It takes a lot of resources to develop a relationship and create a client. We market, we network, we hold events, and participate in a thousand other activities that cost money and time. There is a cost for every client we acquire. For most businesses with an offline or relationship component, it is extremely difficult if not impossible to calculate this cost accurately, but we can all agree that a simple coffee can be expensive. Depending on where you live, the cost of your coffee, gas, parking and most significantly, hourly rate can make a $2 cup of coffee a $250 cup of coffee. No, I’m not kidding. Add up your time, gas, coffee and parking and find out how much a coffee meeting really costs.
Before Starbucks or Peets starts calling, let me just say that I love coffee. I love coffee more than a lot of things and I drink it everyday. And YES I go to coffee meetings, BUT if I’m not careful I could have coffee in Paris for the price of one month’s coffee meetings. But more than just the money, the time is irreplaceable for me as well as the person I’m meeting. It’s for this reason that I am protective of my time and do my best to make even casual meetings valuable.
The point is new relationship acquisition is an expensive endeavor regardless of your business model. It’s therefore incredibly important to retain and grow the relationships you’ve already cultivated. In no way am I suggesting that you don’t build new relationships. New relationships are critical to a long-term growth strategy. However, existing relationships become more profitable because you’ve generally already spent as much as you needed to spend to acquire them in the first place.
With this said, consider how client retention and referral networks play a role in your current business development plan. Don’t take relationships for granted and assume that because your client loves you that you’ll get all of their business. When you stop romancing your client, someone else is happy to wine and dine him or her in your absence. As my former boss John Gehegan would say, “The number one reason a client leaves an organization is seller indifference.” Once a client silently becomes indifferent a large space emerges for your competition to inhabit.
Here are a few things you need to keep in mind to maintain your relationships and encourage referrals:
1. Don’t call just to sell something. There is a time to call to review accounts, ask questions and grow the relationship, but this can’t be every call. You need to actually care about your client and their business. If it’s all about separating them from their money, your calls will quickly go unanswered.
2. Don’t wait for them to call you with a problem. If you’re maintaining contact, you won’t get that dreaded call and you’ll be able to solve problems before they arise.
3. Set up a communication plan. How often do you make personal contact and for what purpose? Use an alert system and calendar your follow up so that it’s consistent and you’re in control of developing the relationship.
4. When you do call to increase your opportunity with your client make sure it’s about them and not you just trying to fill a quota or goal. Every sale is about making your client’s situation better. It’s not about how many contracts you need to get signed or how many widgets you need to sell this month. If you approach every client with the goal of making his or her situation measurably better, the goals will take care of themselves.
5. Your referral network is an unpaid sales force so acknowledge their contribution. I’ve had a several people who’ve sent me clients and I literally didn’t know the referral source personally. Even in those situations, I find out who the person is and thank them for taking the time to refer me and I always update them about the development of the relationship. Referring me is an extension of their brand and I want them to feel good about the referral. I make every effort to make the referral source feel very good about sending me business. This doesn’t have to be rewarded with money or gifts although it can, what people really want is to have their brand elevated through their referral.
We all need to continue to build new relationships, but the sales cycle for a new client tends to be longer and is almost always more expensive. Retaining and growing current relationships and valuing our referral sources can cut the cost and of client acquisition and increase profit.