The How to Succeed Podcast is a public and free podcast from Sandler Training, the worldwide leader in sales, management, and customer service training for individuals all the way up to Fortune 500 companies with over 250 locations around the globe.
Mike Montague: Welcome to the How to Succeed Podcast, the show that helps you get to the top and stay there. This is How to Succeed at Client Retention. The show is brought to you by Sandler Training, the worldwide leader in sales management and customer service training. For more information on Sandler Training, including white papers, webinars and more, visit sandler.com.
I'm your host, Mike Montague and my guest this week is Jonathan Farrington. He is CEO of Top Sales World and Editor of Top Sales Magazine, and coming to us from the UK. We're going to talk with him about how to succeed at client retention.
All right, Jonathan, welcome to the show. Tell me a little bit about client retention, why you're passionate about this topic and who should be listening today.
Jonathan F.: Well Mike, thank you very much indeed. It's a great pleasure. Client retention or another term that I use often is customer experience management. It's my belief that it should be an organizational issue. It's not a single act. And the reason that it's so important in my view is because between 68% and 80% of our orders in any given year will come from existing customers, unless of course, we're selling commodities. And I do passionately believe that if we fail to look after those customers, nurture them, respect them, and constantly work to earn the right to their business, rather than pursuing the life of what I call commercial promiscuity, then those clients will respond appropriately. And that is, they'll vote with their feet.
Cause there's almost an indecent obsession at the moment with spending most, let's say 80% because I use Pareto's principle quite a lot. Most companies are spending around 80% of their available selling time hunting down new, more exciting opportunities. And that's at the expense of our very loyal existing clients. And they're the same customers who once were themselves new and sexy prospects. There's compelling reasons, compelling evidence for why we should focus and build brick walls around our existing clients.
Mike Montague: I totally agree. I love what you said there that if we're doing our job right, once you've been in business for three years, 60% to 80% of your revenue should come from recurring clients and repeat purchases, which means that's your Pareto principle applied again where you should be spending the majority of time where the majority of revenue is going to come. And we always want to pursue new prospects and continue to grow but a lot of times you can grow even faster with those existing clients.
Let's get into it and talk about attitude a little bit here. I think we already started on why you would want to do that but what are some of the good attitudes of top sellers that are great at this? And what are some bad attitudes that we would want to avoid?
Jonathan F.: Well, shall we start with the bad, because quite simply it's like any relationship. A commercial relationship is very exciting at the front end for the seller. They open doors, they bring flowers, and they send chocolate. They'd do anything to get the order. But it strikes me, and we could again use the 80/20 rule if you like, but 80% of organizations believe that once they've got that first order, then that client is a regular customer and they don't need to bother anymore because they'll ring if they need something else.
Now, there was a very interesting survey carried out by the Institute of Sales and Marketing Management in the UK 18 months ago. And they were asking the question, thinking about when you last changed supplier, why did you do so? And I think what the Institute were expecting were quite a lot of answers that suggested they were offered new, shinier deals or less expensive deals. But actually, more than 70% of respondents came back and said it was due to the incumbent supplier's complacency. They felt ignored. They felt undervalued and that's the attitude that is prevailing out there, again I say, in 80% of the cases.
Mike Montague: I totally agree with that one too, and it's amazing that it applies to employees, so that's the number one reason employees leave a company, is because managers aren't paying attention to them. It's one of my favorite jokes whenever this topic comes up, Jonathan, but do you know how often you should tell your spouse that you love them? It's before somebody else does, is the right answer. The same thing goes for your clients, right? If you're not showing them appreciation, someone else will.
Jonathan F.: Absolutely right. Mike, I mean, now looking at what successful companies who are focusing on a solid customer experience management strategy do. They meet with the customer regularly. They conduct regular reviews. They don't wait for complaints, as an example. They want to understand on a regular basis what is working and what is not working. They spread their vista, in other words, they look across the line, they look up and they look down when thinking about the people that they call on and visit on. In other words, they expand their area of influence because we know now that in any major sale, around about, and it depends on size of course, so around about 6.8 decision makers are involved in that unit. And yet worryingly, there's substantial evidence to suggest that salespeople only call on two or three at the most, which clearly leaves them vulnerable.
