The Secret Formula to Keeping Clients

This column is the fifth in a six-part series detailing key strategies that will put you in control of your agency

The cost of obtaining a new customer is astronomically high. In fact, it is not unusual to lose money or barely break even on a client’s first purchase. Run the numbers and you may be in for a shock once you factor in the real costs—not just marketing expenditures.

We typically spend a disproportionate amount of effort on the acquisition of customers while tending to ignore what it takes to retain them.

Many agents have told me that repeat customers make up 70 to 80 percent of their business. Although this may be true for some, it might surprise you that, based on analysis from travel consortia, retention is actually less than 30 percent.

One of my favorite quotes is from Peter Drucker, the late business consultant: “The purpose of a business is to create and keep customers.”

So why don’t we make a better effort to keep the clients we already have? According to a Microsoft study, an increase in customer retention by as little as 5 percent can lead to an increase in profits by 25 to 95 percent! The same study noted that the number-one reason customers stop doing business with a particular company (68 percent) is that they don’t believe said company cares about them. Remember—your clients are a source of both revenue and new customers. It is vital for them to feel loved.

The key is to have a retention marketing strategy that focuses on the five Cs—Communication, Content, Consistency, Community, and Care.

—COMMUNICATION. Create a clear plan to maintain an open dialogue with your customers. Maintaining a good balance roughly 4:1 of personalized content versus promotions—is essential to engagement.

—CONTENT. Consortia and host agencies have marketing programs designed to deliver relevant content to your clients. However, the programs are only as good as the data you collect and your participation.

—CONSISTENCY. Build trust and awareness. Typically, customers will buy from sellers who communicate with them on a regular basis.

—COMMUNITY. Keeping your customers involved makes them feel like a part of your family. They love sharing photos and experiences with others. If you don’t have a Facebook group for your business, drop everything and set it up now. Remember: Community inspires loyalty.

—CARE. Let your customers know that you care about them as people—not just as clients. Call them with no other agenda other than to say hello. If you hear of an illness or death in the family, send a card or visit. It’s the little things that count.

Increase retention and your profits will skyrocket, your customer base will grow and your marketing costs will decrease exponentially. I have always believed that if you take care of your customers, they will take care of you. This philosophy has served me well my entire career.

If customer retention is not a top priority, it may be time to rethink your overall business strategy. The law of diminishing returns will eventually catch up with you.