One of the prime arguments for retention over acquisition is the 80/20 rule. This is often a favorite rule for those in the financial planning business. Long-term business relationships ensure more stability compared to constantly creating new ones with little thought of nurturing them afterwards.
On the other hand, what happens when retaining actually means getting less from your long-time customers? Does it mean generating more financial planning leads or is getting less still better than getting none?
It’s more of the latter actually.
This doesn’t mean you should reach a point when you start giving your customers things for free. Lines must still be drawn. But as far as getting new leads go, you shouldn’t be so alarmed to generate new ones just because your current customers want to pay less.
Renegotiations and special discounts are part of maintaining a long business relationship. There are several situations where it is warranted such as:
- Competitors – Just because you’re already advising one business doesn’t mean there won’t be those who’ll try to give them a better deal. And as far finance goes, price wars are both a topic and a battlefield. Changing the cost to your current customers can be a small price compared to losing them completely.
- Economy – Sometimes economic changes could still force prospects to consider the competition. Ironically, when times fall hard, it’s typically up to finance managers and advisors to figure out areas to start cutting. If a particular crisis seems evident to the point that it’s making the news, now’s a good time to at least consider a special favor or two for your struggling customers.
- In-house changes – Sometimes the prospect you initially did business with may wind up replaced, promoted, moved out etc. In any case, the new person might not be familiar so it’s really a matter of getting on their good side.
This doesn’t eliminate the importance of generating leads completely. In fact, it only complements the purpose of prioritizing less leads and more on retention. Not to mention increasing the number of new customers as a knee-jerk reaction will only give you more relationships to constantly maintain. Don’t make things harder for yourself and remember that less is still a lot better than none.