I think what successful companies do, that I suggested, that have got a formal strategy, they bring the relationship to a symbiotic level and they make sure that the customer is getting what they want when they want it. In other words, the five rights. The right product in the right place at the right time in the right condition, etc. But they go beyond that and they look to create a strong commercial partnership. As I always say, customers are better persuaded when they're part of the process and not part of the audience. I guess the message here would be, to salespeople, stop selling. As soon as we start selling, brick walls come up. There is no need to sell. It's all about selling with, not selling to.
Mike Montague: I think we've already translated over to behavior a little bit when we're talking about this plan and I love what you said about regular review meetings and paying attention, expanding your reach. We've seen that so many times where a sales person has one good contact and then a competitor comes in on the other end of the organization. Or that one contact gets transferred to another department or leaves for another company and now you have no contacts.
Is there anything else that comes to mind here when you think about the goals, plans or actions we should have as far as client retention's concerned?
Jonathan F.: Well, I think it's about formalizing. One should formalize a relationship and I go back to that word again, strategy. It's no good the selling company merely creating a strategy unless they share it with the buying company. In other words, together this is what our relationship should look like. Do you agree? What should we add to this as we move forward? And then you create this strong bond.
What that also should ensure is that the selling company is in my first territory. And let me just explain that. I'm sure you know this, Mike, but again, it's probably 80%. I don't know, it might be 79.9%. But salespeople are working in my too territory. In other words, their buyers come to them for a quote or with an RFP, but they're also going to other companies. Then we've got another 15% of sellers who are working in my first territory. They're a preferred supplier but they're not the only supplier. They'll ask for a quote or I'll supply them with a RFP first but there's no guarantee that they'll get the business because other people are also being asked.
The top 5% of sales professionals are in my only territory. More often than not, they actually help to write the RFP. They're the only person that that company wants to deal with simply because the relationship is so strong, the service has been so good and the buying company have been so respected. And the buying company understand that there is often a huge cost in changing supplier and they respect that fact.
Mike Montague: I love it. I have a great example of that play when I was here as a sales trainer in Kansas City and the hospital was building a new wing onto the hospital. It was going to be 100 new beds, it was a huge new addition. Millions of dollars in the project and they didn't put it out for bid. I was talking with the vice president of the hospital that did this project. We said, just out of curiosity, how come you didn't have anybody else do it? They said we always work with this one company. We've put other projects out to bid and nobody's going to be more than 20% off. We know that they're in the ballpark.
But he said, do the math really quick. We're building a 100 new beds. Those beds generate revenue at $1,000 a day. That means there's $100,000 a day we're losing every day this building is not open. So the longer we take to shop and do other things, the more money we're costing ourselves. Even if it just took a week, nobody's going to be $700,000 lower than the supplier that we like.
When you can get those kind of relationships with your vendors, that's a no-brainer. That's super easy. Let's talk about how to do that a little bit. Do you have any good techniques, tricks, hacks or just questions we should be asking our clients to deliver better value?
Jonathan F.: I think what I would say is this, Mike. We've got to be very, very clear that customer experience management is a strategic understanding. It's not a departmental name and I think that most people in most companies, they don't think about their responsibility providing good customer service, because they don't actually see it within their remit. I mean, have you ever seen a job description that contained a reference to customer experience.
Mike Montague: Well, I think it's usually mentioned on the ninth or tenth bullet of the job posting, right?
Jonathan F.: Yeah, and I think the important thing to consider is that if you asked any sales person or any sales manager or any VP sales what the cost was of losing that customer that walked away last week, they wouldn't be able to tell you. Yes, they'd be able to look back in CRM and they could say, well, they did this much business with us last year and that much business with us the year before. But of course, that's not the true cost. It doesn't take into account how much money it cost to win that business in the first place and how much it cost to manage the account and support the account. There's no consideration also, for what future business might have been. Unfortunately they're working in the dark.
I think my answer to your question would be this, yes, successful companies view customer experience management and the retention of customers or clients as a company-wide responsibility. You should be able to walk into a selling company and ask any member of staff who your top five clients are. Who are the five most important customers to this organization? Everybody ought to be able to tell you. But sadly, as we both know, that is not true. And it isn't going to happen unless the messages start coming down from the top because success in any organization, or commitment to something like CEM doesn't add upwards. It has to come down from the top.
