The Harvard Business Review found that a 5 percent increase in customer retention can increase profits by as much as 25 to 95 percent. The math is fairly straightforward: it costs less to maintain the loyalty of an existing customer than it does to acquire a new one, and a loyal customer is likely to make repeat purchases, making their lifetime value quite lucrative.
With that in mind, the bigger revenue opportunity lies in having a thriving new business engine that pumps alongside a robust retention system. The new business engine continues to bring in new customers, and as long as the retention strategy is effective, that total number of loyal customers will continue to grow. Most business owners understand this truth intuitively, but separating new customer acquisition from customer retention misses a key opportunity.
Customer loyalty begins with the sales process
This is especially true in the insurance and financial services space. How you approach your first interactions with a prospect will define the entirety of the customer experience. Yes, service is important, but service should be a product of the sales experience not a crutch that you lean on because you are afraid to lose the sale. The service mentality — the eagerness to please at every turn, the hesitancy to tread over uncomfortable ground — can establish a precedent that ultimately undermines the relationship with your client.
An unwavering commitment to service can actually lead to poor communication, which in turn starts to muddy the reality of expectations. The customer is not always right.
Your time is valuable, which means sometimes having to say no to a client request and upholding a level a mutual respect. Sometimes the customer will disagree with your expertise and you will have to work through a difficult conversation.
If you begin your relationship with a service-at-all-costs mentality, you hide the fact that these challenges will ever arise when in fact we know that they are inevitable. If the first time you challenge a client is months into your relationship, your client could feel duped. After all, you never behaved that way before.
Why would you suddenly demand that they make an appointment for a call after you dropped everything to help without a question asked? Why would you suddenly push the client to endure a tough conversation about their financial outlook if they make a certain choice when you nodded and said yes to every request, hat in hand, up until now?
Instead, start your relationship by being up front about how you are, how you work, and the advice you offer. Your sale does not have to depend on your charisma or how much the prospect wants to be your friend.
In fact, a study by CEB, published in the Harvard Business Review, found that the top sales reps around the world across a range of industries were the ones willing to challenge the thinking of their prospects. They entered sales conversations confident in the value they could bring to their potential client, and used the sales conversation as an opportunity to educate prospects about opportunities in their space that they hadn’t considered.
They were willing to challenge the assumptions and thinking of their prospects — politely and professionally of course — to draw them into a more engaging and valuable conversation. Unlike the relationship or solution approach to sales, these sales people stuck to their guns and were willing to endure temporary discomfort.
The end result is a teachable moment where the insight becomes the key takeaway. Not only has the prospect learned something valuable, but the prospect now has a nugget of wisdom that he or she can share with colleagues to boost their own reputation while also spreading the advisor’s expertise. The alternative is to be less of an advisor and more of an order-taker.
If you are willing to challenge your prospect up front, both parties can see right away if this is a relationship worth establishing and maintaining for the long term.
Starting the sales process this way establishes a dynamic more akin to a partnership. The sales person is not a vendor bending over backwards to move a package of widgets.
The sales person is a trusted expert that brings a unique perspective to the conversation. This is a person that’s worthy of respect and trust because they were open and honest about the challenges the prospect faces and what steps are necessary to overcome them. In this way, the sales process never really ends. New opportunities will arise. Circumstances will change. You will need to have multiple sales conversations with the same client if they stay with you for any significant period of time.
Though this process can lead to some uncomfortable moments up front, it can be perfectly polite and productive. And more importantly, the consistency of the sales process continues into the service. That consistency bolsters loyalty as you continue to live up to the expectations you set forth from day one.
Challenge yourself to challenge your prospects, and your business could benefit from the increases in client loyalty that it brings.
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