Does Your B2B Company Have a Retention Marketing Strategy?
The cost of acquiring new clients is always much higher than the cost of servicing existing ones, so customer retention marketing should be on the top of all company’s priorities. Companies are so focused on acquisition marketing that they often forget about their most valuable asset, their current customers. It costs 6-7 times more to acquire a new customer than it does to keep an existing one. Furthermore, you are 4 times more likely to close business with an existing customer than you are with a new prospect.
The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20% (from Marketing Metrics). Research also shows that a 10% increase in customer retention results in a 30% increase in the value of the company (from Bain and Co.) Anyone working at a SaaS (Software as a Service) or any service business. knows that churn and customer renewals are critical metrics for the business. Yet, many marketing plans are so focused on customer acquisition that they largely ignore customer retention.
Here are 7 steps to a better B2B Retention Marketing strategy:
- Determine Audience Segments.
Start with broad categories such as customer, prospect, influencer, and channel/reseller. Layer in additional qualifiers as you go. A rule of thumb is the more "adjectives,” the more precise the segmenting will be. This may be one of the greatest steps most companies take care of.
- Segment and Clean Your Database
Build a clean database made up of e-mail addresses with information about each subscriber that identifies his or her segment. Existing database entries can be complemented by list-building opt-in strategies like marketplace prospecting and web site registration (in exchange for valuable downloadable content), subscription offerings, warranty/customer servicing, etc. Once the database is built, it has to be scrubbed inside and out on an almost daily basis. Customer mindset evolves as lives change and preferences change with them. Setting up a customer preference center is great for this and can help limit your unsubscribe rates as well.
- Give Your Newsletter a Kick in the Pants
It seems like most companies at least have some form of Newsletter. The problem is most company’s newsletters are all about them, what they are doing, and what they think is important. What you need to do instead is share content (curated or your own) that make your customers say, “Yippie, the newsletter arrived today!” What works for you will depend on your market but the basic formula we have found is to try to share one thought leadership piece, one interesting article from a relevant market or service and one piece about something exciting that is going on in your company. If possible try to create a different content for each newsletter based on their segment.
- Share Your Thoughts
In today’s marketplace it’s not enough to have a great product or service, you also have to help educate your customers on how they can use your product or service better. Interviews with industry experts and video snippets of product managers or support folks sharing their favorite tips and tricks work well for this. Remember the online marketing guru Seth Godin has a mantra. Online content must religiously adhere to three criteria: it must be expected, valuable and relevant.
- Customer service
Poor customer service accounts for 70% of customer loss. Marketing can help with this greatly by working with the support team to deliver content that can help service folks do their job. Often many customers’ service issues stem from a mismatch between the offering functionality and customer expectations. Marketing can create content that can set customer expectations for functionality and performance to make sure there is a good match between the product and what the customer is trying to do. The overwhelming majority of unhappy customers will never communicate their dissatisfaction with you. Regularly checking in on customers will help you to see signs of an impending departure, while there’s still time to fix problems.
- Campaign to Your Lost Customers
You are twice as likely to close business with a lost customer as you are with a new prospect. With close rates like that, you should be treating these folks like hot leads. Doing win-loss interviews can help you identify patterns around what went wrong in the first place and get clues as to what to offer them to come back.
- Do it Again and Again.
Online retention programs are relatively easy to turn into a repeatable process. Start with one or two "beta" audiences and then scale up and outwards into more segments from there. Consistency is critical since developing a continuous, expected experience keeps customers and content aligned.
The Bottom Line
Because it costs 6-7 times more to acquire a new customer than it does to keep an existing one, retention marketing should be on the top of every company’s priority list. When you consider that the probability of selling to a current customer is 5-10 times greater than that of a prospect, retention marketing are the most valuable leads your marketing team can generate. The problem is that most companies are not doing enough or even any retention marketing. By following these seven steps, you can significantly increase your client retention rates and the overall ROI of your marketing initiatives.