Why Client Retention is Essential for Your Business (And 4 Ways to Increase It)

Is lead acquisition more cost-effective than repeat business? Building post-transaction relationships is by no means an easy feat, but client retention will always prove to be better for your business’ growth and ROI than constantly investing in marketing to get new leads. 

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Why Is Client Retention More Important?

When it comes to setting your business up for success, acquiring and retaining clients are both important activities deserving of your time and effort. However, as a business focused on ROI, you have to ask yourself a crucial question: which is more important?

Determining where to focus your efforts generally comes down to the long-term projections. You need a steady influx of leads to keep your business running--or do you? A new lead might equate to a sale. On the other hand, investing in client retention opens the door to a number of opportunities. 

• The probability of successfully selling something to an existing customer is 60-70%. For a new prospect, the odds are just 5-20%.
• Increasing your client retention rates by 5% could raise your profits by 25% to 95%.
• A single negative review can drive away 22% of your customers. Meanwhile, client retention can improve the experience for every client, promoting positive reviews. 

These stats are enough to convince anyone of the importance of client retention, but there are really three primary reasons why you should focus on client retention.

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They’ll Be More Satisfied

When you close the deal never to be heard from again, it’s pretty obvious that you see your clients as dollar signs--at least, that’s how your clients feel. Of course you have to spend your time wisely and you have other clients to work with, but if you fail to maintain a solid relationship with your customers after making the sale, you are not likely going to get any rave reviews or referrals from them in the near future.

Your success depends on client satisfaction, which is why working on your client retention strategy is going to greatly improve your reputation. When a client feels like you have gone above and beyond, that’s your chance to get a highly satisfied testimonial in return. 

• More than half of American consumers have scrapped a planned purchase because of poor service.
• American consumers will tell an average of 15 people about a poor experience, versus the 11 people they’ll tell when they’re happy.
• After one bad experience, 51% of customers say they will never do business with the same service provider again. 

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They’ll Come Back

If you follow-up with your client after closing the deal and you continue to support them as they get settled in, you will definitely be the first person they call if they need your services in the future. Repeat business often isn’t a big factor for loan officers and real estate agents, but in other industries, it can make or break you.

When you spend time building a solid relationship with every customer you service, you are much more likely to see them again in the future. This repeat business beats new leads any day. 

• 82% of companies agree that retention is cheaper than acquisition.
• It will cost your business around 7x more to get a new client versus keeping one that you already have. 
• By reducing your customer defection rate by 5%, you can increase your profitability 25-125%.

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They’ll Bring Friends

In addition to being cost-effective, boosting your reputation, and drumming up loyalty to your services, client retention will also bring another gift with it: referrals. Even if a happy client has no need for your services in the future,  they likely know someone (or many people) who might.

By putting your efforts into client retention, you’ll be at the front of the mind of your past clients when someone asks them for a recommendation. Since word-of-mouth recommendations are by far one of the most effective and meaningful forms of advertising, that’s excellent news for you.

• A referred customer will generally yield a 25% higher profit margin.
• A referred customer will be 18% more loyal than customers acquired by other means. 
• Referral marketing has a 3-5x higher conversion rates than all other channels. 

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How To Retain Your Clients

Now that you understand why it is important that you invest time and effort into client retention, how exactly do you go about doing that? 

First and foremost, don’t be the salesman who goes silent as soon as you have the signature you need on the contract or money in your pocket. Follow-up with your clients and engage with them. If you’re a real estate agent, congratulate them on their new home. Tell them they can call you anytime if they have questions or if they need recommendations for X, Y, or Z.

This is an excellent way to continue providing value to your clients even after you’ve done the job they hired you to do. Show them that you care about their happiness and success by supporting them in any way you can. Give them all of the resources and information they need to make sure the transaction is smooth and their move goes as easily as it possibly can.

Perhaps one of the best ways to turn a happy client into an over joyous one is to give them a token of appreciation for choosing you over all of your competitors. To a real estate agent or loan officer, this might mean providing them with a housewarming gift. Meanwhile, a retail store owner might give their new customers a gift certificate or gift card to get them back in the shop again. 

It probably won’t cost you more than $10 or $20, but the gesture in itself will mean so much to your clients. That’s the act of gratitude that can push them over the edge and encourage them to leave a stunned review online or shout your name off the rooftops to let everyone know about how great of a service provider you are. 

However, a small gift is far from the only way to provide value to your clients. Here are some other strategies you could use too:

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1. Identify The Patterns

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Know the signs that a client may be about to give up on you. Things like questions, calls, and changes in how they are using your services can be a sign that they are about to find someone else. As an example, a real estate agent may find that a client who was previously asking about 2-3 houses per week has suddenly gone silent. It’s Wednesday and you haven’t heard from them at all. React quickly with a follow-up containing new listings to make sure you keep their interest. 

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2. Schedule Time

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Follow-up is very important to building relationships with your clients and making sure that they know you really have a vested interest in their satisfaction. Time management is critical, because you need to be able to schedule time with your clients to email, text, and take phone calls just answering their questions and chatting about progress and their situation. 

Real estate agents, for instance, will be able to keep a lot more clients if they keep them engaged, interested, and encouraged in their search for a home (which could take many months to complete). 

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3. Target Clients

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When you are putting time and effort into closely tracking the behavior and interest of your clients, you can better target them with resources and offers. For instance, one client might have came to you weeks ago saying they were thinking about selling their house.

Continuing to follow up with them with information about market conditions and their home’s value can help encourage them to take the leap and list their home for sale. If you have buyers interested already in their potential listing, they are certain to call you back for more info.

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4. Use Automation

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Committing time and effort into keeping them informed and in-the-know will go a long way to demonstrating your knowledge and authority in your field while also demonstrating your excellent customer service skills. People want to know that they’re in good hands, and giving them a reliable source of information helps them trust your services and abilities. 

With that in mind, though, client retention can be a time-consuming process--that’s why thousands of real estate agents and loan officers are employing the help of the HomeBot platform, which can make the process substantially easier and more effective for yourself.

Homebot puts the power of data and analytics in your hand, displaying important details in an intuitive platform that allows you to pass information on to your clients exactly when they want and need to see it. It’s automated, it’s easy, and it will go a long way in improving retention for your business. 

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Using Homebot To Grow Your Business

Homebot is personalized dashboard for your home that combines automation with the power of collaboration. With Homebot, Loan Officers and Real Estate Agents work together to keep customers happy and informed throughout the entire home selling process.

With Homebot, you have total control over which clients receive a monthly digest and what information it includes. From "Robo-Advice" that will give clients an estimation of their home’s value to automatically imported information about the buyer and their agent, everyone will be kept in the loop.

Loan Officers can schedule a 1-on-1 demo today to learn more.

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Article References

• https://marketeer.kapost.com/customer-acquisition-versus-customer-retention/ 
• https://blog.hubspot.com/service/customer-retention 
• https://www.dcrstrategies.com/5-reasons-customer-retention-business/ 
• https://www.annexcloud.com/blog/39-referral-marketing-statistics-that-will-make-you-want-to-start-a-raf-program-tomorrow/ 
• https://blog.fivestars.com/26-statistics-that-prove-repeat-business-is-where-its-at/ 
• https://www.helpscout.net/75-customer-service-facts-quotes-statistics/