Profile - How We Maximize Customer Retention
Selling Value, Not Products, Is Key
David Tate will tell you his company, Memphis-based Signet (asi/326636), specializes in contract accounts. They represent, in fact, about 85% of his firm's business. But the real reason Signet has enjoyed industry success for 35 years is because it specializes in something else – customer retention. "We have never lost a customer," Tate says.
How has Signet done it? "One of the key things that keeps us anchored is that we do more than promotional products," says Tate, Signet's president. "The bottom line is, the more disciplines you bring to the table, the more solid the business relationship."
How can your company improve customer retention? Read on for Tate's advice.
Q: Why should companies put such a premium on retention over customer acquisition?
A: Great customers have many needs and there is always more business to be done with them. That increase in business comes about naturally and without much cost because the relationship is there. Mining for new customers is also important, but you are only going to land a percentage of those on whom you spend your efforts. An existing customer brings almost a 100% return on additional effort.
Q: How do you ensure retention?
A: We have periodic meetings at a high level to discuss the overall company-to-company issues of clients and we review all meaningful metrics.
Q: How do you keep Signet top-of-mind with clients?
A: We use frequent contact by our salespeople and offer e-mail specials on a regular basis. We also use our annual end-user show, Facebook and LinkedIn.
Q: When do you say "no" to a customer request?
A: Very seldom do we say "no," but when we do, it is because it's such a stretch that we think we can't do a good job for our client or think they will be better served another way. In that situation, we always research and suggest an alternative.
Q: When an order goes wrong, how can a distributor salvage the client relationship?
A: Fix first, ask questions later. If it's the supplier's fault, they should stand behind it. If it's the distributor's fault, step up. If it's the client's fault, there is an opportunity to teach and set the stage for success the next time. If possible, work out some kind of solution that is a win-win. How you handle the problem defines your future with the client.
Q: Do you think discounting products helps or hurts your long-term position with a customer?
A: Discounting hurts you in a bigger way than you know. It ruins your credibility and value. If you approach the market based on price, you might as well find something else to do. Customers can source you all day on the Internet and get lots of cheap, unsafe products with which they may be happy until they have a product safety issue.
Q: So then what's the best approach to take to keep customers coming back?
A: Consultative selling makes you a value to them. Remember, a promotional product is a combination of consulting, suggesting, sourcing, designing and then finally putting a logo on a product. In this day and age of the Internet, your customers actually need true promotional products professionals more than ever. You provide a value to them and you should get a fair price for it.
Q: What advice would you give to a new distributor about customer retention?
A: Within the first year, implement a discipline of firing customers. New distributors, out of necessity, do business with anyone and everyone to get the cash flow going. However, some customers are not a good fit with your culture and philosophy. They will run you ragged with Internet chase-downs, maybe they're a source of repeated problematic orders or they're disproportionate in considering maintenance versus profitability. Identify those as soon as possible and try to wean yourself off of them.