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Do you really know the true cost of acquiring a new client and just how vital it is for you to retain them?

Studies show that on average, it costs 5-7 times more to get a new client compared with retaining existing ones.

On an average loan of $300,000 the Up Front is around $1,500 and our research indicates that the cost for a broker to obtain a new client is between $1,000 and $1,500, which in affect means you’re simply covering your costs.

Here are some example costs associated with acquiring a new client:

• Your own cost = your expertise & the value you create for the business
• Any marketing you have spent
• Time on the phone handling the initial enquiry
• Your travel time to the appointment
• % of your car costs (fuel, maintenance)
• Time at the interview
• Time chasing clients for any other required information
• Cost of the technology – software licensing, laptop
• Telecommunications cost – landline/mobile phone
• Preparing & Monitoring submissions
• Compliance costs

Add all of these up and you can quickly see how the cost of acquiring a new client can be as high as $1,500.

So with all these costs when do you start making a profit?

The profit comes from the trail plus from selling additional products and services to a client, which is why it’s so vital to retain clients.

It’s also important to take into consideration the Life Time Value (LTV) of a client, that is, the value that a single client will contribute to your business during their lifetime. The LTV concept is a simple one yet one of the most powerful influences on the success of your business.

The key to LTV is obviously to RETAIN clients for their lifetime, this way as you continue to add new clients your overall income increases exponentially.

So what are the top 10 ways to retain a client?

Tip 1 – Have a Plan

Everything worthwhile always begins with a plan and retaining clients is no exception.

As a broker your plan for retention should include a range of simple measures & goals for your whole business and then individual clients including Run Off Rate, Number of Referrals, Amount of Repeat Business and Number of Products per client.

Creating this plan won’t take long and it’ll keep you focused on what’s important to increasing your rate of client retention.

Here’s some suggested goals to consider:

• Obtain 3 referrals a year per client
• Increase the % of clients with at least 2 products with you e.g. Home Loan, Insurance, Car Loan
• Contact clients a minimum of 4 times a year (quarterly)

Tip 2 – Provide More Services

Ever heard of the Triple-Play? This is a key strategy you’ll recognise that telcos and banks use to retain clients. Telcos have a strategy aimed at gaining your Fixed, Mobile & Internet business because they know that by having at least 2 products with them you’re 70% more likely to remain a client.

From your perspective, the key here is for you to cross-sell as many products & services you can to a client, therefore don’t only provide them with their home mortgage but also provide Income Protection, Life Insurance, Car Loans, budgeting assistance or an annual review of their mortgage statement.

Tip 3 – Get Feedback

A lot of us often don’t want to really know what our customers think of our business or our service – just in case it’s not what we want to hear.

But getting feedback from your clients will help you understand their current and future needs, identify ways in which you can improve your service and importantly make them feel wanted.

Survey all your clients at least once a year and supplement this with one-to-one surveys or feedback at key points in your relationship such as just after settlement of their loan.

There are several ways to conduct a survey such phone or mail, however the most cost-effective and simplest for you and your clients is to use a free online survey tool such as Survey Monkey.

When doing a survey to keep it short and offer an incentive to participate – this will significantly increase your response rates.

Tip 4 – Use Your Database

One of the most important components of your business is your customer database and it will be a key part of your client retention program.

Your database should be used for 2 key purposes; to collect client information and to market to clients using this information.

Collect key information about your clients such as demographics, products purchased, loan details etc. – some of this information will obviously also come from your survey results.

Using this information you can then segment clients into groups such as First Home Buyers, Owner Occupiers, Investors or even age, location & number of children.

After segmenting your clients you can then develop targeted marketing communications which will directly appeal to their needs.

For example a new loan product geared toward investors will obviously be of interest to all of your clients that are investors.

Tip 5 – Be Easy to Deal With

The easier you are to deal with the more likely a client will be to stay with you.

A key aspect of this is to understand how each client prefers to communicate, be it by phone, face to face or email. Each client will be different but it’s important to communicate with them in the way that they feel most comfortable and of course will best gain their attention.

Tip 6 – Stay in Touch

Keeping in touch with your clients will make sure that when they next need a loan they’ll most likely call you first.

This also gives a chance to tell them about new products or services that you’re offering, plus will often uncover a need that they may not previously been conscious of before your contact.

How you contact them is directly related to how they want to deal with you (Tip 5) and the most common and easiest way is to send a regular newsletter either by post or email.

Tip 7 – Build Loyalty

Loyalty is crucial to client retention. Research indicates that 60% of loans don’t go back to the originating broker.

Loyalty will result from following these tips but also through implementing a planned program of rewards. For example, providing a client a gift upon settlement or when they refer a client to you. These programs can be adhoc or more formalised depending upon your needs.

Another way to build loyalty whilst keeping in touch is to contact them just after loan settlement, 3 & 12 months into their loan then ideally just prior to a key milestone such as completion of their fixed-term loan.

Tip 8 – Under Promise & Over Deliver

You can build fantastic client relationships and loyalty based upon under promising and over delivering, a simple, yet extremely powerful concept.

If for example, you promise to follow up with the bank for a client and get back to them within 2 days, do it today or at the latest tomorrow. Remember how important this is to the client, they’ll be waiting for your call so surprise them and call them before you promised.

On the flip-side, never make a promise that you have a doubt you’ll be able to keep, there’s nothing like a broken promise (or worse still a string of them) to send a client to your competitor.

Tip 9 – Educate & Empower

By keeping clients educated you likely become a “trusted advisor” so whenever they are looking for finance information they’ll contact you instead of your competitor.

Two key ways to educate clients is through providing valuable information in your regular newsletter, ideally this information should be relevant to them (Tip 4) and by inviting them to attend free information seminars.

These seminars are another opportunity to stay in touch, communicate, make them feel important and obviously sell new products.

Tip 10 – Do the Unexpected

Give unexpected gifts or rewards to clients that aren’t a part of your service.

For example, if you don’t have a formal loyalty program and client provides a referral then send them a special gift such as a hamper, gold-class movie tickets or a voucher.

Some brokers actually send their top 10 clients a gift during the year to thank you for simply being a client.

These ‘out of the blue’ rewards can have a powerful impact on building client loyalty, goodwill and of course increase client retention.

Byron Gray is General Manger, Sales & Marketing of Intellitrain and has been working with businesses for the last 20 years to increase their sales and profits through unique and practical sales, business development and marketing advice.