How do you keep customers from quitting you and moving over to the competition? In other words, how do you lower customer attrition rate and maintain the business you have worked so hard to get? You keep your customers from the competition by being the competition.
When I was an outside sales consultant for a major electronic distributor, my number one customer was as loyal as you would ever want. Over the years I was able to maintain my relation and business with this customer even when the competition came knocking on their door.
It wasn’t anything new or magical, nor was it some “secret method” that helped me and the company I worked for maintain a lower customer attrition rate. What worked was the fact that we became the competition, the target of other distributors who wanted the business we had.
The Tool to Maintain Lower Customer Attrition Rate
As I mentioned it wasn’t a magical trick or method that I used to maintain the business, but it helped stave off the guys looking to take my business.
What was this simple, yet creative tool used to maintain the customers business? We called it “Customer Cost Savings” and it was a requirement for each salesperson in the company. And get this, it worked.
It was not only the responsibility of each salesperson to have their customer cost savings report each month, they were held accountable to do so. I quickly learned the value of this one simple tool.
How Customer Cost Savings Works
In order to insure I had a lower customer attrition rate, I had to provide my customer with a written cost saving report each month. This put a whole new meaning on “value added selling”.
By using this one simple but powerful tool I saved my number one customer over $160,000 dollars on one item in a single year. Not only that, I managed to save another piece of business from the competition.
They were having a problem with a switch in their product that they were buying from me. The switch was failing which created costly service calls to repair the switch. This coupled with continued use of this switch was costing the customer about $160,000 per year.
While working with the engineering department on this issue, it was determined the switch wasn’t the issue so much as the way it was designed. I recommended a different switch with a higher rating and after a quick re-design, the new switch was put into the manufacturing process.
Now here is where the customer cost savings comes into play. I wrote up the report outlining the issue and the solution stating the total yearly cost savings. Then, here’s the important part, I had engineering and purchasing sign the report verifying its correctness and validity.
I filed the report away in my folder until the day I needed it.
When a competitor came calling on the customer looking to steal a piece of my business with nothing more than a low ball price on another item, you can guess what I did.
The competitor said they could save them a few thousand dollars on the item and my customer was considering making the change.
Retaining the Business
When I produced the $160,000 dollar savings report, which they had signed off on, they realized that I was working with their best interest in mind. They knew they had an invested partner in their business in me and the company I was working for.
In conclusion, if you are looking to lower customer attrition rate, provide your customer with solutions that provide cost savings. You don’t have to lower your price to maintain a piece of business if you use this one simple tool.
You may also want to read Words Decision Makers Love to Hear by Jill Konrath.
One last thing. If you are using a form of customer cost savings, I would like to hear about it.
Just leave your comment or example in the box below. I would love to hear from you.
Recommended Reading: Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage