If you looked at your LinkedIn InMail inbox right now, you’d see that 95% of all cold pitches are about getting more leads and more customers to your business. Rarely have I received a cold pitch on how to retain an existing customer.
We’re all focused on the shiny things like Google and Facebook ads, email outreach, SEO, viral videos, etc. We all want what we don’t have. But acquiring new customers is usually only a problem for companies that haven’t achieved product-market fit yet. So even if you did reply to those LinkedIn messages about helping you get new customers, they would mostly fail because you’re still trying to retain your existing customers effectively.
Basically, you can’t retain customers you don’t have. When you gain customers who leave two weeks later, you don’t have a business; you have a leak that needs to be fixed.
And actually, in many real-life examples, increasing customer retention rates by 5% increases profits by 25% to 95%, according to Bain & Company.
Which brings me to my first point...
Companies that focus on customer retention will have an easier job of acquiring new customers.
Two companies that are currently phenomenal at retention marketing: Superhuman and Outreach.
Superhuman is a supercharged, easy-to-use email client that is updated almost every week with new features and exciting updates. It’s very rare that I get excited about feature updates, but whenever Superhuman releases an update, I usually read what’s in them.
And Outreach is a demand generation platform that automates marketing and sales outreach. It’s a powerful platform that integrates with Salesforce.
Both of these companies have something in common: exceptional human-to-human product onboarding.
Normally, when you purchase a digital product or platform, you get access to the platform with the immediate ability to check out support materials, etc. That works, but both of these companies take it a step further.
With Superhuman, you sign up and schedule an onboarding session with an account manager from the company. They walk you through the entire platform and customize it to your liking. The whole goal is to get you familiar with the tool, give you the opportunity to ask questions you would have been afraid to ask (or not known to ask), and get you closer to Inbox Zero.
With Outreach, they actually make you pay for the training and onboarding. This can be off-putting for many, but there is a good reason they make you do this. Customers who are onboarded properly, stay longer.
It’s that simple: onboarding with real humans is costly. Both of these companies could have easily just given you access and sent you on your way. But, they know from experience that retaining customers is as important, if not more important, than acquiring customers.
And just a reminder, onboarding is one small example of customer onboarding.
Which brings me to my next point...
Live and die by the numbers (key metrics).
Sometimes, if you just do the math, you’ll uncover some big revenue opportunities if you were to make small adjustments. I’m sure Outreach and Superhuman quickly uncovered that decreasing the number of clients who churn is less expensive than acquiring a new customer. Onboarding is a one-time activity.
It’s all about the math, plain and simple. If you don’t have a dashboard that you’re reviewing daily, it’s time to do so.
You should be asking your team these questions:
- How do we measure customer satisfaction?
- What activities can we do to decrease the churn rate?
- What is our current churn rate?
- How do we define customer value?
- Are some customers more valuable than others?
- What are the north star metrics we’re tracking daily?
- How loyal are our customers?
- Are our current customers referring our product to new customers? If not, why not? If so, how do we track this?
- What is our repeat purchase probability? Meaning, how likely is it that a single customer will return?
Remember, this isn’t just for SaaS businesses. Although it’s not public information, a market research company has estimated iOS loyalty rates are 89%. This means 89% of the time, current Apple customers are buying an Apple product vs. Android or other mobile devices.
If your retention rate was 89%, how would that impact your business? Something to think about. What changes or investments would you need to make to achieve such a retention rate?
Fuel the funnel and reduce churn.
In the end, although feeding your customer funnel by acquiring new customers is certainly good for business, retaining your customers can make or break your sales revenue.
Take a look at your product life cycle and diagnose what metrics can be improved, then start taking action one-by-one.