Mike Montague: That's really good advice. What about diving into it, have you looked at any stuff of what does a client review meeting sound like? Or what are some important questions we should be asking our clients to make sure that we're delivering what they expect?
Jonathan F.: Well, I think the first point that I'd make, Mike, let's be clear, it's not a selling event. It must not even feel, smell or look like a selling event, because it isn't. It's a proper review meeting where you sit down and you ask questions like, okay, imagine it's a QBR, quarterly business review meeting. Shall we look together, look back over the last three months and see how that compares with the previous quarter. This is the business that we transacted together. These are the reports that I've had from service personnel and they confirm that installation, implementation, delivery, etc., all went well. Was that your experience?
Then we can ask our questions but we've got to be very, very careful not to make it a one-way conversation. We've got to give our client the opportunity to contribute and very successful, clever salespeople are able to elicit that type of response so that it becomes, as I suggested earlier, you'll remember, I said it's very important that customers feel part of the process and not part of the audience. By eliciting all of that information and discussing and giving a customer, client, the opportunity to tell us if something went wrong, it gives us the chance to put it right immediately. It's always very, very important follow up, of course, like any important meeting, in writing afterwards, and concern that that's what the conversation was. These are the challenges or issues. These have got to be put right.
We should always welcome complaints. We mustn't go to one these meetings and think, oh God, hope there's not going to be any complaints. Hope that there are complaints because if they're not telling you, they're telling somebody else. And if they're not telling you, it's just as likely they will vote with their feet. That's important.
Mike Montague: I think that it's brilliant for several reasons. Number one is I totally agree with you that when there are complaints, that's when you have the ability to do some amazing customer service. Nobody says, wow, that service was so great when there weren't any issues because they expect there not to be any issues. When you can really go above and beyond their expectation is when you're solving problems that were unexpected or situations that were unexpected.
Number two is when you're genuine about listening to that negative feedback and asking those questions first, it brings in that authenticity that you're not there just to sell something. If you walk in and you lead with the question, so what else can you buy from us, that's not going to be a very good review meeting. They're going to put those walls up. But if you genuinely listen and elicit feedback on the negative stuff first, then they know that they can trust you with the positive stuff later.
Jonathan F.: Yes, and this is the whole essence of the symbiotic relationship.
Mike Montague: That's awesome. We're talking with Jonathan Farrington, CEO of Top Sales World and Editor of Top Sales Magazine. He is coming to us from the UK this morning, so we appreciate you taking the time out, Jonathan. I want to get to know you a little bit better. How do you define success these days?
Jonathan F.: I sort of cheat a bit. I use Earl Nightingale's definition and he said, "Success is the achievement of a worthwhile objective." I'm one of those how can I do it better sort of chaps, so success for me is constantly being able to do things better than I've been doing them. That doesn't matter whether it's my fitness or whether it's Top Sales World. I don't want this to sound like a cliché, but I definitely believe that it's not a destination. It genuinely is a journey and you have to have ongoing objectives. That's really important.
Mike Montague: Totally agree. What was your biggest lessons learned or hurdle you had to get over in your career so far?
Jonathan F.: I think complacency. I think it's very easy when you enjoy success to become complacent and think that you've made it, whereas, genuinely successful people realize that that isn't the case at all. We never, ever know how good we can become and we should never, ever stop improving and I think that's really important. I also think that some successful people, and you know this, Mike, I'm sure you've met some, can become arrogant and it's always been my view that once arrogance strides in through the front door, then success slips quietly out of the back door.
Mike Montague: I was just telling somebody else yesterday that I am awesome at being humble. What is your favorite superpower or go-to move? What's your biggest strength when you need a win.
Jonathan F.: I tend to rely a lot on my emotional intelligence. I learned about emotional intelligence when I was in my early 20s. It came through the work or the tests that I did with Mensa and they suggested, oh you might be very interested in learning more about emotional intelligence. I think that's probably my greatest asset because what it allows for ... I'll give you an example. I could meet a member of the sales team in the car park, and they didn't even have to say anything. I could look at their expression, the way they were walking, the way they were managing themselves, whether their attitude was right that day. I think it's so important for anyone leading anybody in any organization to take on board and embrace emotional intelligence, because it gives us the opportunity to keep our teams, keep our people, working at optimum performance levels. We should always feel them, we should always feel their attitude, understand their motivators.
