As an Estate Planner, Financial Adviser or Broker, your existing client base is vitally important at the moment.
Your clients are more valuable to you than you may think….
Why are your current clients so valuable?
Sometimes, it’s so easy to get caught up in the process of converting new customers that you forget that your best customers are sitting right in front of you.
It’s simpler and more cost effective to get repeat business from an existing client than it is to acquire new business. At the moment the current climate has made it that much harder to get new clients, especially if you’re used to meeting new clients face-to-face and introducing your services.
But there are always a wealth of opportunities within your current client list – they are your existing customers, you have already won them over and gained their trust and loyalty, so they are a reliable customer group.
Therefore it should be easier to encourage them to buy further products and services from you. The longer a client stays with you, the more valuable they become through their lifetime value.
When your existing customers are satisfied, they’re more likely to buy from you again. So, it’s far more cost-effective to persuade existing customers to make a purchase than it is to acquire a new customer (think of the money you don’t have to spend on ads as well as the time it takes to find people looking for your services).
The real value of an existing customer is higher than the value of their repeated purchases. Your existing customers are your greatest advocates. If they’re happy with your products and pleased with your customer service, they’ll refer others to your business, authentically and naturally. The value of these referrals (which have not cost you anything) can be huge.
Loyal customer referrals come in a variety of forms, including:
- Word-of-mouth recommendations
- Social media posts and messages about your brand
- Positive comments and reviews, posted on public pages for anyone to see
These recommendations are powerful tools that should never be underestimated. People trust referrals from their family, friends, and peers, sometimes far more than they trust messaging that comes directly from a business.
Most crucially, new customers who were referred by an existing customer already have a positive impression of your brand, since their trusted friend, family member or peer gave your brand the thumbs up.
So, they are more likely to become loyal, lasting customers. In fact, the average lifetime value of referred customers amounts to 16% more than the value of other customers. And best of all? Referred customers are more likely to keep the cycle going, and refer their friends to you.
Client wants and needs
According to the 2019 Financial Services Consumer report by Accenture, clients increasingly expect financial advisers to be able to offer services that meet core needs and not just traditional financial products. They want a personalised offering that is suitable for their circumstances. Clients want tips, guidance, and recommendations that fit them.
This is why spending the time to knowing your client is paramount, and invaluable to your business. Clients want services and products to be attractive rather than intrusive, so you need to demonstrate how they add value to the client, and how the product benefits them or their family.
The study also clarifies how clients value face-to-face interaction with their advisers. This communication choice is key as part of the relationship development for newer clients. For existing clients who already know you then, especially at the moment, it is not such a great requirement.
Your existing customers are also more likely to spend more on your products and services!
These stats show just how valuable it is to maintain your customer base:
- 65% of your sales will come from existing customers.
The probability of selling to an existing customer is 60%-70%. Meanwhile, the probability of getting a potential customer to buy from you for the first time is only 5% to 20%. So, you’re at least 40% more likely to convince an existing customer to buy from you again than you are to convert a prospective customer.
- Compared to new customers, existing customers are 50% more likely to try out your new products.
- Repeat customers spend an average of 31% more than first-time customers.
- 80% of your future profits will come from just 20% of your existing customers.
Why customer retention matters
Focusing on your existing customers helps keep your retention rate high. Your retention rate is the percentage of customers who have remained with your business over a period of time. (The opposite of retention rate is churn rate, which shows the percentage of customers you have lost over a given time).
A higher retention rate is directly connected with higher profits. After all, as the Harvard Business Review explains, “you don’t have to spend time and resources going out and finding a new client — you just have to keep the one you have happy.”
Increasing your customer retention rate by 5% can potentially increase your profits by 25% or more.
Retaining existing customers increases their lifetime value. Lifetime value measures the total profit contribution that a customer has brought to your business. The longer someone remains your loyal customer, the greater their lifetime value. The more products they buy from you, but the less you need to spend on them, creating a profitable outcome in your favour.
A new customer who spends the same amount of money on products as your average existing customer doesn’t bring nearly as much profit as the existing customer, because you must account for the one-time costs to acquire that new customer.
It can cost you between 5 and 25 times more to acquire a new customer than to keep an existing customer and its forecast to be 16 times as expensive to bring a new customer up to the same level as an existing loyal customer. So the time effort and resource required to create a loyal client.
So how do you create valuable loyal clients?
Provide jaw-dropping customer service.
To get customers talking about you to others – telling stories of how you went “above and beyond” to give them what they needed - you need to routinely do things that are attention-worthy. Going above and beyond, and giving clients sight of what they need, before they know they need it – again amplifying how important it is to know your clients!
Your goal should be to have your customers telling similar stories about your business.
Consider all the touch points you have with customers – all the communication opportunities and review what you do at each touch point. Is that first email engaging and pertinent? Is the letter you send to the point and personal to that customer? Don’t just send out generic communications but adapt for each customers so they know you did listen and you did understand.
Check your spelling. A small error and a simple mistake can put some people off. The detail can make the difference.
Deliver what you say you will deliver
This is your business, don’t rush sending something out, make sure it reflects your professional approach and creates the trust and loyalty from your customer – take your time!
Check documentation, ensure the client has all the information they need, provide them with an easy way to get I touch with you. Make it simple, make it easy, try not to over complicate your service.
Then deliver what your clients are expecting, keep them informed and ask for any feedback!
For more advice on how to create more value from your existing client base just get in touch - firstname.lastname@example.org or call 01522 500823.
Sources: 2019 Global Financial Services Consumer Study, Accenture. Neil Patel. Harvard Business Review. Small Business Trends.