COVID-19 created a hard reset for many businesses. After over two years of hesitation to purchase new products, enterprises have refocused their investment in renewals and customer success teams to balance the revenue scales. In the post-COVID world, a business’s growth is directly correlated to its ability to drive value.
Proactively building customer loyalty is now more potent instead of relying solely on product features and services. The companies that will be the most successful moving forward are the ones that develop a new approach to customer retention.
This blog covers why your business should put a deeper focus on retention in the post-COVID world.
The Cost of Acquisition vs. Retention
Depending on your industry, attaining a new client can cost five to 25 times more than retaining existing ones. Plus, the success rate of marketing to an existing customer is 60 to 70 percent because they are already familiar with your business and products. In contrast, the success rate of signing on new customers is only 15 to 20 percent.
Businesses must inform new customers about their brand, and promoting to them costs more resources and time than convincing your current customers to stay with you. It’s critical to provide customers with the best experience to increase customer success because then they won’t even entertain the idea of going somewhere else. Focusing on providing current customers with the best experience possible allows you to keep your overall costs down.
As the economy continues to recover, if your customer doesn’t see the value in your service or product, they’ll go somewhere else. Because of the costs of initial implementation, especially for the technology industry, the customers you lose will probably never return.
You Can More Accurately Forecast Revenue
When forecasting your revenue for the year, you use historical trends. However, once you lose a customer, you need to make up for the lost revenue. And you’re also stuck with the cost of maintaining the customer up until the contract ends.
Net revenue retention (NRR) has quickly become the number one qualifying metric for determining the health of a SaaS business. Of the top 100 SaaS companies investigated by McKinsey & Co, the top quartile prioritized net revenue retention. Looking at customer success as an investment in growth instead of a cost center improved their ability to forecast revenue more effectively, protected their install base, and gained larger scale and efficiency more effectively.
Increasing Stickiness Creates a More Resilient Pipeline
The pandemic didn’t just change the wants and needs of your clients; it changed when, where, and how they want their products and services. For example, more businesses than ever are comfortable conducting online purchases. One post-COVID behavior survey by McKinsey found that “70 percent of B2B decision-makers say they are open to making new, fully self-serve or remote purchases above $50,000, and 27 percent would spend more than $500,000.”
That same survey showed a 10 percent increase in decision-makers who feel digital sales methods effectively meet their needs. Working with this trend gives you more opportunities to support a customer’s growth alongside your product. That means you can foster a stickier, more connected relationship as you move away from a one-time transaction to a more ongoing relationship.
How can you make your product stickier for your clients? Look at ideas like professional or managed services that help keep your customers satisfied with your products and services.
A Voice of the Customer (VOC) program is a great way to monitor and maintain your customer satisfaction. Regular customer interviews, client feedback, and even social media responses can help you identify ways to drive value for your customers. It can also show you ways to continue engaging and driving revenue from your existing customer base.
It can also keep the sharks out of the water. What do we mean by this? The pandemic led to what many deemed “the great resignation.” More freelancers and start-ups with innovative and sticky products are in the marketplace than ever before. A good customer retention program is your best defense against competitors poaching your customer pool.
Gain Deep Insights with Customer Health Scores
You can measure all sorts of metrics. Metrics like net/gross retention rates, cost per customer (CPC), and acquisition cost (CAC) helps you precisely identify attrition costs. Still, a Customer Health Score can help you predict your performance in the marketplace. A complete guide to performing customer health checks is a story for another day. Still, these checks show you what your relationship with your customer is genuinely like and can help you quickly identify when a relationship is at risk.
Based on these health scores, you can tailor your upsells to your customer’s goals and needs and take the time to get to know why your customers choose you in the first place.
Create Stronger Relationships with Your Customers Through Customer Success
Post-COVID customers have a clearer picture of what they do and don’t need to support their business. Now customers expect you to consistently demonstrate the value of your various products and services through VOC programs, health checks, and a seamless renewal process.
Companies that can adapt to post-COVID consumer behaviors are winning the market share. Detailed customer profiles can help you understand their motivations and needs intimately. This understanding helps you ensure your messaging works, but that’s only part of the story.
Building a concept of value for your customer means understanding their needs. Let’s say you have a customer who uses one aspect of your company’s solution on their accounting team. You realize through talking to them that if you improve their reporting function by connecting to their billing department, you can help them save time and money with a new tool. You’ve increased the value of your customer and, at the same time, engrained yourself more deeply into their business.
The cost of that growth is negligible for you, but the benefits are exponential. This dedication to customer success will level up your customer’s experience and foster a client for life.
Partner with a Third-Party Team of Expert Customer Success Professionals
There are many pieces to the customer puzzle that need to fit correctly to drive customer retention. You may have several pieces already in place, but we rarely find that business’s have a genuinely resilient growth engine. This lack of insight is where partnering with ServiceSource can help. We have 20+ years of proven success creating customers for life with a combination of data, people, and processes.
Contact a renewals expert today to see how we can help scale and transform your customer journey experience to improve retention and unlock the hidden value of your existing client base.