To Retain or Scale? That is the question
I decided to cover my thoughts on a topic that I get asked about all the time.
What do you think is more important scaling or focusing on what you have? The answer is simple. It takes time scale and it takes patience, your focus should always be split evenly between scaling and finessing. Finessing in my terms simply means perfecting what you already have.
As a Digital Marketing agency you invest your heart and soul into providing your clients with the best value every day. Your team understands them and builds a solid working relationship with them. Do you not think it’s more advantageous to keep these clients? Don't you think it is better to work with a client you already know and understand? The moment you start thinking about it, you will understand the true power of client retention. Let's first understand the meaning of client retention, client retention simply means retaining your existing customer to work with you again or to procure your services again in future. If you keep providing them with value, they will keep coming back to you…...very simple if you ask me.
How Important Is It To Retain Existing Clients? When you retain a client, there is one major thing that works in their favour, and that is their growth. As you are now their trusted digital marketing service provider, they will spend more on you as well as expect more from you. The same thing happens the other way around. A customer's retention benefits you and your business in many ways, some are quite evident, and some needs a business eye to see.
Things That Work In Your Favour? The most blatant would have to be decreased customer acquisition cost: - It takes a lot to bring a new visitor and convert them into a customer. If you are a company, you might have a dedicated team for that task and if you are a one-man army, you might need to spend 50% of your time in searching for new clients. This eats a lot into your cost and requires a lot of time. Remember time is also money so it needs to be utilised appropriately. Retaining an old client simply cuts all of this off, hence, saving you a lot of money and time.
Increased Sales: - Retention of an old client will simply increase your sales, as he will purchase your services again and again. There is also a high possibility of up-selling. A loyal customer who has a good amount of trust in you might also wish to try your other services, thus, increasing your sales. How many times have you stayed brand loyal due to quality…..ask yourself what keeps you buying a quality product, then try and replicate that reason for your clients.
Word of mouth: - Nothing beats the power of referrals when it comes to promoting your business. Do not get me wrong, lead generation is the name of the game, however a loyal customer will definitely tell everyone he meets, about how you and your services helped him to grow. Business owners will network with other business owners, and if you are the reason for the recent BOOM in business trust me the word will spread, and your business will get all the benefits in the form of sales and profit.
Ease of working: - Most important among all is the ease of working with a well-known client. You both understand, and trust each other, so any kind of ups and downs in the project become quite easy to handle and resolve. Also, when your team knows what the client has in their head, they can deliver exactly what they want.
There are some studies that show the stats to prove this point:
Retained Client New Client
The probability of generating new sales - 60-70% 0-15%
The probability of trying your new services - 50-55% 20-30%
How Can Retaining Customers Increases Your Profit In The Long Run? It has been proven that client retention, in the long run, can substantially increase your baseline profit. It makes a positive impact on every aspect of your business. When you retain customers, it decreases the cost that goes into getting new customers and new sales. On the other hand, the retained customers keep spending on your services more and more, the investment from the client's side keeps increasing during the retention cycle. This retention helps you to maintain a good cash flow. Your sales increases and so do the profit, resulting in an increase in baseline profit in the long term.
How Scaling Your Business Too Quickly Can Be The Reason For Its Decline? Bringing in new clients isn't bad for your business, it is obviously necessary to explore new opportunities. But what most of the start-ups are getting wrong these days is the fundamentals of business. It often seems like all glitter and gold in the start as you try to bring in sales and clients from every possible direction. Once you are stacked up with numbers of clients, the actual trouble starts to begin. You are a small team, and now you cannot give enough time to all of your clients. You may probably be able to maintain the quantity of work, but you will not be able to do the quality control. Which we all know leads to bad feedback from your clients.
As a result, you will start losing your clients and no new client will trust you due to your bad track record. As you never tried to build a loyal client base that you can retain, you will be left with nothing or continuing the rat race of client acquisition.
As the workload and pressure increase you will start putting pressure on your employees. Your employees, now frustrated, can either leave the company or produce lower quality of work either due to laziness or simply because they are overworked. Hence, resulting in the decline of your business in a very short time.
It has always been suggested that focusing more on your quality of work rather than the quantity of work might prove more effective. Scaling your business too quickly can be extremely detrimental to your quality and also the longevity of the business. It might seem like very good growth in the start, but the true nature of the business is to generate good and constant profit in the long term. If you focus on delivering quality, it will help you to build a loyal customer base that will result in a successful business.
As a Digital Marketing Agency, we have spent 4 years providing our clients with quality services. Over the course of time, we have experienced how much the quality matters over quantity. Our quality-based approach has given us many opportunities to work with our existing clients again and build a loyal business relationship. It’s all about your book in the end, balancing it and fine tuning it, rather than trying to ram in clients. Organic growth is always the holy grail and I firmly believe in this. Most of our biggest client wins have come from our reputation for quality and client satisfaction.