A customer retention strategy is critical to growth. But did you know that only 21% of B2B marketers track their churn rate with existing customers? In markets where new customer acquisition can take anywhere from 12-18 months, leveraging your current customer base is a smart and efficient way to grow your business.
Here are a few reasons customer retention strategies should play a key role in your business growth strategy:
- Recruiting new customers costs 5x as much as retaining current customers
- A 2% increase in customer retention has the same effect on profits as cutting costs by 10%
- A customer who is “totally satisfied” delivers 2.6x more revenue than one who is “somewhat satisfied”
- The average customer spends 67% more in his or her third year as a customer of your business in the first year
Define Your Onboarding Process
Where do you start with customer retention? Begin with the onboarding process. From day one, a customer’s user experience greatly factors into their long-term loyalty. To create a continuous customer feedback loop, make sure that you have all the data you need. This includes direct contact information—email, text and phone. Be sure that your customer knows what to expect by establishing a schedule of consistent communication. That communication cadence may be a combination of in-person sales visits, virtual check-ins, scheduled feedback surveys to understand their interests and needs, and a call center to better gauge sales success and sales barriers.
Act on Customer Feedback
Once you establish the communication cadence, leverage the data you gather. Understand why a customer makes a purchase or why they don’t. Then, act on it. According to the book, “Customer Winback: How to Recapture Lost Customers and Keep Them Loyal,” you only have a 20%-40% chance of winning a former customer back. That means, timely action is paramount. According to studies by Bain & Company in partnership with the Harvard Business School, evidence shows that even a 5% increase in customer retention can lead to an increase in profits of between 25% and 95%.
Calculate Your Net Promoter Score
Use the collected feedback to inform your Net Promoter Score (NPS). To obtain your NPS, survey your existing customers. Ask them how likely they are to recommend your company, product or service to a colleague. The question should be answered using a scale of 0 to 10. Then, convert the results into a score that ranges from -100 to +100. The first step to calculate the NPS is to divide the respondents into 3 groups—Promoters (rating of 9 or 10), Detractors (rating of 0 – 6) and Passives (rating of 7 – 8).
Use this formula to calculate your NPS:
NPS = Percent of Promoters minus Percent of Detractors
Measuring your NPS enables your organization to:
- Identify dissatisfied and at-risk customers
- Benchmark your organization against industry averages
- Monitor movement of your company’s NPS score over time
Utilize a CRM System
Once you gather all of the data and analyze customer feedback, utilize your Customer Relationship Management (CRM) system to establish a sales action plan. Integrating your data into an effective CRM communication loop is crucial. It allows you to track sales action, customer feedback and plan marketing retargeting campaigns.
Leverage Real-Time Data
Tenlo used our research center to help one of our clients refine their customer retention strategy. By utilizing customer satisfaction surveys, Tenlo helped Nestlé Professional maximize their customer retention strategy using real-time data and actionable insights.
“We put the customer at the heart of everything we do. Our ultimate goal is to continuously improve our customer’s journey and ensure every interaction we have with them is a positive experience. Our emphasis on retention starts with the first interaction. We look to various strategies that provide actionable insights, which allows us to prevent potential issues or pain points. Having access to real-time customer feedback ensures that we always provide the highest quality products, services and customer experience!”
–Megan Alexander, Sales Operations at Nestlé Professional
Build Your Retention Strategy
Leverage the data you gather to develop an appropriate content and amplification strategy. Develop content that addresses concerns and praise from your customer feedback surveys. Establish a regular cadence of communication and leverage your most effective channels for content amplification—email retargeting/automation, social media, webinars, web content and more. Align marketing and sales objectives against your strategy and hold “task force” meetings to keep your teams accountable. Measure success along the way, refine and iterate.
Customer retention should be at the core of your business growth strategy. It doesn’t start with negative feedback responses, it begins with a clearly defined onboarding process and requires a continual feedback loop with actionable insights. Acting on real-time feedback data will help you to proactively address concerns and build a retention strategy that is responsive and scalable.
Corporate and agency experience gives Mary Ellen a unique perspective on clients’ businesses. She uses her knowledge and expertise to ensure marketing plans deliver positive results for clients.
Mary Ellen Ellar, VP of Client Strategy