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.
These conversations should be revisited every quarter during your quarterly business review (QBR). The QBR should have a clear focus, and it should present a clear review of the progress from last quarter and the road map for the future.
2. A Focus on Adoption
Adoption is the foundation of any successful implementation, and it should be considered throughout the lifecycle of the customer's deployment.
To start, your company needs to have clear, measurable visibility into every customer's adoption of your product or service. Those measures typically take the form of initial adoption metrics, such as the five key steps a new user must take to be successful, as well as ongoing metrics, such as usage patterns that predict customer health and adoption of new features by current users.
In addition, businesses should look at Net Promoter Scores (NPS), support ticket counts, and other qualitative metrics to get a comprehensive hold on what is working and what is not, and use those insights to inform product decisions.
If there is a roadblock somewhere in the onboarding process, you want to know about it and respond as soon as possible.
3. Manager and End-User Value
Data about user behavior is also critical post-adoption.
Understanding your customers' day-to-day activities allows you to build a product or application that meets their needs. Companies should attempt to build into the product or service visibility into how customers actually use them—not just how it was originally designed to be used. Generally, the two are not the same thing.
Of course, your product designers had ideas in mind when they created the product or its new features, but customers are experts at devising their own use-cases. Make sure you can "see" these new usage patterns and adapt accordingly.
That information also enables you to unblock potential barriers that your product team may have inadvertently created.
4. Training and Communication
Training and ongoing communication are key for customer retention because they help users realize the value of your product more quickly.
Such updates should include information about changes, new features, and useful tips that will enable users to use your product successfully. In this case, your customer success team should work closely with the marketing team, and maybe even include a dedicated marketer, to ensure that the messaging is consistent.
All the standard content marketing rules apply to customer marketing as well. Content should be bite-sized, visual, helpful, and interesting. Mixing broader industry content, such as best-practices, that extend beyond your product is another good way to keep customers engaged.
By educating your customers on overarching themes, you become a trusted and valuable resource.
5. Providing Support and Changing Management
Staying in tune both with your customers' evolving needs and with evolutions in the market is critical for retention.
As your customers' business changes, your product also needs to change if you're going to keep those customers around. If you conduct your QBR the right way (as noted above), you should be standing very close to your customers and thus should be able to pick up on how their business is changing—e.g., job/role changes by power users, reorganizations, competing systems introduced in other parts of the company, and of course, changes in goals.
Changing management and implementing a strong support process is a good way to make sure that your product remains useful and relevant.
Product marketers are also important on this front, because part of their job is staying on top of industry trends, including how competitors are changing their product and messaging. Remember that your current customers are a goldmine of such information. They are also a great "test bed" to try out beta features before rolling them out to your broader customer base. Learn from them.
You might also consider creating a customer advisory board, which can be a formal one, focused on executives, or it can focus on the manager/user level where members can hear from you about the product and exchange ideas among themselves. Such an effort could end up serving as the foundation for an industrywide community, with you at the center.
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Maximizing the lifetime value of your customers is central to maximizing the value of your business. Ultimately, all this advice boils down to the one core principle: Listen to your customers and respond to what you hear.
Doing so will help improve your product and brand awareness, not to mention your business's bottom line.
You may like these other MarketingProfs articles related to Customer Relationships:
- Boost Your Sales With Strategic Gifting [Infographic]
- How to Use Empathy in Your B2B Brand Storytelling
- The Role of Customer Empathy in the Future of Marketing
- How to Offer More Value to Your Crisis-Stricken Customers [Infographic]
- Planning Your COVID-Related Communications: A Flowchart [Infographic]
- CX Will Be Essential for Rebuilding After COVID-19: Four Steps You Need to Take Now