If you’re a salesperson, you probably focus mainly on finding new clients. But if you work in a mature B2B industry, that isn’t always so simple. And let’s face it: These days, most B2B industries are mature! The only way you can land a new client is to steal one from someone else. That can be very hard to do.
When new accounts are few and far between, your best source of new business is likely to be your existing customer base. So rather than chasing after new accounts, it makes sense to invest more time working to upsell and cross-sell the clients you already have.
This means you have to have a strong relationship with each of your clients –what I call Trusted Advisor status. These relationships can be a huge source of added revenue. Here’s why:
Let’s suppose you have a 50% client retention rate. This means half of your clients leave you every year. This rapid turnover makes it difficult for you to grow your business, because each year you have to market to new clients, beat out competition and become established as an approved vendor. But if your client retention improves to 75%, you double your average tenure, and at 95% you have a staggering 20-year average client retention rate.
The Value of Sticking Around
What does this mean for you as a salesperson? By getting your customers to “stick around,” you will begin to have:
more cross-selling and upselling opportunities
more and better referrals
better pricing (due to less need for discounts to win customers)
… all with less time, effort and expense.
The longer you retain clients, the greater these benefits will be. Keeping customers loyal to you over time makes the difference, as loyal customers will have a greater incentive to give you more share of wallet.
How to Achieve Trusted Advisor Status
In the B2B world, building great relationships is often the fastest and easiest way to meet or beat your sales goals. To achieve these kinds of relationships, you need to make a determined effort to understand your clients’needs and desires and consistently exceed their expectations. I call this building “sales equity”–an expression for all the advantages you gain when you build Trusted Advisor relationships with clients.
During the Sales 2.0 conference in Boston on Monday, July 14, I’ll be presenting a speech titled “Sales Equity: What It Is, Why You Need It.” During this address, I’ll do a “deep dive” into how stronger sales equity can lead directly to better results for B2B salespeople and other owners of customer relationships. I hope you’ll join me there!
The bottom line is this: Strong client relationships matter, and keeping your customers around longer will lead to more and faster sales, lower costs and greater growth for your company.
What are your thoughts on the relationship between client retention and higher sales? I’d love to hear them.