Competitors are going to try stealing your best customers: It’s not a question of if, but when they’ll strike. In fact, they’re almost certainly approaching your largest, most valuable customers right now. What happens next depends on you — and your customer retention strategy.
Here are three tips for keeping your competitors at bay:
1) Prepare your customer retention strategy: When competitors make a play for your customer’s business, that’s no time to figure out what to do. Your customer retention strategy should be ready to spring into action. While company leadership always has retention on its radar to some degree, step-by-step proactive planning needs to be a priority. Build in formal competencies for retention and create a formal plan for your largest accounts.
Your strategy should include scheduling quarterly reviews with the customer. Reviews tend to have an overly historical perspective, focusing on what’s happened for 90 percent of the time, and spending only 10 percent on what’s next. If you change that mix to 40 percent historical review and 60 percent looking ahead, you ensure that the customer is counting on your services when planning for the future. When you have that kind of trusted partner relationship, there’s much less room for a competitor to squeeze in.
Another element to include in your retention plan is proactively offering customers new opportunities for savings, new products, new technology, etc. They may decline these offers, but at least you’ve shown your commitment to their company’s future.
Other ideas include a “go-to-market” support program, including top customers in a formal advisory council and involving them in your future product designs. If your customers are entrenched in your design organization and providing guidance, they feel like they’re an important part of the development process and your strategy.
2) Sell the value early: When you consistently emphasize the partnership benefits you offer your customer, it prepares them to turn away the competitors knocking at the door. By focusing your customers on the value of your products and services, rather than price alone, they’re able to quickly filter out the competition.
Make sure the customer explicitly acknowledges that there are real, meaningful benefits to working with you as a supplier, and that these benefits go beyond the products and services you provide. To get that explicit acknowledgement, be sure to consistently communicating those benefits, arm them with data and bring in additional thought leadership.
Start with communicating your tangible business impact as part of regular conversations with your customers. Arm them with data and sound details about the value of the relationship. You might also want to bring in alliance partners as a way to demonstrate your thought leadership and give them insights into what’s going on in the marketplace.
3) Don’t panic: When a competitor offers your customer a product at a large discount — perhaps 25 percent less than you charge — reacting in a dramatic, defensive way could push them toward the competition. Instead, have a frank conversation in which you review all of the benefits you currently provide, so that your customer is able to make a fair comparison.
Once you’re sure the customer understands all of these benefits you offer, work with them to identify any that might not be important right now. This allows you to adjust the offer and provide a less expensive solution while keeping the conversation focused on value, not price.
Developing a strong customer retention program certainly isn’t easy. The preparation alone requires a lot of energy from your sales team. For customers to be receptive to your retention efforts, you need strong relationships already in place at the right levels. But when you make these upfront investments in customer retention, you’re protecting your company’s future and laying the groundwork for long-term profitability and success.
Want to learn more about creating a retention strategy that allows you to quickly adapt to changing markets and customer needs? Read our complimentary e-book, Selling Value: Increasing Customer Retention and Profitability