B2B Retention Marketing: The First Thing You Must Do
Have you ever found yourself writing B2B marketing copy with fingers crossed, hoping your company could actually deliver? You know the copy I’m talking about that describes how great your product and the customer experience is using phrases like:
- our product has the lowest total cost of ownership
- we deliver premium customer support
- easy payments with detailed monthly reporting
- quick spare parts delivery and expert troubleshooting
- product/service reviews to ensure you get the most value
As a marketer you should be confident making promises like these to prospective customers. After all, the messages marketing and sales communicate to the customer during the sales cycle sets customer expectations. However, if expectations don’t match reality, then you’ve likely got low customer retention rates. And what marketer wants to work hard acquiring new leads, only to learn your customers defect to the competition after a short time.
Losing customers isn’t only frustrating for marketers, it’s really bad for sustaining business growth. Consider the following data:
- From Bain & Company:
- Increasing customer retention by 5% can increase profits 25 – 95%
- The likelihood of selling to an existing customer is 60 – 70%, versus 5 – 20% to a new lead
- It costs five times as much to attract a new customer as it does to keep an existing one according to Lee Resource Inc. Although I’ve seen numbers as high as 10 times depending on your product/service and industry.
Check out this infographic Customer Acquisition Vs.Retention Costs Statistics and Trends for even more data.
The point is, if your customer retention is low, don’t assume that a retention marketing program will improve your numbers. Before you start a retention marketing program, you’ll want to make sure your back office, everything that happens after the sale, is in alignment with your front office, everything that happens before the sale.
Role of marketing expanding
As a B2B marketer, you likely don’t see yourself being concerned with accounting, customer support, technical service, or quality management. These departments and others come into play once a sale is closed. However, you should and you must, because everything that happens after the sale contributes to the customer experience and directly impacts retention rates. Gartner’s latest CMO Spend Survey shows that marketing is taking on some aspects of customer experience because marketing manages customer touch points that are increasingly digital. No matter how great your B2B customer retention marketing strategy is, you won’t be able to overcome a bad customer experience.
I’ll share two real examples to bring home my point.
- While leading marketing in two different B2B services companies I discovered issues with how incoming call handling. I was trying to learn what happened when prospects called (acquisition). However, I discovered there was no process for how to direct customer questions or problems (retention). In fact, there was no central number. As a result, customers called whatever number they could find. In most cases the person answering couldn’t transfer the caller to a different office, even if they knew where to direct the call. This situation led to irate customers who felt they were getting the run around. Not exactly the “top notch customer support” they heard about during the sales process.
- Delayed shipments, or receiving the wrong product, was a recurring issue at a manufacturing company. I discovered this while overseeing customer satisfaction surveys which uncovered the shipment issues. As it turned out the error was happening in the shipping department. The primary issue was a manual process that bridged two electronic systems. However, the electronic systems didn’t “talk” to each other. It was simply human error coming into play resulting in unhappy customers.
Retention versus acquisition
Lead generation and acquisition is the “sexier” marketing. Therefore it garners most of the attention from the marketing automation system vendors and agencies, probably because their prospects don’t want to talk about their low retention rates. A survey report from Econsultancy, Cross-Channel Marketing 2014, found that 44% of companies have a greater focus on acquisition versus only 18% with a greater focus on retention and 40% focused on both equally. High customer retention improves acquisition efforts because it’s easier to get referrals and case studies – two things that make a big impact on new prospect decision makers.
Marketing should provide customer perspective
Collaborating with your back-office peers and teams is hard work. In spite of this, marketing needs to bring the customers’ perspective, which is so often missing, to improve customer retention. In fact, one of your biggest challenges may be convincing the organization that retention should be a priority. I’ve found this is often the case when there’s no data to prove it’s an issue. For instance, if don’t know when a customer is buying from someone else (especially the case for low interaction products) or no lost customer metrics. This is also common when the organization is sales driven and new acquisition is the focus. Analyzing customer data, customer satisfaction surveys, and seeking out feedback directly from customers is vital for customer retention. By listening in on incoming customer calls, customer satisfaction surveys, or even calling customers yourself, you will gain a better understand your customers’ perspective.
Do you know your company’s customer retention rate or why customers leave?
B2B marketers must lead the customer experience and ensure the organization can “walk the talk” before charging ahead with retention marketing efforts, which I discuss in another blog post, Customer Retention: From Sticky Relationships to LTV.
For additional reading you may be interested in this recent AMA Marketing News article, The Drivers of Brand Loyalty May Surprise You. – Being dependable has everything to do with your back office don’t you think?
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