Companies sink or swim based on their ability to retain customers. A company with $10 million in revenue with a 10% churn rate needs to acquire $1 million of new business each year, just to avoid shrinking.
The fact is that existing customers have greater lifetime value for your company: A 5% increase in customer retention can increase business profits anywhere between 25% and 125%, according to Gartner Group.
Improve retention, and other facets of the business quickly begin to improve as well.
So how do you unlock such value for your business? Here are five keys to customer retention that can help you increase revenue, fill up the sales pipeline, and improve performance.
1. Shared Vision and Strategy
To achieve their goals, businesses have to know what those goals are in the first place.
Take the time to set a shared vision and strategy with your clients; the idea is to articulate what they are trying to achieve and what the best way is to get there. You want to get your customers thinking about how using your product fits into their core vision, corporate strategy, and program objectives.
That process should start during the sales process and it should continue through the engagement by the customer success team:
- By the time customers are fully onboarded, you should have a good idea of their high-level strategic goals: for example, how to augment outbound marketing efforts with an inbound strategy to increase Marketing's contribution to revenue.
- The next step is to highlight tactical objective, such as ramping up the inbound marketing team, deploying campaign infrastructure, or launching the first inbound campaign in Q4.
- Finally, make sure to document the exact metrics and goals your customer will use to measure success. If the goal is to generate 250 leads in Q4 resulting in 50 Sales-qualified leads (SQLs), your team should be on the same page.
These conversations should be revisited every quarter during your quarterly business review (QBR). The QBR should have a clear focus, and it should present a clear review of the progress from last quarter and the road map for the future.
2. A Focus on Adoption
Adoption is the foundation of any successful implementation, and it should be considered throughout the lifecycle of the customer's deployment.
To start, your company needs to have clear, measurable visibility into every customer's adoption of your product or service. Those measures typically take the form of initial adoption metrics, such as the five key steps a new user must take to be successful, as well as ongoing metrics, such as usage patterns that predict customer health and adoption of new features by current users.
In addition, businesses should look at Net Promoter Scores (NPS), support ticket counts, and other qualitative metrics to get a comprehensive hold on what is working and what is not, and use those insights to inform product decisions.
If there is a roadblock somewhere in the onboarding process, you want to know about it and respond as soon as possible.
3. Manager and End-User Value
Data about user behavior is also critical post-adoption.
Understanding your customers' day-to-day activities allows you to build a product or application that meets their needs. Companies should attempt to build into the product or service visibility into how customers actually use them—not just how it was originally designed to be used. Generally, the two are not the same thing.