In a world where relationships are king, retention marketing is one on the most effective tactics for reversing customer churn. From SaaS web apps to daily deal websites, companies are vying to stop the leakage of customers and revenue from hurting the bottom line. While the first step to reducing churn is an aspiration for improvement, the reduction plan can only come to life with a push into retention marketing. When implemented properly, the results are a decrease in customer turnover and increases in purchasing and upselling.
Retention marketing encompasses all of the activities and communication between businesses and their customers. From problem solving to just saying hello, all of the touch points come together in building the customer relationship. When you think about the value of a customer relationship, just image how great your business would be if each year you only lost half as many customers as you currently do. The impact of customer churnis exponential over time. According to a recent Forbes article, “a 5% increase in customer retention can increase a company’s profitability by 75%… 80% of your company’s future revenue will come from just 20% of your existing customers… attracting new customers will cost your company 5 times more than keeping an existing customer.” When put into that context, the importance can’t be overstated.
In light of the data, many business professionals are left questioning, what are the best ways to prevent customer churn with retention marketing? To find out, you just have to look at the top 3 reasons why customers can become unsatisfied with a business and turnover. Ask yourself if you have ever churned because of one of these reasons.
1. False expectations
Recommended for YouWebcast: Why, What, and How to Do Social Selling
2. Failed delivery
3. Better offers
Each of these three drivers can undermine an otherwise successful business, and each of them can be counteracted by consistent retention marketing. Point by point, we can strategize improvements that will directly reduce customer attrition.
1. False expectations: Are you setting your customer up? There are two ways to sell a product or service- with honesty and integrity and without. You have to find out where your company fits into the business environment and honestly make a case to earn each customer. If false promises, expectations and lies are part of the equation, there’s no sustainable relationship for the future.
2. Failed delivery: Nothing is ever seamless. There will be bumps and hiccups in every business relationship. The factor that separates the winners from the losers is that they honestly admit their faults and learn from the mistakes. Customers hate being left in the dark and they’ll readily leave a company that is untrustworthy. Keep the channels of communication (social, email, phone and web) open and regularly check in to make sure expectations are being met. The time spent building relationships and enabling customer success will pay off far more in the long run rather than constantly trying to upsell
3. Better offers: Sometimes a competitor will come out with a new promising feature or drop their price significantly. By having open channels of communication, you can gain valuable insight for improvements from the decision makers and work with them to match an offer. When customers trust your brand, you’ll find them more willing to negotiate and work on a solution. Without the relationship to back it up, it’s nearly impossible to catch up after they’ve decided to leave. The information gained from an “exit interview” can help to prevent problem with future customers.
It’s important to remember that churn works both ways. A sales cycle or two down the road, with a relationship bridge intact, a customer may return. By have a strong retention marketing program in place, the likelihood of customers rechurning or not churning at all is greater.
Share in the comments section below some ways you’ve managed to keep customers happy over time.
Posted originally at Apptegic’s retention marketing blog.
Image via Flickr