Incumbency is Not a Strategy

 

The honeymoon phase reminds me of this song currently playing in my head:

 

— The Eagles, “Hotel California”

 

 

 

Even if your service is “sticky,” or you are so deep into your client’s business that it is difficult for them to leave, you still aren’t the Hotel California. They can and WILL leave you if you don’t treat them properly.

 

I often hear stories of how a long-time client suddenly left for a competitor. First of all, a long-time client shouldn’t ever surprise you by suddenly leaving. If that customer is important to you, then you better make absolutely sure you are in touch with them and tuned into their needs. Secondly, you shouldn’t assume your customers would be with you forever.

 

 

You can do many things to keep them happy or loyal or better yet, a raving fan of your services. Unfortunately, there is plenty of competition and innovation beyond the exterior of your company walls, so you have to work hard to keep customers loyal and engaged.

 

 

I lead CEO and Executive peer groups via Vistage International, and we work on every business issue you can imagine. On the particular topic of client retention, my favorite quote that came out of a session was the phrase, “Incumbency is not a strategy.” In other words, don’t hang your hat that all of your existing customers will stay forever while you map out your strategy. You are very likely to have at least some customer churn. However, there are also some things you can do to engage your customers to keep the churn low.

 

• Use a CRM system. At the very least, you need to have some system in place to stay in contact with your customers on a regular basis. If you don’t have a solid CRM system to help you keep track, get one as soon as possible! It’s important to track your progress, because you can’t manage what you can’t measure.
• Send out a company newsletter. Newsletters are effective, especially if you are communicating general information your clients can utilize. I prefer frequent one-on-one correspondence with clients, but newsletters can be effective.
• Conduct business reviews. Quarterly or semi-annual business reviews are a great idea, and you may find in those meetings that your customers need more of what you have. They can also clue you in on where their needs may be changing, giving you innovation ideas for your business.
• Add value to their lives. You can send them an article or book that can help them personally or with their business. Top sales people will tell you to get to know your customers, as well as their spouses and children. If you go out of the way to put them in touch with a Spanish tutor for their daughter, they’ll stick with you if your service and cost are even close to your competitor. Nothing beats relationships.

 

 

One of my clients, TIPCO Technologies, is a fluid solution supplier for all industrial hydraulic, and high-purity applications. They are the largest stocking distributor in the Mid-Atlantic region.

 

TIPCO started their TIPCO Platinum Preferred (TPP) program for their premier customers. They even developed a logo, so it’s visible to all TIPCO employees, to remind them to go that extra yard with the TPP clients. The logo is also on all TPP customer paperwork so they feel special. Eventually, TIPCO’s co-owner Rob Lyons would like to have all customers getting that same level of service – deeply embedding the process into the company culture.

 

Imagine your company being a different version of “Hotel California”—one where your customers can leave, but they don’t want to.

 

The key to retaining your customers is remembering this: Incumbency is not a strategy. What are you doing on a regular basis to keep your customers? If it is not an intentional, measurable, formal customer retention plan, then start one today.