New business development is typically viewed with an outward mindset. While it is true that bringing new prospects into your business is a key part of growth, how you engage and leverage the clients you already have can increase revenue and create new opportunities for growth.
In the software-as-a-service (or SaaS) world—think subscription software platforms like SalesForce—growth experts often tout the principles of Customer Success by Mehta, Steinman, and Murphy.
In addition to having aggressive sales and marketing teams, successful SaaS companies often hire a vice president of customer success (and eventually build an entire department) to drive efforts geared to improve customer satisfaction and outcomes.
This comparison to our space is powerful, because like advisors, SaaS companies depend on client engagement to generate recurring revenue, making one of their biggest enemies “churn,” or the percentage of customers that leave in a given time period. When you track and attack churn, amazing things can happen. Here are the highlights:
A 5% increase in retention can increase profits by to 95%. This figure, touted in a now-famous Harvard Business Review article, should turn your head. That boost in revenue comes from a variety of factors: it’s cheaper to keep customers than it is to replace them, the greater the lifetime value of all of your customers the greater your revenue, and retained clients are likely to adopt a number of revenue-increasing behaviors that we cover in the next bullet points.
Happy clients are likely to spend more with your business. In SaaS, that means buying an upgrade or adding more users. For advisors, this means increasing walletshare and adopting new initiatives, all of which deepen the client’s connection to you and increase your revenue.
Clients like to brag about their success. Word of mouth marketing is still the most powerful source of new opportunities, so when you do amazing work for your clients, they will tell their friends and peers. Referrals are a low-cost way to generate new business, and the sales process for referrals tends to be relatively is easy. When your clients advocate for you, more doors will open.
Prospects want to hear about successful clients too. It’s a small world, after all. When you have a great story to tell about how you helped a client, if the client does not recognize the name he or she will likely be able to see themselves in the story you tell. Each success story you create for a current client becomes an arrow in your quiver for future sales.
Now that the growth opportunities in client success are clear, how can advisors capture those opportunities?