic ordering or invoicing systems for major customers increases convenience and creates barriers for competitors.
Reward Customer Loyalty
Another important retention strategy is to reward customers for their loyalty. Set up a process for following up purchases with an email acknowledgement and an offer of related products or services at discount prices. For customers who buy frequently, incorporate an incentive program that rewards them for higher levels of purchase. The rewards might include increased discount levels, rebates or gifts for the business.