New Sales! Is that really the most important thing?

I’ve recently experienced yet another example of a misguided thought process as it pertains to current clients -vs- new sales.

During my daily call with my dad, he always asks me how Avionté is doing. One of the easiest things to talk about is new sales. New sales are sexy, exciting and build momentum.  Everyone understands the importance of getting new customers. However, what is equally important, but not nearly as sexy, is client retention. Fundamentally, people believe in this and give it loads of lip service – but I’m consistently surprised to see businesses not practicing what they already know to be true.

With my staffing software business, I realize we can’t grow at a significant rate without new sales, but I also know we can’t survive without long-term satisfied clients. In many respects, current clients are better than new clients. Here are few reasons why (not in any order):

• Significantly lower support costs the longer they are on the system
• Better feedback on the system, including best practices
• Providing industry referrals and case studies
• Organic growth – i.e. our customers add new users  – the cost of sale is significantly lower than new clients

However, here is a case where Avionté is the current customer. We are in a building owned by RREEF, a Chicago based mega-company owning millions of square feet across the country/world. They are full of bureaucracy, which if you know anything about me, you know I can’t stand. I want to be able to sit across a table from my landlord and figure things out. We signed a 5 year lease in 2008, so our lease ‘ends’ September 2013.  We do have an early termination option for September 2012. This is our 4^th office in 5 years, due to growth. Fortunately, or unfortunately, we have already filled up this new office space, with the 4 new hires on March 29^th.  Next door, there is a nice end cap space (2833 sq ft) that has been vacant for 4 years. We don’t require much build out, as we feel too many individual offices detracts from great teamwork.  Bottom line – we are asking for 3 things:

1)       A door cut into a wall that literally had a door there before we moved in (they removed it) 
2)      A 2^nd entrance, creating a pathway from our current space to the new space
3)      A training room, 16×25 ft, which requires adding 3 walls to create the room

They would have to carpet and paint the space, which would be done regardless of the tenant.

Now, I’m confident they would give a new tenant, off the street, a 3 year deal similar to the rate structure I have in place, for the space above. In our attempts to talk to them about the space, we have been blown off constantly – so that already sets the tone of the relationship, in my opinion. This week, they presented us with an offer: they’d do the improvements, but require us to extend the total lease for 4 years (i.e. 7 years from now). 

Maybe I’m jaded – who knows.  But, I believe they should look at trying to keep a fast growing, low maintenance, current client happy. In my opinion, they should keep the original terms and basically say – how many feet do you want?  This 2833, great. Want more? To make this even more interesting – the space on the other side of us is being vacated by Sun Microsystems – 25,000 sq ft!  And the building is less than ½ full.

Bottom line – there is no freaking way I’ll sign a lease longer than the term we have and we will move. I realize we aren’t the biggest of clients, but we are a reliable, expanding tenant who is still paying good money to RREEF.  It is a classic example, in my opinion, of missing the forest for the trees.

So – if you are a competitor of ours in the staffing software industry, please feel free to keep focusing on new sales and not your current customers. For the rest of you, make sure you are looking hard at the simple things it take to keep your current clients happy.

John Long is the founding Partner and CEO of Avionté, a customer-focused provider of staffing software solutions.  He has extensive knowledge of the staffing industry that began with four years at Paychex, where he developed an in-depth understanding of back-office functions, specifically with payroll software processes.  Over the next several years, John worked for established staffing software firms in advanced roles that included President, Vice President of Sales and Chief Revenue Officer.   John’s ability to empathize with staffing software users and fully comprehend their needs is a direct result of his hands-on involvement at every level. John holds degrees from St. Olaf College in Math, Computer Science, and Statistics.