Finding is much harder than keeping - Look after your existing clients

Posted by Rob Hook

|

28/01/2009 15:52:31

|

Add comment

My experience shows that a new client gets all the attention within the agency, like a new born baby. Meanwhile they shunt the existing clients in front of the TV in the hope that it pacifies them. This allows them to concentrate their full attention on nurturing the new babe at the expense of the others.

But that is so wrong!

Look first at the cost of new client acquisition - it is mind boggling if you take into account the obvious and the hidden costs. The agency must recover from the new client the costs of the pitch, the new business activity, and the promotional costs and so on. All the costs associated with passing through the sales pipeline need to be recovered. It might take years before they make a true profit from that new cleint.

Then consider the risks. It is right at the start of the relationship that the risks are highest. There is no heritage or legacy to fall back on when things go south, as they do in every instance.

Then consider past relationships with the outgoing agency or supplier. They will be looking for opportunities to get back on the roster and they have the legacy and the relationships already in place.

Finally, consider the risks to the relationships. Change brings with it attendant risks to the network. What will other think of the new client, what might happen to the existing relationships both internal and external?

Now I know that we need to win new business and the sales pitch is an important part of that process.

But beware of taking your eye off the really important piece of the business jigsaw - the existing clients. They are usually more profitable, more loyal and more resilient than the newbie.

By how much you might ask. Well it is hard to quantify but my experience tells me that 85 - 95% of turnover should come from existing clients. Only a tiny fraction typically comes from new ones.