Your existing client base can act as a growth engine for your business, yet it’s one that many businesses neglect to harness to its full potential. After all, winning net new clients is often celebrated (and should be), but client retention and furthermore expansion revenue is arguably equally, if not more, important to building a sustainable business. And while retaining and growing your existing client base is always important, it can be even more important during recessionary times. In this article, we’ll unpack why client retention and growth is a smart and effective strategy for businesses looking to weather economic downturns and come out stronger on the other side.
Acquiring new clients can be a costly and time-consuming endeavor. In fact, it’s been shown that acquiring a new client can cost five times more than retaining an existing one, increasing customer retention by 5% can increase profits from 25-95%. Not only that, existing clients tend to spend more with your company than new clients do. This is even more likely to be true during a recession when budgets may be tight both for you and your prospects. In times of economic uncertainty, winning net-new business can mean longer sales cycles, expanded buying groups, and increased CFO scrutiny. By focusing on retaining and growing your existing customer base, you can save on more costly marketing and sales strategies such as cold outreach, and reallocate those resources toward other areas of your business.
Given the fact that many businesses are looking to tighten up their balance sheets, one of the first thing’s they’ll look to do is decrease costs by evaluating their expenditures, from technologies to services, and eliminate those that aren’t deemed essential or delivering enough value. While client retention is always important, in a down market, it’s even more important to reduce client attrition as new client acquisition can be more challenging.
So, what client retention strategies can you deploy to mitigate client attrition?
Focus on Delivering Value
In order to retain clients, it’s imperative that you are delivering enough value to their business to warrant their continued investment. The good news is, when markets are disrupted, clients often face new challenges that impact their operations and strategies, which can present an opportunity for you to provide new services and guidance that support how they adapt and navigate these changes. Delivering this type of consultative service as a trusted advisor can cement your firm as an invaluable service that is a need to have, not a nice to have.
Maintain Engagement Levels
Building on this understanding that you want to be seen as a trusted advisor, it’s critical that you maintain an appropriate level of communication and engagement with your clients. One of the best ways to ensure you’re providing value is to simply maintain a regular cadence of communication with them, to reach out and ask how you can support them. Monitoring and maintaining a consistent level of engagement with your clients is also a great way to gauge whether or not there is a consistent stream of value being delivered to your clients.
Establish A Foundation of Clients that is Primed for Future Growth
Building a strong and loyal client base is key to long-term success, and this is especially true during a recession. By focusing on retaining your existing customer base, you can establish a solid foundation for your business to continue to build upon not only during uncertain times, but even more so as the economy recovers. Firms that deploy creative, strategic approaches to efficiently and effectively retaining and growing their client base, rather than solely focusing on cost-cutting and efficiency, will be positioned to outpace competitors when the economy stabilizes. With that said, maintaining a satisfied client base doesn’t necessarily mean your client revenue will grow organically. Increasing client revenue requires the deployment of intentional and strategic approaches.
Maintain & Harness Your Known Network of Relationships
Firms pour massive amounts of spend into cold outreach as a client acquisition strategy, but the truth is, it’s a costly approach that is becoming less and less effective. In fact, ninety percent of executives say they won’t respond to cold outreach, and 73% of executives prefer to work with sales professionals who have been referred to them by someone they know. In response, firms need to unify and tap into their collective network of relationships and operationalize them to find new opportunities, win more work, and drive more expansion revenue with existing clients.
We hope this has shed light on why companies should ensure that the appropriate resources are allocated toward client retention and growth in times of economic uncertainty. Keep an eye on our blog as we expand on specific retention and growth strategies that you can deploy to retain and grow your client base. If you’re eager to learn more about how Introhive can enable your firm to grow client revenue in an efficient and effective manner today, book a consultation here.