There’s one big reason companies focus on renewal business: the cost. Renewal business costs less than new business because you aren’t paying acquisition fees or other up-front costs. Your customer is also familiar with you, which means you spend less time tracking down new leads, which means more money and less effort. Some studies have shown a customer you keep is five to seven more times profitable than a new one.
Although consistent renewal business should be a goal of any sales organization, reps should also take advantage of the lead generation benefits renewals can deliver. Here are some pros that come with renewal business, as well as some tips on maintaining referrals to strengthen your sales strategies:
The more trusted you are as a sales rep, the more likely you are to receive referrals. A customer with whom you have established a personal connection will be more likely to refer you to their business partners down the road. If one of your trusted customers does the selling for you, you significantly decrease your costs-profit margins.
Businesses talk, too, and will be more likely to work with you if they know their partners already have. Make sure to nurture and maintain a quality relationship with a new customer. You never know how many other new customers they might bring.
When you have trusted customers at your fingertips willing to refer you to their partners, you spend less time making more money. In fact, you not only spend less time making money on maintained relationships and trusted referrals, but you suddenly have much more time to nurture new leads.
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You can never take a closed won deal for granted. Profitable customer relationships require consistent nurturing. If you lose contact with a customer once they agree to give you referrals, they’ll smell something fishy in the waters. You don’t want to come across as a taker. Continue offering them discounts for their company or recommending new products to them based on the relationship you spent so much time establishing.
As parting advice, there’s one final key to maintaining renewal business: having the proper in-house tracking system or software to monitor what you did to gain renewal business. Renewals should be repeatable, and any customer intelligence you gain can help improve your future process.