Building Long-Term Customer Relationships

Building Long-Term Customer Relationships

New customers are the lifeblood of every company. New customers are key to driving revenue growth, market share and competitive displacements. While new business is critical to success, so is maximizing the revenue potential of existing customers through effective retention, as well as cross-selling and up-selling. In general, it costs 5-7 times more to acquire a new customer than it does to retain an existing customer. Because it costs less to sell to existing customers, the profit potential to the bottom-line increases substantially.

How do you maximize retention and revenue of existing customers? By having the right account coverage model in place. The most common account coverage model is where one customer contact has a relationship with one seller. If the customer contact leaves, the relationship is lost. Or, if the seller leaves, the relationship is lost. What is the answer? Look at each customer through the account coverage quadrant. The purpose of the account coverage quadrant is to ensure broad, sustained relationships between the company/seller and the customer.

Account Coverage Quadrant
• Quadrant 1 – One-to-one relationship. If the customer contact or the seller leaves, the relationship is lost.
• Quadrant 2 – One seller-to-many customer contacts. If the seller leaves, the relationship is lost.
• Quadrant 3 – Many sellers-to-one customer contact. If the customer contact leaves, the relationship is lost.
• Quadrant 4 – Many sellers-to-many customer contacts. If customer contact or seller leaves, relationship sustained.

New business is critical to long-term success, but so is maximizing the revenue potential of existing customers through effective retention. Always ask yourself, do I have enough account coverage? Do I have the right account coverage? Do we have broad enough connections within each account to sustain the relationship?

All contents copyright © 2011, Josh Lowry. All rights reserved.

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2 Responses to Building Long-Term Customer Relationships

  1. Dusty Centeno says:

    Great post. I am really impressed with your site.

    Like

  2. Bradford Conroy says:

    Your blog truly has all of the information that I wanted concerning this subject and did not know who to ask.

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