You may have heard the song lyrics, “Make new friends, but keep the old. One is silver, and the other is gold.” This sentiment rings true for more than just personal relationships; it’s important in business, too. Business growth is dependent upon adding new clients, while keeping and expanding relationships with existing customers.
Smart Business spoke with Heather Wirtz, chief development officer at Richwood Bank, about how to leverage your relationships into financial success.
Why is customer loyalty so important?
Whether your company does retail sales with repeat opportunities or provides a service as-needed, customer loyalty is key for the best sales tool of all: recommendations through friends and family.
A customer might only buy a car every five to seven years or mortgage a home once, but that experience sets a memory that can provide referrals for years, even if you don’t see that customer for a decade. It’s the same for retailers that send coupons every week. If customers don’t have a great experience, feel the product was quality, like the selection etc., they’ll probably toss them out.
Treat every customer genuinely, regardless of appearance, financial status or ability. It sets the right tone to make the purchase journey a memorable one. A customer for life is possible when you make them feel as important to you as you are to them.
Where do you see companies struggle with customer retention and relationships? Why?
From a cultural perspective, your ability to build customer relationships and retain those relationships is directly tied to employee relationships and retention. The retention of customers is a lagging indicator of several efforts, but certainly if your employees aren’t engaged they won’t engage the customer. Equally, if too many faces change, your customers lose the motivation to get out of their car and see that special person.
Some companies overlook this dynamic, but it’s particularly critical when the business is built upon human interaction. To further explore this area, draw a square with customer relationships, employee relationships, customer retention and employee retention in each corner. Draw an ‘X’ connecting the corners, and then discuss the relationship of each item to each other item. By discovering where you’re weakest, you’d have one strategic initiative and deciding how to exploit where you’re strongest, you’d have another.
What other strategies can improve customer relationships?
Think about where you want to be in the relationship. When business owners work on their goals, they can try this exercise. Draw a triangle and divide it into three parts. At the bottom, in the largest base, is the vendor role. Think of the vendors in your life, such as cable, internet, Amazon, etc. That’s a relationship. The middle section is a consultant, such as a financial planner, doctor, contractor, trainer or decorator. The list is long, but all of them could move into the top of the pyramid: the adviser.
With vendors, you feel you have to decide and hope for the best with what you receive. There’s no expectations and in many situations, it’s merely transactional. With consultants, you look for their expertise and advice but still allow it to influence you or not. With an adviser, you bring the issue to them before you’ve made a decision and lean on them to guide you through it.
How do banks play a role in this aspect of business?
Many people don’t consider a bank anything but a vendor — a must-have, a transaction. But community banks should, at a minimum, be a consultant. That’s when people see value in that relationship and come to their banker with questions, possibly about a mortgage for a home they’re trying to buy, for example. The best banking relationships fall into that adviser role. Then, people would come to their banker prior to searching for a home and working out a budget, possibly even sharing their dreams of home design.
When considering your business, know where you fall in the relationship model — vendor, consultant, adviser — and if that’s where you want to be. Many businesses still thrive in the vendor box. If that’s where you fit best, then make sure that each transaction is the best experience it can be to continue gaining repeat business.
Insights Banking & Finance is brought to you by Richwood Bank
