It should come as no surprise that selling to someone who has already purchased from you is easier than selling to someone new. It has been drilled into our marketing psyche that loyalty and retention drive revenue and referrals – not to mention really happy people in corner offices. Gartner even put out a stat that I am sure most executives are having tattooed on the inside palm of every VP of Sales or Marketing – 80% of your future revenue will come from just 20% of your customers.
A healthy bottom line is a key metric at the heart of growing any sustainable business. And while there is much talk that it’s about 50% easier to sell to existing customers than to brand new prospects, Marketing and Sales tend to focus on the HUNTING versus the FARMING. Why? Because in most cases, there is little alignment of assets, processes and manpower dedicated to reducing churn. In other cases, it is discounted merely because of the notion that unlike lead generation or customer acquisition, retention efforts take comparatively longer before producing results.
But wait, shouldn’t resources be applied to where you get the biggest return? Yes, they should! But it is up to the mighty members of the marketing field to help our fellow sales teams and executives recognize the value of doing just that. And here is how…
Think Loyalty First
If unhappy customers do not want to do business with your company again, then it stands to reason your onboarding of new clients and operations play a vital role in retention. As Marketers, we are trained to look “out”, not “in”. But in doing so, we miss specific information that will help offset “unmet expectations” throughout the lifecycle of a customer inside our own organizations. Mapping your Customer Journey is a common practice – with most attention focused on the collateral, communications and experience that drives the conversion of a prospect to a customer – not the post-sale loyalty.
So look deeper. What does a “new customer” need to experience in the first 90 seconds or 90 days with your business to re-affirm their purchase decision, confirm their pronouncement of trust and demonstrate to others (influencers, stakeholders or subordinates) that they made the right choice? Understanding what the customer needs to see or hear from you post-sale to remain loyal to their purchasing decision is paramount to a brand’s marketing and sales messaging throughout their Customer Journey. The strategy is to outline the assets and collateral you must create to align those expectations.
Develop Nurturing that Achieves Alignment
Great marketers must become proficient in operations in order to best understand the Voice of the Customer. Recently the Harvard Management Update reported that 80% of companies surveyed by Bain and Co. said that they offer superior customer service, but only 8% of their customers agreed with them. “Can you hear me now?” Don’t be fooled by the “false positives” of singular data points including likes of Facebook or customer satisfaction surveys. Those often give a false sense of hope – and margin growth just doesn’t spring forth from the well of eternal optimism. At least that’s what my CFO friend tells me.
If your customers are leaving, find out the reasons. For every customer complaint, there are more people who likely have not complained. Take these pain points and then map back to how your messaging, collateral or sales department might have set that “unmet expectation”. Create a wall of sticky notes listing the “Why They Buy” and “Why They Leave” and invite your interdepartmental team members to share in the discussion. How must your marketing, sales and operations better function together to deliver on the Brand Promises you are making along the Customer Journey? Then, and only then, can your Nurturing Program be an effective tool in fighting churn. Just slapping in an automated marketing email system that elegantly ties to your CRM and ERP platform will not solve this problem.
Recognize Advocacy as the Key to Profitability
We are all a fan of something – a team, a player, a beer. Being a “fan” means more than just cheering, it means evangelizing others. This comes in many forms, but the result is always the same – someone else telling the story besides you. As marketers, we don’t just want to build customer base, we want that customer base to share their (great) brand experiences with others – to recommend or refer their friends and colleagues to us. We call this “word of mouth” marketing. But stop for just a moment and THINK. That is an “Acquisition” statement – meaning those customers get tagged with a lower Cost of Acquisition because they were referred and not “earned”. What if we put “Word of Mouth” marketing in the retention and advocacy bucket? Would that not change our approach to tracking “Loyalty and Nurturing” such that we could demonstrate the value of spending on existing customers to produce these referrals over time?
Tracking “Cost of Referral Acquisition” is a new methodology that will result in your advocacy efforts creating a new conversation with Sales and Executives. If it costs 5 times more to acquire a new customer than keep existing clients (Forester Research), then it stands to reason more effort and dollars should be appropriated to driving greater “Share of Wallet” within existing clients or helping sales get deeper and wider with larger, disparate organizational structures. Did we not just demonstrate this will have a more effective ROI? (NOTE: In this case I did mean Return on Immediate – because ALL sales have a component of time.)
Budgeting for Retention Marketing
As you are formulating your spreadsheets, strategies and objectives for 2020, consider this: Understanding your customer “failure rate” will lead to greater promise of retention returns. Look for new ways to hear the voice of your customer, understand their pain points (both within their business and yours) and communicate in new ways to clearly set expectations throughout their journey with your brand. Anyone can put a line item in a budget that says, “Nurturing Program”, “Automated Marketing Platform” or “Net Promoter Score Survey”. But a great marketer looks at the best way to personalize and streamline the touchpoints along the path of the “Prospect to Customer to Advocate” journey.
It’s time to go beyond just Acquisition and Activation. Only by truly understanding the resources that should be applied to your existing customer base can you be part of the “bottom line” equation. Failure to act now only delays the future of your brand’s reputation, effectiveness and value.