So much for the golden age of e-business. Today, the crowds of dot-com enterprises and brick-and-mortar Web wannabes have dispersed. New project starts and RFPs have declined sharply. The task of servicing new customers has been replaced by another imperative: holding on to existing customers.
"All sorts of new ventures were popping up [and] people were following the money," recalls David Munn, president of the Information Technology Services Marketing Association. The market downturn, however, has "helped some companies return to their roots," Munn observes. "Companies are going back to their best clients, who might not have been sexy or growing at wild rates, and making sure they are spending more time with them."
Welcome to the new reality of customer retention. Integrators and service providers are redoubling efforts to keep their customers happy. They're attending workshops and hiring consultants. They're employing tactics ranging from customer satisfaction surveys, to free seminars, to new service promotions. They've discovered that hanging on to old customers is a lot cheaper than pulling in new ones. Industry executives estimate that the expense of selling a new account can be anywhere from two to 11 times the cost of maintaining an existing client.
"It's harder to find new clients," says Janet Szilva, president of AJS Group, a sales consultancy, voicing a sentiment shared by most industry executives.
Therefore, rather than expend most of their energies chasing new accounts, integrators are exploring ways of getting the most out of their existing customer relationships. One such company is EYT, an application service provider.
Jim Hunt, the company's CEO, says it recently won a deal with a major automotive manufacturer and now wants to ensure that it becomes a permanent fixture at the client site. The ASP's salespeople have been given customer badges and are working in the account's purchasing group every day.
"Every deal is very competitive and every deal is hard fought," Hunt says. "Leveraging the first sale is much better than going out and finding a [new] client of that ... stature."
Still, challenges remain. Larger integrators, hungry for work, are moving downstream to pursue smaller accounts, making life even harder for mid-market integrators. In addition, some customers are breaking up the few projects they do initiate into separate bids, making account control difficult. Companies also must contend with internal issues, such as declining sales and marketing budgets.
What follows are a few approaches for hanging on to what you've got.
