Whenever I gain a new client, it's always my goal to keep them as long as possible. Long term customers are more profitable, they're more cost-effective to market to, and they're more likely to refer families and friends.
As a business owner, you will often have the opportunity to lure customers from your competitors. And, while you're attracting new customers, it's also important to keep your existing customers happy so they don't make the switch.
As consumers, we've all been in a situation where we've made the decision to switch from one vendor to another. I had been a member of a local gym for some time and was reasonably satisfied with their facilities, but in the back of my mind, I was always slightly irked by the fact that I had I had to sign a new contract with them every two years (it was mandatory). Just before my next 2-year contract renewal came up, I noticed a new gym was opening nearby. I dropped in to check them out and found that not only did they have better equipment than my old gym, but that I could sign up with them on a month-to-month basis and the fee was the same as my current gym. To me, the decision to switch was a no-brainer.
How do you hold on to the clients you have, while also gaining new customers? Make sure you understand the reasons that are most applicable to your business and the customers you serve.
Address the switch triggers
There are a lot of reasons why a customer may switch suppliers or vendors. Make sure you understand the reasons that are most applicable to your business and the customers you serve.
When looking at your business, it is important to be aware of what is prompting your customers to consider jumping ship, and what might make a competitor's customer come to you. Here are some common reasons for switching:
- Budget - Your price may be higher than what a competitor charges for the same service.
- Value - Your customer may not see the return on their investment in your product.
- Service - If you have an incident in which a customer feels you have not done right by them, you have a trust issue and you risk losing that business. Conversely, if your competitor cannot be relied upon by their customers, there's an opportunity for you to step in.
- Neglect - Particularly in industries with long sales cycles, it can be easy to stop paying attention to your existing customers as you try to curry favor with new clients.
- New leadership - Especially in business-to-business transactions, there is a risk of losing a customer if a new person takes over the account.
Focus on retention
Once you've identified potential switch triggers for your current and potential customers, you can determine what you need to do in order to keep the customers you have and also catch the attention of your competitors' customers.
To retain existing customers, you need to continue to compete for their business. If price is a switch trigger, consider different pricing levels for your offering. If applicable, you could have a 'gold' subscription, which includes all of your services, as well as 'silver' and 'bronze' packages with fewer perks.
Additionally, learn as much as you can about your competitor's offerings, so you can point out the differences to your customers and demonstrate the value add you are providing. The differences will represent opportunities for you to retain and win new customers. If your competitor has a good idea that you haven't thought of yet, consider how you could incorporate something similar into your offering.
Know your industry
Within the insurance industry, the most advertised switch trigger is cost. We've all seen the commercials about how much you could save from switching from one insurance carrier to another. However, buying insurance is not the same as buying gas. If you approach two gas stations, you will most likely choose the one with the lowest price per gallon. But when it comes to insurance, while a lower price may get your attention, there are other factors that will play into your decision to switch insurance carriers, including coverage options and the deductible.
Competition is a fact of life in business and a part of what makes it fun. Challenge yourself to identify new ways to retain existing customers and attract new ones from your competitors.