Mike Montague: I think that's great. I'm wondering if you could give us a quick rundown of your perfect day. What does a great day look like for you?
Jonathan F.: A day off. No, no, a great day is when I achieve all of my objectives. I'm very organized. I don't work with to-do lists. I work with week lists, month lists, quarter lists. A good day for me is getting everything done but I think beyond that it's being able to help someone else achieve their objectives. You're getting out there and being on the front foot and being proactive and helping someone without needing to be asked. That gives me an awful lot of pleasure.
It is true, I think, my mother taught me this. The more you give out, the more you will receive. It's exactly how it works. But certainly my latest experience with that is with Top Sales World. We're there to help frontline sales professionals and their managers and their manager's managers through a group of brilliant contributors, who I absolutely love helping and promoting and publicizing.
Mike Montague: I think that's a great lesson for sales people and managers, too. When you help other people achieve their goals, you're going to be doing well in those two professions. Based on what we talked about today and How to Succeed at Client Retention, what's one key attitude you would like people to have?
Jonathan F.: Can I reverse that? What I'd like selling companies to do is to stop saying we exceed customer's expectations, because it's become such a cliché. My experience is that most companies believe they've exceeded expectations as long as they deliver those five rights that we talked about earlier. It goes far, far beyond that. I just want organizations to wake up. I want them to appreciate the real cost of losing a customer and I want organizations to create symbiotic relationships. I want them to build brick walls around their existing client base. They will then discover how much more profitable those clients can be.
Mike Montague: What's one behavior you would like people to do? If they did one thing, what would it be?
Jonathan F.: Try and give rather than take and that's got to be one of the secrets of excellent customer retention, customer experience management, be on the front foot. I think that we sellers have to constantly work to earn the right to our customer's business. We cannot under any circumstances whatsoever to allow ourselves to become complacent, let alone arrogant.
Mike Montague: The best technique to use?
Jonathan F.: I think sellers today need to become commercially multilingual. What I mean by that, Mike, is that they've got to be able to have conversations all the way up the food chain. The type of commercial conversation that you have with the user or recommender or a member of the technical team is a completely different conversation that you'll have with a senior buyer, a CEO, a finance director. Becoming commercially multilingual, I think, is really, really important. You don't need to have an MBA to be successful in sales but you do need to have a broad commercial bandwidth. That is important.
Mike Montague: I like that. I think that's brilliant, especially as a challenge for us to wrap up the podcast on. If you are a sales person or a manager out there, challenge yourself or your team to get those things done. Jonathan, I want to give you some time to talk about Top Sales World and Top Sales Magazine. What do you have going on over there? Give us the 30-second commercial about what you guys are all about over there.
Jonathan F.: 30 seconds, Mike. This is my baby. Nobody thinks their baby's ugly and mine's very beautiful. Look, Top Sales World is almost coming up to its 11th anniversary. It was my primary objective when I sold my consultancy way back in 2005 to create a vocation where frontline sales professionals and their managers and their manager's managers can come and enjoy fresh resources, which is updated daily in the form of articles, podcasts, webinars, e-books, white papers, etc. We've done that.
I mentioned wanting to everything better all the time and my team do too. We do, we refresh and we deliver new initiatives all the time. Top Sales Magazine is the most popular sales marketing magazine online now. We've got almost 350,000 subscribers. Again, the magazine is free and that's the best bit. Everything the Top Sales World does and provides and gives out is absolutely free, so anyone listening, we would welcome you over to Top Sales World.
Mike Montague: If they don't like it, they get their money back. I like that. Once again, we're talking with Jonathan Farrington, CEO of Top Sales World and Editor of Top Sales Magazine. If you want to find them, just type in Top Sales World into your favorite search engine. I bet you will find the magazine.
Also, you can find Jonathan Farrington at LinkedIn and connect with him over there if you want to continue the conversation. For more information on this topic and much more, you can follow us at LinkedIn, Facebook, or Twitter @SandlerTraining or get any of your free resources at sandler.com.
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