“Keep your friends close, and your customers closer.”
Ok, maybe that’s not exactly how the old adage goes. However, it does go without saying that it’s important to connect and build close relationships with your customers if you want to keep working with them in the future.
Customer retention is mandatory if you plan to grow and scale your business. If you're always searching for new customers to offset a high level of churn, you’ll never be able to move your business to the next level of success.
Investing your resources in customer retention makes sense from a financial standpoint as well as from a growth-minded perspective.
It costs significantly less to upsell an existing customer than it does to bring on a new one. Customers who’ve developed strong loyalty to your business/product/service are also likely to stay with you for longer, have a higher lifetime value, and provide you with more referrals.
In a nutshell, a focus on customer retention is a must-have for growing and maintaining a successful business. We’ve put together some tips to help you do it well.
Customer retention shouldn’t be something you start thinking about when the customer in question has two weeks, 90 days, or six months left on their contract. Instead, you should start thinking about and prioritizing retention from the very beginning of their relationship with you.
This customer-focused retention strategy all starts with a clean and seamless hand-off between your sales team and your customer service/customer success teams.
Your customers should never have a moment when they feel unsure regarding their contact and your company. And they should never experience a lapse in communication from when they initially sign up with your company, to when they onboard, put the pedal to the metal, and gain traction using your services.
If you don’t have the resources available on your in-house team to create a high-touch partnership between you and the customer, the time may be right to consider an outsourced customer success team to maintain those relationships and keep your customers engaged and actively using your product/service.
The costs of adding this partnership can easily be offset by the gains your business can make in service and retention. According to Bain and Company, a small incremental increase in retention (5% for example), can increase profitability by 75%.
This sounds like it should be easy, right? Just do something when you say you’ll do it and how you say you’ll do it. It certainly sounds like an easy win.
However, the reality is that many companies lose customers for that very reason – they don’t follow up and do what they initially promised.
Research shows that two-thirds of all customer churn can be prevented by providing fast, solution-oriented customer service that fixes problems and achieves results during the first interaction. Bringing on outsourced customer support resources can make sense if it saves time and money, and keeps clients happy with your services.
Customer experience has become an industry buzzword and a must-have for companies specializing in ongoing relationships. People actually like keeping the same service provider when they have the option to do so; the service providers just have to avoid getting in their own way.
Fifty-five percent of consumers will spend more money when they have a positive customer experience. When you make the process of using your product/service easy for your users, you make it more likely that they’ll receive value from your offering and want to continue using it.
You should also take steps to reduce friction in the renewal process by considering where you’re most likely to see customers dropping off.
- Is it because they haven’t taken the steps to proactively renew their service? Provide them the option of an automatic renewal so they don’t have to go through a lengthy process. If you make an existing customer spend a lot of time on the renewal process, they might feel like investing those hours in looking at a competitor and the tantalizing incentives they offer, instead.
- Is it because they are dissatisfied and haven’t let you know? Many companies ask customers why they’re leaving only after they’ve chosen to go with another service provider. Instead, ask them frequently about their experience (requesting that they complete a Net Promoter Survey on a regular basis can be a good way to start these conversations) and remove the friction when it occurs.
- Is it because you both let the contract end date slip past without noticing? Ideally, this should never happen on your end because your team members should be on top of the relationship. Consider working with an outsourced customer success team to build automated reminders that make it easy for customers to renew and to ensure that no one forgets to touch base with a customer in the days, weeks, and months leading up to their contract’s end.
Special incentives shouldn’t just be used to lure in new customers. Offering incentives and perks can be a great way to show your existing customers that you’re committed to the relationship.
If you have an existing customer who would benefit from an upgrade to a higher level of service or who could see value from an add-on product, offer them a limited time to trial one of these options.
At the same time, perks don’t have to be all about giving something away or offering a discount. Other perks might include access to advanced training materials or letting them know how you’re using their feedback to inform your development processes and make future iterations of the product better/faster/more usable for them.
This approach can be a win-win because you’re impressing upon the customer that they’re important to you. At the same time, you’re also giving them more reasons to stay with you or to upgrade their services.
Sometimes, even if you’re doing a good job, customers can start wondering whether the grass is greener on the other side of the fence.
In scenarios like this, the best thing you can do is to help them find the Next Best Thing, making sure it’s something from your offerings. If you’re using an experienced customer success team that is attuned to your customers’ needs, they should be able to find ways to highlight product features and upsells that would make sense for your customers.
And, if you’re looking at your customer personas and analyzing data, you may be able to identify those Next Best Things that your customers don’t even know they need.
As an example, CloudTask was able to help The Workplace Depot secure more than $95,000 in product upsells in their first year of partnership. They achieved this success by identifying opportunities to offer an additional product that the customer wasn’t aware of or hadn’t inquired about.
Data analysis is a key factor in customer retention success. And, keeping all your customer data, information, and touchpoints in one place can help you ensure your customer success team is making connections regularly and effectively.
According to Salesforce, using a CRM system to manage your customer relationships can improve retention by as much as 27%. If you don’t have experience in managing this type of system, an outsourced customer success team may be able to help; they have experience with helping customers build repeatable, successful processes to ensure sales and retention success.
Instead of hitting customers with one-size-fits-all communication, personalize your communications to fit their needs. This doesn’t necessarily mean you have to create specific messages for each individual customer.
Instead, look for similarities in the pain points or opportunities that different customers/customer industries may face. Crafting buyer personas can help you begin to create those groups and find the similarities between them.
From there, you can build a content and communication strategy that speaks to their particular needs and concerns.
For example, if you offer a technology product to both corporations and small businesses, you’d expect there to be different use cases for each. Once you determine which opportunities exist, you can build white papers, tutorials, webinars, and more specifically to support their needs and make them feel heard, understood, and supported.
Customer retention is about more than keeping the customer signed up, then forgetting about them until you touch base in the next quarter or year.
It’s about building helpful, long-lasting relationships in which both parties feel a committed and ongoing loyalty. By using your resources to create these types of partnerships, you’ll be on the way to creating greater long-term success for both your company and the customers you serve.
Does your business struggle with customer retention? Where do you see the greatest opportunities for improvement? Feel free to let us know in the comments below: