Customer retention is equally as important (if not more) as customer acquisition.
A high customer churn rate can greatly hinder the growth of your B2B company. Studies show that companies that do not prioritize customer retention lose $136 billion per annum. It costs more to acquire new customers than to retain old ones.Rather than channeling all resources towards customer acquisition, B2B sales and marketing teams need to leverage best practices to retain customers and increase their ROI.
What Are The Benefits of High Customer Retention In B2B Companies?
1. Lower cost per customer acquisition: Customer retention is 5-25 times less expensive than customer acquisition. If you focus on customer retention, you spend less and earn more in the long run.
2. Increased sales: Customer retention also increases ROI. For example, if you implement strategies that boost your customer retention rate by 5%, your overall revenue could increase by as much as 25-95%.
3. Encourages brand loyalty: According to studies, customers are willing to spend more with companies they have previously worked with.
Effects of Low Customer Retention (Customer Churn)
For B2B businesses, customer churn is much more than losing a customer. You not only provide business for your competitors but could also hurt your reputation in the process.
Calculating Customer Churn
The first step is to calculate the rate at which you lose clients.
To get your customer churn rate, choose a specific time frame. Then, find the difference between the number of customers you left at the end of that period and the ones you had initially. Find the percentage over the total number of customers at the start.
Customer churn rate =
Customers at start of time frame - Customers at the end
Customers at the start of time frame
Any figure below 1 indicates customer churn. You might want to set a threshold below, which is unacceptable.
Best Practices to Retain Customers and Reduce Customer Churn
1. Prioritize Customer Experience
Customer experience should be a primary priority today. You must always put your best foot forward with your customers to build trust and loyalty. How do you prioritize excellent customer experience? A few ways to do this include:
- Respond to your customer’s complaints and inquiries promptly and professionally. It helps to create a guideline on how your sales team can address and resolve specific customer issues to improve this.
- Create a response or rating system. Surveys or forms after each business transaction can be beneficial. They point out issues your team might have overlooked.
- Maximize your social media platforms. Platforms such as LinkedIn are pretty personal and can be used to create strong bonds with old and new customers.
- Offer unique services. By offering something different from the competition, you improve customers' chances of sticking with you.
- Adopt customer service tools such as automated CRM software. These work faster and more efficiently and thus help solve customer problems faster.
2. Offer Personalized Experiences
Studies have shown that customers prefer a brand with which they can build a connection. The more customers can relate to your brand, the more loyal they will become.
So, a successful customer retention strategy should always prioritize personalized content. Set up customized texts and emails, occasional calls, or in-person service whenever possible.
The first step of creating a personalized strategy is identifying your target audience. You can draft messages and content to suit them when you understand their personas. You can also reach out on their preferred channels and engage them in a non-intrusive manner.
3. Provide Consistent Quality Content
High-quality content answering pending customer questions can be an effective customer retention strategy. Relevant content brings many benefits such as:
- Establishes you as a thought leader in your niche. That increases the potential conversion rate and the likelihood that they will stick with your brand.
- Shows your customers that you prioritize providing value over making quick money. This increases trust and thus the likelihood that they will continue buying.
You can use multiple avenues to consistently provide quality content such as blogs, eBooks, videos, etc. With the customer data, you would create the right content for your specific audience.
4. Maintain communication
Constant communication is critical to your business retention rates. Your clients encounter hundreds of marketing communications daily. So, it helps always to keep your brand top of mind.
Draft a proactive communication strategy that constantly provides guidance and relevant information. For B2B businesses, email sequences are the best ways to do this. Whereas this can be time-consuming, automation tools like CRM can help you reach large numbers regularly in a short time.
Similarly, social media and other networking platforms can be great avenues to stay on your customers' radar. However, try not to bombard them with too much brand communications, which could produce the opposite effect.
5. Reward customer loyalty
Your long-term customers would appreciate efforts to make them feel special. The B2B space is already characterized by lifeless monetary transactions. So occasional surprises would be powerful.
Occasional thank you gifts, upgrades, or exclusive treatment is a great way to remind your customers that you are thinking of them. That way, they are motivated to keep working with you.
Create a loyalty reward system to encourage long-term business. For example, rewards, upgrades, cash backs, etc., for purchasing beyond a particular limit. Allow them exclusive free trials on new products or specialized assistance. All these help your clients feel they are making a worthy investment in you and are thus more likely to stay.
Repeat customers contribute to over 67% of the overall revenue. So, customer retention strategies should take precedence over acquisition methods. These are just a few best practices you can adopt to reduce customer churn and improve your retention rates.
CRM and marketing automation tools are essential for providing customized experiences and easing communication. They should therefore be at the forefront of your customer retention strategies.Need help with these? Get a free demo of our SharpSpring automation tools to help you improve your customer management.