It’s Not about Winning, It’s about Retaining Customers
Does the title of this blog freak you out?! Don’t win new customers?!
Glad it got your attention, but sorry, you do still need to bring in more business (unless you’re in the exceedingly rare and enviable position of companies like Tesla that have hundreds of thousands of anxious prospects on a wait list to buy). For now, we’ll assume you’re not in that position, but it’s a bit of a moot point because even companies with people lining up around the corner to make purchases still need to look ahead to attract more of those ideal buyers. The market-sell-retain cycle, of course, is never over.
The point of this post, however, is to underscore the growing amount of data that shows why cultivating customers who re-buy, and equally importantly, recommend your products is the holy grail of business and brand success. I won’t bore you with too many stats; they’re out there if you look, but for the sake of context and credibility, just consider the following three data points. These speak to the financial impacts of customer retention, realities of re-purchase, and the ripple effect of loyal customers:
- Profound Financial Impact: As Esteban Kolsky presented at our C3 conference, it is six to seven times more expensive to attract a new customer than it is to retain an existing one.
- Reality of Repurchase: The probability of selling to an existing customer is between 60-70% versus 5-20% for new prospects (MarketingMetrics).
- Broad Ripple Effects: Again, according to Kolsky, if customers are not satisfied, 13% of them will tell 15 or more people that they are unhappy. Whereas, 72% of customers will share a positive experience with 6 or more people.
Considering those three factors alone, the writing is on the wall; or as Alex Shultz, VP of Growth for Facebook succinctly says, “Retention is the single most important thing for growth.” To grow and to receive the other benefits of customer-centricity, companies must broaden their understanding of the customer lifecycle (i.e. it’s not over once a sale is made) and they must shift the end-goal away from simply winning customers to engaging and retaining them so that they re-buy and share their positive experiences.
Here are five tips to retaining customers the right way:
- Clean up the C-suite. Ouch. Harsh place to start, but it’s true. If your top-level management doesn’t see the value of customer retention, doesn’t put teams in place to support it, and only drools over shiny new accounts, you’re fighting an uphill battle. You can still work on some of the following tips, but getting top-down leadership is essential to comprehensively cultivating loyal customers.
- Innovate in customer marketing. Many marketing teams across industries focus solely on demand / lead generation. This is important, but as the statistic above showed, it’s much more expensive to attract new customers, so if there’s not a formal customer marketing team, perhaps encourage the lead gen team to run some strong customer-focused campaigns to earn those sought-after repurchases and cross-sells, which again according to our stats, are actually easier to close than new business.
- Empower the Customer Success team(s). Even if you don’t have an official Customer Success Team, remember that all customer-facing teams are your front line ambassadors to wowing existing customers. They need to be supported with systems that empower them to be knowledgeable and helpful, and have real-time access to customer feedback so that it can be addressed if needed. Keep in mind that bad customer service ranks at the top of why customers churn.
- Change the one-and-done Sales mindset. It’s somewhat stereotypical to think of the salesperson narrowly focused on closing the deal du jour, but it’s also baked into many corporate cultures (e.g. just do whatever you can to close it and we’ll clean up the mess later). This is a mindset that’s on it’s way out as the customer-centric era evolves. Salespeople need to be trained to treat customers with an account manager’s sensibility and eye toward up-selling and cross-selling over a long and trusting relationship.
- Be social and build communities. This is the new frontier of successful retention efforts. It’s not just about responding to customers over social channels, which most companies have been doing for years; now it’s about turning those social networks into vibrant communities where customers interact with each other and well as with members of the company. If you have the resources to build a more sophisticated community platform, complete with gamification and digital motivation elements — more power to you! Community breeds trust, which is a direct line to long-term retention.