Delivering great products is no longer sufficient to be an industry leader. Companies need a customer retention strategy that’s
And sure, you need a great product. You need lead generation and sales. But if you can’t keep your customers, you won’t hit your revenue targets for the long-haul. Customer churn is an expensive problem.
Consider a SaaS (Software as a Service) company. They want to grow from $1MM in annual revenue to $100MM so they IPO or exit. And they currently have a 12% annual customer churn rate. If the company stays on its current path, when it comes time to exit, they’ll grow revenue to about $48MM. But had they deployed a successful customer retention strategy, they would be earning almost $300MM in revenue in that same amount of time.
That gap between $300MM and $48MM is huge – and amplified significantly when exit multiples come into play.
In case you’re wondering, we used a cost of churn calculator to determine those numbers.Want access to run the numbers for your company? No problem – click to get free access to the customer churn calculator .
That’s just one example of the impact of customer retention. You may not have a SaaS company that’s looking to IPO or exit. But no matter what your company’s circumstances, focusing on customer retention is the best way for B2B (business-to-business) companies to hit their revenue goals and growth targets.
At CXology, we focus on helping B2B companies create and implement thoughtful customer experience processes. Our primary goal is to help companies cultivate long-term, high-value customer engagement, which means developing the skills to boost retention.
There are opportunities to build genuinely strategic relationships in the business world that don’t exist in the same way as on the consumer side. B2B customer relationships are more complex and dynamic. In addition, historically B2B companies have spent less time focusing on the customer’s success.
More complexity plus less focus means a huge opportunity for growth via customer retention.
And it gets even better, because many companies simply fall short on their potential to cultivate long-term relationships with customers.
A little focus on customer experience puts you way ahead of your competitors. It’s where your
retention strategy comes into play.
Congratulations! You’re already an expert in being a customer. No matter what you do, where you live, or how you engage in the world, you’ve been a customer of something, somewhere, at some point.
Hopefully you’ve had a moment (or several) when you realized a company had knocked your socks off with their service, support or engagement. Those moments happen when companies are authentically connected with the people they serve. They understand what makes them tick, the challenges they’re trying to overcome, and the language that speaks directly to them.
Maybe a ton of number-crunching that went into understanding those customers. Maybe they intuitively know who they serve. Either way, a thoughtful approach to customer experience begins by considering the people behind the jobs your customers hold.
Companies are entities, but they’re all made up of people who want to feel appreciated.
There’s a reason people connect with the following Maya Angelou quote:
“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Sales teams are trained to ask insightful questions that unearth customers’ feelings. Those questions help customers identify needs they want to address and resolve.
There’s a reason commercials often begin with some version of, “are you tired of…” When people are prompted to identify with that negative feeling, and are prompted with a solution, they’re more likely to buy.
But what happens after they buy? What is your company doing to make customers feel appreciated and valued once the deal is signed? If you’re not making customers feel appreciated and valued they’ll probably feel frustrated.
Your company’s retention strategy must begin with the foundation of thoughtfully considering the unique group of people who make up your customers.
Great products are not enough. Your company needs an equally good customer experience.
Being thoughtful about knowing them comes first. Next, ensure your strategies are customer-centric.
Consider this scenario:
A customer purchases your products and their employees must be trained to operate that product. As a company, you have a standard training program you deliver. The customer requests an adjustment to the standard training protocol.
What do you do?
Here are three possible outcomes:
In the first outcome, your company might think they’re being customer-centric, but in fact, they’re falling victim to a classic blunder. Customer-centricity does not mean doing anything the customer wants in order to make them happy.
That’s not the case – it’s also not good business. Companies can’t become beholden to every unreasonable request a customer makes. Boundaries in relationships are important, whether those relationships are business or personal.
It may be controversial, but the customer is not always right.
A customer retention strategy built on doing anything and everything for your customers is bound to fail.
With the second option, you’re considering the needs of the customer. Maybe even having a conversation to better understand why they’re making the request.
Your company evaluates the request to ensure that quality standards are still met, while seeking to validate and accommodate the customer.
In this regard, customer-centricity puts the customer at the center by following its process to serve the customer’s request, taking the overall relationship into consideration.
When you build customer experience with the customer’s needs in mind, you’ll develop processes that make customers feel valued. When the customer in this example believes their request has been heard, they will be more likely to accept your decision for customizing the training (or not).
Your process to manage the relationship will likely have a greater impact on retention than the decision itself.
What about option #3? That sounds reasonable, right? After all, many training programs cover vital information. Employees are trained to deliver that specific training. If you change either variable, your company runs the risk of diluting the quality you provide.
You could argue that quality is the bedrock of your training program and it has to be delivered the same way every time to ensure standards of excellence.
In today’s world, that “take it leave it” mindset is too rigid. Especially when you can follow the friendlier path of option #2.
Can you go too far accommodating a customer? Sure – there’s even a story about a shopper who got a refund for a tire from Nordstrom, a store that has never sold tires. This is a true story. And while it made Nordstrom’s customer return policy legendary (they’ve since changed the policy) it’s a great example of the customer not being right.
When companies have immature customer experiences, every situation is a fire drill. Employees are given little direction for implementing the customer experience, so they manage each situation as a one-off.
It’s difficult to build a customer retention strategy – or any strategy – when you don’t have a solid foundation.
Consistency is the foundation for customer experiences that lead to retention and growth.
Your company delivers consistency via plays.
Plays are documents that employees use to guide customer experience. When companies create and implement plays, they provide everyone the clear path to success they need to be consistent.
What’s in a play:
None of these components needs to be complex. Your goal is consistency, not complexity.
When customers leave a company, it’s generally not due to a catastrophic failure. Only rarely is there one single factor that immediately causes a company to churn. It happens, but it’s rare.
The biggest predictor of churn is just the opposite. Most commonly, turnover occurs after a build-up of small issues that go unresolved over time.
It’s frustrating when you hire a company to do a job and feel like they don’t communicate well, don’t respond to your feedback, and act as though they want your money more than they want to deliver good work.
Eventually, there’s the proverbial “straw that breaks the camel’s back” and a customer is no longer willing to deal with those small issues, so they leave.
(Consider your own business relationships. Does that hold true for you?)
This means companies need ways to avoid the small issues that add up to churn over time. It means your company must deliver a great customer experience, consistently, so customers feel valued. Feeling valued is one of the best ways to ensure retention and earn a little discretion when those small issues come up.
Let’s say it one more time, because this is so critically important – the key to your customer retention strategy is to consistently make your customers feel valued.
Fortunately, making customers feel valued is not complex. It’s not even expensive. In fact, it’s simple and the best investment you can make in your company’s growth.
Your strategy for retaining customers is directly tied to your team. Interpersonal engagement is where your opportunity for customer retention thrives. In order for your employees to wow your customers with great experiences, they need to know what to do and how to do it.
Your team needs clear processes they can deliver every time, in a way that’s aligned with your brand’s voice and vision.
That’s why the secret to customer retention is simple.
At CXology, we help companies create and implement experiences that are designed for long-term customer retention.
Companies need plays that focus on the most mission-critical inflection points through a customer’s lifecycle. CXology is online training that guides companies through the steps to create and deploy those plays so that every team member knows how to successfully deliver customer experience consistently.
Companies that deliver thoughtful, customer-centric experiences consistently earn retention strategies that convert to long-term growth.