Most sales training focuses on prospecting, lead nurturing, and closing techniques. In other words, the things a sales rep needs to know to attract new customers.
But what should a seller do after securing a new buyer?
Smart salespeople know that the initial sale is small potatoes compared to the numerous sales they can make in the future if they learn to retain their current customers. So today, we’re diving deep into the world of customer retention.
Keep reading to learn what customer retention is, why it’s vital to business success, and what you can do as a sales rep to better retain your customers.
Customer Retention: A Definition
Customer retention is the act of retaining customers over a specific period of time such as a month, quarter, or year. The metric is most useful when expressed as a percentage. To find your company’s customer retention rate, simply apply this formula:
Customer Retention Rate = ((# Customers at End of Period – # Customers Acquired During Period) / # Customers at Start of Period) X 100
For example, if your company started the quarter with 50 customers, acquired 9 during it, and only lost 4, you’re customer retention rate would be 92% as illustrated below:
((55 – 9) / 50) X 100 = 92%
Why Is Customer Retention Important to Business Success?
Now that you know what customer retention is and how to apply a fancy formula to discover your company’s customer retention rate, let’s talk about why you should care.
You’re a salesperson, which means your primary job is to meet with prospects and close deals. What a customer does after the deal is done is somebody else’s problem, right? Wrong! Customer retention is vital to both the success of your company and your sales career, and shouldn’t be completely outsourced to your Customer Success team Here are three reasons why this is true:
1. Customer Retention = More Revenue
You’ve heard the stats before: it’s 5-25 times more expensive to acquire a new customer than it is to retain a current one. That means your company can generate more revenue at a more affordable cost if it can increase its customer retention rate.
Customer retention is also specifically important to sales reps as some organizations have instituted commission claw-back policies for customers who churn within a specific time frame. If the folks you sell to regularly return products or split after a month of using them, your personal bank account could very well suffer.
2. Retention Increases Customer Loyalty
Studies also show that customer retention generally leads to higher spending amounts. That’s to say, current customers will often spend more with your business than new buyers. How much more? 67% more according to recent research.
This is obviously great news for sales reps!
Once you’re able to demonstrate value to your customers, they’ll continue buying from you in the future, which makes hitting your sales targets so much easier.
3. Retention Boosts Your Referral Rate
Lastly, retained customers are more likely to tell their friends and family about your products and/or services than new buyers. This makes sense because new buyers are still trying to determine for themselves whether your offerings meet expectations.
Since 92% of modern consumers trust referrals from friends and family more than allContinue reading