In most business transactions, it’s pretty typical for both parties to part ways once the goods/services have been delivered and money has changed hands.
However, if you are saying goodbye to paying customers at this point in your relationship you’re making a costly mistake.
Repeat customers are the lifeblood of almost any business. When you build trust and rapport with a customer over time, they are more likely to buy from you again and recommend you to their friends, family, and co-workers.
In order to establish a repeat customer you have to begin to develop a relationship. But there’s a secret to this, and it’s not something they taught me in business school…
In order to do this effectively and efficiently, you need to have a process in place that ensures you’re trying to create that relationship with each and every client that you do business with, not just by “chance”.
Today we’re going to be looking at the first step in building an effective strategy: Offboarding.
What is offboarding?
Offboarding is the point of your sales process when the agreed upon work or service is delivered and payment has been exchanged.
For many businesses, this is their entire offboarding process.
Some customers will come back, and some will not. Some will recommend you to their friends, and some won’t. But because businesses with no true offboarding process end the conversation when the deal is done, there is no way for them to encourage repeat business or coveted referrals.
New Customers vs. Returning Customers
In business, we’re often most worried about the initial sale. The conversion of prospects into paying customers. And, obviously, that’s something we need.
We spend a lot of time thinking about these things. It’s how we market our business, how we greet people who come in the doors, special discounts or promotions we offer, down to how we arrange items on a shelf.
However, we are taught that it is it’s around 5 times more expensive to acquire a new customer than to retain an existing customer— yet most businesses don’t have a true offboarding process that can help them retain more customers.
Instead, they say goodbye, and repeat the new-customer sales process again and again.
We scrutinizes our customer acquisition costs, looking at all kinds of factors that fit into that equation. Somehow we’ve forgotten that if we could retain more of our existing customers the need for having new customers diminishes. When our business is feeding itself off of our repeat customers and the relationships we’ve built with existing customers we don’t NEED to spend so much acquiring new ones.
If you aren’t familiar with the statistics about the cost-savings of retaining customers over finding new ones, here are a few facts:
- It costs 5 times as much to attract a new customer, than to keep an existing one.
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%.
- Existing customers are 50% more likely to try new products and spend 31% more, when compared to new customers.
Even understanding those facts, still most companies focus the majority of their efforts on customer acquisition. But why?
Increasing customer retention rates by 5% can increase your profit by 25-95%! Yes, you read that right.
You might already have a process and not know it
If the term “offboarding” is unfamiliar to you, it doesn’t necessarily mean you’re not already doing some form of it already.
Building relationships with customers can come more naturally with some, and less with others. And this is exactly what’s lead you to the point in your business where you have little or no control over which customers come back.
You might follow up with some customers, and not with others. Send a questionnaire from time-to-time, or even follow up with a coupon of some sort.
But if this is not a consistent practice for your business, you’re unlikely to see real, measurable, results from the effort.
Instead of this passive approach, you need to adopt a proactive offboarding strategy. With a purposeful system in place you can increase your chances of each and every customer become a repeat customer and stop leaving it up to chance.
This means you need a system in place that, without fail, each and every customer will experience after they’ve done business with you (at least for the first time. You may need a different set of procedures for existing customers).
The benefit of having a process in place is the consistency. With only this small shift in being more intentional you will instantly increase your rates of return customers.
Building a proactive offboarding strategy
If you’ve reached this point in this article, you are convinced you need to put some process in place to increase your odds at retaining more customers— but you might still be wondering exactly how you might do that.
The truth is, that this greatly depends on what product or service you offer— but the key is in following up once the transaction is over.
I can’t cover every scenario for your business, but let’s look at a few business models you might be familiar with with the hopes that these strategies might spark some ideas for your own business.
Real Estate Agents
If you’ve ever bought or sold a house before, you know that a realtor works mainly off commissions. While this does make their drive to get the deal complete very high, they often have to immediately move on once the deal is closed in search of their next property sale.
It’s unlikely to have repeat customers very often in this business, as people only tend to buy or sell a home every 7 years, but that is no excuse for not building a relationship with clients that will lead to warm referrals.
First, it would be a great approach to follow up with a buyer or seller and solicit their feedback on how the whole process went. This can be done through anonymous feedback submission forms (to help keep the integrity of “honest” data). By learning more about how your client felt about your dealings, you can better understand how to improve processes in the future, as well as show your customer that you truly do care about them— even after the money has changed hands.
Many proactive realtors will also stay in touch for the long-term both through email and physical mail with their past clients. This could be through interesting articles on home improvements or ways to reduce bills. It could be updates on property values in your neighborhood.
Home Service Contractors
This might be the industry that could benefit the most from a proactive offboarding strategy, but also the guiltiest of not having one.
No matter what their business is (plumber, electrician, painter, roofer, etc.) it’s likely any past customer will need these same services again in the future. A good way to ensure that they remember you the next time they do is to take the time to reach out to them after your dealings are done and see how things are working with the work you did. Obviously, if things weren’t right, you’d want to make sure the customer was happy, but even if they are going smooth it’s a great connection for you to make with a customer for them to affirm their pleasure with your service.
Additionally, you could follow up with them when routine maintenance is required or even with tips on how they can get the most out of what they purchased.
It’s these small touch points that will put you and your company miles ahead of your competitors who are only chasing new leads.
The big chain restaurants have long realized the importance of repeat business and a proactive offboarding approach. This is why they have implemented club memberships, ask for your email address, and send you coupons.
If you have a small or independent restaurant you should take a queue from these practices—because they work.
Reminding clients of the delicious meals and good times they have had in your establishment can even trigger cravings for your food.
While following up on the phone would be a bit too much in this scenario, offering coupons (through an e-club), or even give them a discount printed on their receipt can encourage them to come back again soon.
Non-Profits & Charities
Non-profit’s rely on donations and volunteers in most cases to keep their organization afloat. If you are a part of one, you already understand the important role your faithful donors and volunteers play.
Unfortunately, there are a lot of folks who volunteer or donate once, but never return. In many cases that’s because they did not feel fully appreciated for their service, or the good feeling they got from helping has faded.
The key here is to follow up with people almost immediately. You want to capitalize on the “high” they are experiencing from doing something good and not only thank them, but play on those feelings by reassuring them what great work they’ve done.
Unlike the restaurant example, here you want to be as personable as possible and make a human connection. A phone call or handwritten letter is the most effective way to pass along your encouraging messages.
You can do this, and your competitors likely won’t
Hopefully you are now thinking of ways you can implement a more proactive offboarding strategy for your business. This step alone will put you miles ahead of most of your direct competitors and win you more repeat business on a consistent schedule than you’ve ever experienced before.
But it doesn’t end there.
If you are serious about getting this right, and want to take your company to the next level of profitability by increasing your customer lifetime value, I’ve put together a guide that walks you through 5 effective follow-up strategies to nurture and build relationships with your clients, called “Continuing the Conversation”.
Download your free copy today, and keep an eye on your inbox over the next week as I will be sending you even more tips and actionable advice on how to grow your repeat customers and referral network.