As corporate SA begins to see a glimmer of light at the end of the tunnel in 2024 – after several dark and gloomy years characterised by economic pessimism, high inflation and constant load shedding – there is a new focus on achieving business growth.
But, highlights Nathalie Schooling, CEO of customer experience specialists nlightencx, too many South African companies will be looking for growth in all the wrong places.
“Growth-seeking executives would likely be very pleased to achieve an annual increase in sales of 5-10%; ecstatic at anything beyond that,” says Schooling. “What they often fail to appreciate it that it’s possible to grow the business by a third – without acquiring a single new customer!”
The successful formula, she emphasises, is to focus on client retention and then drive up-selling and cross-selling opportunities within the existing customer base.
“As many businesspeople know, finding new customers is far more expensive than keeping the ones you already have. It’s hit-and-miss. There’s a lot of competition and many of the potentially most profitable customers, especially in B2B, are already tied into agreements with suppliers.”
Schooling says that statistical, long-term research conducted by Professor Charlene Gerber, Associate Professor at the University of Stellenbosch Business School and the previous Head of Research at nlightencx, showed a clear correlation between consistently high levels of customer satisfaction and sales, which could be up to 30% higher.
“At a time that the economy may be improving slightly, but remains in crisis, this level of increase would make a considerable difference to any business,” she observes.
nlightencx conducted its research using proprietary predictive modelling that tracks customer satisfaction scores and sales over at least two years. This model has shown that achieving consistent client satisfaction scores of at least 70% does appear to improve sales.
“What this tells us is that companies who keep their existing customer base happy are in a better position to grow than those who are throwing lots of money at sales and marketing efforts to get new customers,” says Schooling.
She points to statistics published in 2023 in Accountants Daily, an Australian publication, indicating that 65% of a company’s new business comes from existing customers, and that loyal clients spend 67% more than new ones.
Further numbers from the publication show that the probability of selling to an existing client is 60-70%, while the probability of selling to a new prospect is only 5-20%. Similarly, existing clients are 50% more likely to try new products.
“These figures shouldn’t be a surprise. If a well-cultivated relationship is already in place, it’s usually an easier sell,” says Schooling. “This is where cross-selling and up-selling opportunities work their magic; businesses that can offer their existing customers relevant add-ons are far more likely to achieve solid growth.”
Consistent client service excellence thus moves from being a touchy-feely ‘nice to have,’ to being a sound business growth strategy, she believes. And when a business does seek new customers, the existing ones become a free source of brand ambassadors and word-of-mouth marketing.
Schooling adds that, in the two years since Covid, the CX organisation has seen from its own client base that customer retention has become a critical strategy.
“There’s been a shift since the pandemic to hold onto what’s good. This means taking care of existing clients, as well as turning inward and taking care of those who work for you – and who influence the customers’ experience,” she explains.
“If I had to give SA businesses two pieces of advice for achieving growth, they would be: ‘keeping clients is more important than getting new ones’; and ‘put client relationships at the centre of every action’,” Schooling concludes.
Additional statistics around customer retention vs cost of new customer acquisition:
www.europeanbusinessreview.com
www.markinblog.com/customer-loyalty-retention-statistics/
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