Stock: 123RF Copyright : Illia Uriadnikov Image ID : 47795804
Have you ever found yourself writing copy for your B2B marketing efforts with fingers crossed, hoping your company could actually deliver? You know the copy I’m talking about where you describe how great your product and the customer experience is – 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”, etc.
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 and working with sales to close the deal, 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., though 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 just 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
Copyright: 123RF ID:64107446 marigranula
As a B2B marketer, you likely don’t see yourself being concerned with accounting, customer support, technical service, quality management, and other departments who come into play once a sale is closed. But 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 touchpoints that are increasingly digital. No matter how great your 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 calls were handled. I was trying to learn how prospect calls were handled (acquisition), but found there was no process for how to direct customer questions or problems (retention). In fact, there was no central number, so customers called whatever number they could find. In most cases the person answering couldn’t transfer the call to a different office, even if they knew where to direct the caller. This situation led to irate customers who felt they were getting the run around instead of the “top notch customer support” they heard about during the sales process.
- Delayed shipments or receiving the wrong product was a recurring issue I discovered while overseeing customer satisfaction surveys as the marketing leader at a manufacturing company. As it turned out the error was happening in the shipping department where a manual process bridged two electronic systems that didn’t “talk” to each other. It was simply human error coming into play that resulted in unhappy customers.
Retention versus acquisition
Lead generation and acquisition is the “sexier” marketing and 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 will improve acquisition efforts because it will be 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, but 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, i.e. don’t know when a customer is buying from someone else (especially the case for low interaction products), no lost customer metrics, and/or 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, via listening in on incoming customer calls, customer satisfaction surveys, or even calling customers yourself, will help you 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?