So why the focus on customers?
At a time when there’s a lack of investment and a critical eye on value, there’s a refocus to maintain revenue and seek growth from existing customers as much as possible. We know it costs more to acquire a new customer than it does to retain an existing one – and Increasing customer retention rates by 5% can boost profit from anywhere between 25% and 95%. As the Harvard Business Review states: ‘Simply cutting defections in half will more than double the average company’s growth rate’. This was a core theme that came from the recent Digital Connections 2.0 research, as well as the recent roundtable.
With most B2B sales, when the deal is done and the contract is signed, marketers typically shift their attention to generating new leads, leaving the latest win to be looked after by the onboarding team or an account manager. With contract durations being between 1 year and 5 years, it’s usually customer service or account management that look after them post-sale – and in effect, the marketing almost comes to a halt.
For SaaS software it’s different. The lifecycle marketing approaches take into consideration retention as this is a fundamental part of the business’ targets. In order to grow average recurring revenue (ARR), you have to keep the baseline of subscribers and build from there – preventing the ‘leaky bucket of subscribers’ is paramount.
Since the advent of marketing automation systems, communications cycles have been gaining maturity, so most marketing operations are pretty slick when it comes to SaaS. But for those high value, consultative industries where customers aren’t on subscription models, it’s rare to hear about retention strategies for customers, other than ABM style account development or customer event series. With a new fresh focus on the bottom line with rising inflation and stagnant growth, the best source of revenue is from your existing customers.
For CMOs, budgets are being slashed and the biggest areas hit are often media and comms. Not only is the business looking for cost-effective growth, CMOs have to look to cost-effective channels to hit targets – and existing customers are a no brainer. The challenge is, the customer is often the domain of the sales account managers, so marketing rarely gets to influence the relationship – that is changing though.
The critical customer-focused programmes
Taking an inward look at the touchpoints customers have with you often highlights opportunities to engage more effectively, enhance relationships and build loyalty. But, as highlighted above, it’s not just the domain of marketing – there needs to be the consideration of those that interface with customers and this requires a wider review of the touchpoints.
In most consultative organisations, the engagement comes from relationships, so once the relationship is developed with the account manager (post-sale), marketing needs to engage in a complementary way. An at-scale, bulk email programme to the customer base probably isn’t going to cut it and traditional B2C techniques for customer engagement, loyalty and advocacy aren’t quite right. What this suggests is a more systemic approach to loyalty in B2B – one that is driven by marketing, but requires input across the organisation for success.
Learning from B2C loyalty
Loyalty in B2C stems from a high quality product or service at an appropriate price. This builds trust which is a fundamental component of loyalty. Simply put, you stay loyal to the seller because you trust them to deliver. It’s the same in B2B, except for so long, the long contract values and the chase for growth have (to some degree) eroded the focus on experience and high quality service. This isn’t true in all cases, but if you’re locked into a 3 year contract and the service is poor, there’s little you can do about it!
The value of growing datasets to measure loyalty
Another core factor that came about with the onset of database marketing – i.e. the aggregation of data points on customers was the ability to understand lifetime value. Before a database, you simply didn’t know which customers generated the most revenue. The information was there but it was paper-based or subjective. By collecting and holding data in a digital format, it was suddenly possible to analyse which customers were more valuable and focus efforts there.
If you think about where we are today (10-15 years since the launch of B2B marketing databases) we have the data and the capability to analyse it effectively. We’re only just beginning to understand where the profitable customers lie, what they look like, what products/services they buy, and how frequently they buy (thanks, Salesforce).
What’s around the corner
After the chase over the last decade around content marketing and data acquisition, the ability to think about the customer and their value is now within the remit of the marketing department.
This means there’s now the opportunity to measure a customer’s lifetime value, understand the impact of lapses or defects, put appropriate strategies in place to retain them, look at their propensity to purchase, and manage the customer lifecycle to optimise revenue and maximise profitability.
After relentlessly chasing net-new for so long, now is the time to take a good hard look at the customer base and uncover untapped opportunities.