You know the old saying ─ identifying, attracting, and closing a new customer is far more costly and time-intensive than keeping a current customer happy and thriving. Recurring revenue from renewing existing client relationships is critical to a healthy financial pipeline. In fact, it’s so important to B2B businesses that a 5% increase in customer retention can lead to a 25% to 95% increase in profits, according to Bain & Company.
So, before it’s time to renew a customer relationship, it’s worth a time investment to consider the top five most common reasons customers don’t renew. While we do expect circumstances related to COVID-19 as a reason not to renew, there are more common recurring revenue risks. Here is a list of the top five and best practices for how to address them:
- Return on Investment: If the customer feels they’re putting more into the product than they’re getting out of it, they will likely move on to a competitor. Companies should not wait until renewal time to discuss customer satisfaction, evaluate product use/adoption, or address concerns.
To head this problem off before it starts, B2B sales must first understand how their customer defines success and the criteria involved in achieving it. Know how your product positively influences revenue growth and customer satisfaction and convey that to the customer. This demonstrates the value of their investment.
- The Relationship: B2B sales and customer success teams can improve customer loyalty by expanding adoption of the product within the customer’s business. Renewals truly start on day one of the relationship. The more contacts you have at the customer’s business, the stronger and more stable your relationship, should a contact leave the customer.
Additionally, if the customer struggles to gain internal support and use of your product, that may be an indication that the solution isn’t working for their business. Widespread use of your product increases renewal because the product becomes part of the customer’s workflow. Often, this saves the customer money which is a winning approach to renewing relationships.
- Momentum: Once the sale closes, customers are eager to get started. However, you want to temper expectations and establish a process for appropriately scaling product adoption within the customer’s business. Customers may be engaged but could quickly lose focus or momentum if the situation changes due to internal or external factors. The onboarding phase of the customer journey experience is a great opportunity to attract and train new product users as well as re-engage expired or dormant users.
- Product: As your product evolves, it’s important to keep customers up-to-date and trained on how to use your product to their advantage. Consider how the updates, enhancements, or price changes may impact the value your customer receives from your product. Also, review the number of support tickets from the customer – a healthy number of questions indicates they are engaged in the product and may be looking at ways to expand use. However, if there are little-to-no calls or email inquiries, that could be a sign that customer service is taking too long to resolve problems and questions which is sure to send customers packing.
- Perspective: B2B sales teams are eager to make the sale, but the work doesn’t stop there. It’s important to collect feedback throughout the customer journey experience to understand the customer’s functional and emotional perspective as they use your product to tackle business challenges. Customer success collects, monitors, and responds to the feedback to improve the experience; yet if this isn’t taking place, the customer may not be getting what they need. Customers won’t continue to use your product or renew their service subscription if they don’t feel heard and supported.
B2B companies can increase renewal retention by re-evaluating strategies for customer retention. From relationship-building to performance and engagement, companies rely on your solution to help their business grow and thrive. Don’t deceive customers into staying with you, but do everything you can to keep and advance their business.
ServiceSource understands the many variables that influence successful B2B sales, customer success, and revenue retention strategies. With over 20 years of experience across 45 languages, businesses worldwide trust ServiceSource to select, convert, grow and maintain B2B customer relationships. Learn more with a ServiceSource expert today.