For savvy digital marketers, customer retention may actually be more important than acquisition. That’s because it’s typically cheaper and more effective to persuade someone who’s already done business with you to do so again.
By some measures, the likelihood of winning repeat business is 60% – 70%, compared to just 5% – 20% for acquiring new clients. The idea makes particular sense for B2B when the decision-making process is longer and more complicated. These transactions also tend to be higher in value, meaning a company probably isn’t going to go away from a vendor who offers a solution that gets results and fits their budget.
If you aren’t already putting a conscious effort into customer retention, don’t worry – this guide will help you get started quickly by providing a framework from which you can build your own plan for retention that helps cut your churn rate and increase monthly revenue.
Delight new clients
One of the most important periods in a customer’s lifetime is when they’ve already committed to doing business with you but haven’t yet fully received or implemented the offering. This time frame represents the first impression a new client has of your offering and your business. Make it good, and you have a much better chance of winning their business again in the future. But if you go over the top and exceed their expectations, not only are you very likely to win their business, you may even turn them into an advocate for your company who promotes you to their friends and colleagues.
In the startup world, this idea of far exceeding expectations is often referred to as “customer delight.” It’s important to remember here that your marketing team isn’t solely responsible for whether or not a customer is delighted. It’s a whole-team effort that requires everyone from marketing to support to accounting.
Throughout the course of his regular letters to shareholders, Amazon founder Jeff Bezos describes this idea as a “customer-obsessed organization.” He stresses that much of Amazon’s success has been the result of what he calls “true customer obsession,” by providing services and products so far above customer expectations that they don’t even realize they are needed. Amazon Prime is a great example – when it was unveiled in 2005, it wasn’t something customers asked for or even indicated they’d use. But after over a decade of iterating with a strong focus on the customer, Amazon Prime now brings in over $25 billion a year.
Don’t stop marketing to existing users
Lots of companies make the same critical error with retention: they focus solely on acquiring new business.While getting new clients is important, some of your marketing resources should be dedicated to those already using your product service. Click To Tweet
Again, while marketing can be the main department driving this initiative, it’s impossible to successfully appeal to existing customers without data from other parts of your business. MailChimp offers a helpful recommendation here: use data from customer support to create a content strategy that answers the most common questions people have about your service.
You can then promote this content in a regular email newsletter, or include it in a customer resource section as part of a client portal or similar platform. Other good ways to market to existing customers include explainer videos for new features, hosting guest presentations from experts in your field, or sharing case studies on how similar clients have found success with your offering.
In today’s fast-paced world of technology and automation, everyone is getting used to interactions that seem to get less personal every day. We receive automated email messages, stock responses from chatbots, or promotional texts from a company’s SMS tool. Even when we get in touch with a person, it’s often a support contractor in a different country, using a predetermined script to direct us to one or more desired outcomes.
One of the best ways to add a personal touch to your business is to thank existing clients for their loyalty. At a minimum, you can reach out via email (phone might be better) with a quick message expressing appreciation for their business. It doesn’t take much effort at all, but most people will appreciate you taking the time out of your day to personally thank them.
Depending on the model of your service or product, other ways to reward clients for their loyalty include:
- Discounts or some type of rewards program for repeat business. These are more common in B2C, but can be applicable in B2B businesses, too.
- A small gift card to a restaurant or coffee shop in the customer’s location.
- Creating a “customer of the month” program to recognize outstanding clients – often either new customers or those who have been around for a while
Build a community
This step is much more involved and complex than some of the other tactics mentioned throughout this post. In fact, there are entire companies and sophisticated software platforms created just to help companies achieve the goal of creating a community among existing clients.
Building a thriving community also isn’t cheap. Among major household brands, the Harvard Business Review says the typical budget for an online community can range from $500,000 to over $10 million. But part of the reason these brands are willing to spend so much on community building is because it works so effectively. Executed properly, the creation of a community can change the entire course of any business.
Consider the story of HubSpot, which began as a startup co-founded by two MIT graduates in 2005. HubSpot sells marketing automation software tools, which was a crowded field even back in the late 2000s when the company was maturing. How did they differentiate themselves from other competitors? Building a community around the idea of inbound marketing, a philosophy they created that revolved around attracting customers to a business, instead of going out and getting them.
The company went all out: they built and hosted a community called Inbound.org, which let users post on a forum discussing strategies for inbound marketing. HubSpot created over 150 user-led HubSpot User Groups (HUGs) throughout the country where members could meet to exchange ideas and best practices on using the company’s tools for inbound marketing. They even created an annual conference in Boston called INBOUND, which drew over 25,000 attendees in 2021.
Has it worked? HubSpot went public in 2014, raising $125 million in its IPO. As of last year, the company has an annual run rate over $1 billion and more than 100,000 paying customers. But you don’t need to host a conference for tens of thousands of people or devote eight figures to a marketing budget for success. Any company can start building a community using tools readily available: social media, chat platforms like Discord, etc. Once you gain some momentum, you can level up to more sophisticated tools like Tribe or Mighty Networks.
Final thoughts on customer retention
Whatever type of business you run, it’s important to put time and effort into keeping clients, not just winning new ones. Customer retention will look slightly different for every company, but the core tenets are essentially the same: delight people during their first experience, continue marketing your product or service even after they buy, and reward their loyalty. With enough trial and error, you’ll find an ideal strategy that works for your offering and the audience for which it was created.
Looking for some help with strategies on customer retention? Click here to schedule an introductory call with the team at Grwth. We have decades of collective experience working with all kinds of companies who want to better serve their existing clients to boost revenue and achieve more consistent growth.