Most of the content posted here addresses the B2B marketing efforts necessary to attract leads, nurture them and convert those leads into customers. Experienced marketers know there is a significant cost involved with these efforts – and it’s much greater than the cost involved in retaining, upselling or cross-selling existing customers. So the last thing any B2B company wants is to lose customers. Yet statistics consistently show that B2B marketers, and B2C as well, typically dedicate a very small portion of their budget and their efforts to customer retention.
Here are some pretty convincing stats on why they should:
- “It costs 6 to 7 times more to acquire a new customer than retain an existing one.” – Bain & Company
- “The probability of selling to an existing customer is 60 to 70%. The probability of selling to a new prospect is 5 to 20%.” – Marketing Metrics
- “A 2% increase in customer retention has the same effect as decreasing costs by 10%.” – Leading on the Edge of Chaos, Emmett Murphy & Mark Murphy
- “A 5% reduction in the customer defection rate can increase profits by 5 to 95%.” – Bain & Company
- “Customer profitability tends to increase over the life of a retained customer.” – Leading on the Edge of Chaos, Emmett Murphy & Mark Murphy
- “Research shows that a 10% increase in customer retention levels results in a 30% increase in the value of the company.” – Bain & Company
Just like B2B marketers need an annual plan for customer acquisition, they need a formal plan for customer retention as well.
It’s been determined, through the tracking of customer lifetimes at many companies, that the first 90 days are the most critical in the customer retention process. Starting a customer retention program immediately after acquisition makes the most impact on that customer’s long-term satisfaction.
A colleague and client of mine, James Pennington at Anderson Direct Marketing, recently put together a presentation for the launch of a client’s onboarding program. Here are some highlights of the best practices for onboarding and customer retention that he presented that I think are worth sharing:
- Listen carefully, ask questions.
- Find out what customers like about your company, products, services and experiences.
- Find out what they don’t like about those same things.
- Find out what they would like to be able to get from you, but can’t because you don’t offer it. Marketers are not pointing out their product or company weaknesses here; they are establishing a position that the company cares about serving their customers’ needs.
- Be sure to ask if there are any things you offer that they do NOT view as valuable.
- Set up a “Red Flag” system that indicates potential high-risk customers. These alerts can be triggered by a reduction in orders, a reduction in site visits, a reduction in the dollar amount of orders, a technical issue that is not easily resolved, or other service problems.
- Once an alert is received, act on it immediately.
- Touch customers consistently via a variety of channels.
- Keep the messaging of those touches consistent.
- Provide a feedback channel with every touch.
- Periodically update the customer’s contact information.
- Ask for more information that will help you understand their needs better.
B2B companies spending a lot of money acquiring customers should never stop marketing to them. It’s retention that makes the biggest impact on the bottom line.