We work closely with service-based companies (e.g. insurance agents) where ongoing relationships and repeat business are critical. An integral feature of our service is automating regular and meaningful communication to these businesses’ clients on their behalf. The goal: to improve relationships and ultimately lead to higher retention & referrals.
A great concept, but does regular and meaningful communication actually contribute to higher retention?
Most people we speak with, at least initially, believe that price is the largest contributing factor to whether their clients stick around or not. That’s the reason they’re usually given when their clients defect, anyway.
The preponderance of research and psychology we studied said otherwise, but we had to know for sure. So we conducted a study of our own. Over the past couple years we collected more than 20,000 Net Promoter Score (NPS) responses from more than 200 service-based companies. We sorted them anonymously by type (negative, neutral, positive) and looked specifically for comments that highlighted reasons for dissatisfaction — a forerunner of client attrition.
As we suspected, price isn’t the biggest culprit. It turns out that, when asked, clients only claim price is the reason, even though it’s likely not the case. This usually happens either because the person is looking to avoid conflict, or because another reason allowed price to become an issue.
Our research showed that, of those clients that eventually defect, 81 percent do so because they lack regular and meaningful communication from the business. This includes following up on questions or specific issues in a timely manner, periodic checkups, returning phone calls, and the overall access a client has to an actual person.
These gaps in communication are forming a perceived indifference; meaning they start to feel like the business doesn’t care much about them. This quickly degrades client loyalty and — like a weak immune system that begets sickness — clients defect at the first opportunity that presents itself. So, if a cheaper option presents itself, they will certainly take it. But this doesn’t mean that’s necessarily the reason they leave.
We also found that the average service-based company is at risk of losing about 20 to 25 percent of its business each year. Of these at-risk clients well over half could be prevented from leaving if they were communicated with more frequently. But the occasional email or newsletter doesn’t cut it. The communication needs to be personal and meaningful. In other words, they need to know you care and have their back.
That’s exactly why we developed our highly-personalized handwriting technology. Unlike bell-bottoms, direct mail is making a comeback.
So what are you waiting for? Your clients are waiting to hear from you.