Companies sink or swim based on their ability to retain customers. A company with $10 million in revenue with a 10% churn rate needs to acquire $1 million of new business each year, just to avoid shrinking.
The fact is that existing customers have greater lifetime value for your company: A 5% increase in customer retention can increase business profits anywhere between 25% and 125%, according to Gartner Group.
Improve retention, and other facets of the business quickly begin to improve as well.
So how do you unlock such value for your business? Here are five keys to customer retention that can help you increase revenue, fill up the sales pipeline, and improve performance.
1. Shared Vision and Strategy
To achieve their goals, businesses have to know what those goals are in the first place.
Take the time to set a shared vision and strategy with your clients; the idea is to articulate what they are trying to achieve and what the best way is to get there. You want to get your customers thinking about how using your product fits into their core vision, corporate strategy, and program objectives.
That process should start during the sales process and it should continue through the engagement by the customer success team:
- By the time customers are fully onboarded, you should have a good idea of their high-level strategic goals: for example, how to augment outbound marketing efforts with an inbound strategy to increase Marketing's contribution to revenue.
- The next step is to highlight tactical objective, such as ramping up the inbound marketing team, deploying campaign infrastructure, or launching the first inbound campaign in Q4.
- Finally, make sure to document the exact metrics and goals your customer will use to measure success. If the goal is to generate 250 leads in Q4 resulting in 50 Sales-qualified leads (SQLs), your team should be on the same page.