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.