Why Customer Retention is Vital to Your Success This Year
Be honest with yourself. How many accounts have you lost in the last 12 months where you had no indication that things were about to churn? If your business is responsible for many thousands of customers, the answer is quite likely, “I’m just not sure.” It’s fine to say this. After all, your key account management team is probably only focused on the top 20% of customers. And then, through a well-thought-out blend of marketing campaigns, inside sales effort, and diligent customer service activity, you will do your very best to hang onto the long tail.
But when you think about it, it’s almost impossible to know in detail how each of your customers is performing, in each of the categories, and across each of the product lines you offer. Put simply, you’ll need an army of people taking the pulse of every customer, every day, to stand any chance of remaining in complete control.
There was a great article published recently by HubSpot. It’s packed full of insights which explain possible causes of customer churn such as price, product/market fit, user experience, and customer experience. My favourite aspect is related to understanding what account churn means to your company. The context being, if you understand it, you can seek to deal with it.
“Depending on your business model, churn may mean the customer cancels a subscription, uninstalls your app, or doesn't return to purchase your product after a certain period of time. Whatever it is for your business, you'll need a set of metrics to monitor customers that are at risk of leaving your company. That way, you can set clear benchmarks for when you think a customer is about to churn.”
You’ve likely heard the messages many times over that it costs so much more to acquire a new customer than it does to retain an existing one. Forbes referenced this significant variance.
“It can cost five times more to attract a new customer, than it does to retain an existing one. And, increasing customer retention rates by 5% can increase profits by more than 25%.”
There are many strategies you can deploy to help reduce account churn, and from my research and experience from over 20 years in sales and marketing I would summarise my top three key aspects as:
Engage with your customers more deeply, and with greater relevance.
Continually seek out customer feedback and ensure you act upon it.
Delight every customer and proactively head-off potential concerns.
But I do wish to return to the idea of metrics and analysis and ask my first question again. How many accounts have you lost in the last 12 months where you had no indication that things were about to churn? It’s probable that in some cases the customer has stopped spending with you, moved to a competitor, and it may already be too late. You had no indication, no insight, and no action. The secret, therefore, is to leverage AI and ML technologies to provide the accurate insight you need to proactively stop that churn before it is, indeed, too late.
At Zilliant, one of our key solution pillars, Sales IQ™, generates actionable insights that help fuel proactive sales growth actions. The solution has many facets, but here’s just a few of the strategies it can help with:
Reduce Account Churn
Spotting churn when it begins is a challenging task for salespeople and winning back lost business is even harder. Sales IQ identifies “at-risk” customers that are showing early signs of defection on one or more product categories using patented algorithms to highlight specific areas where revenue is declining or has been completely lost.
Grow Wallet Share and Win New Customers
With large product ranges, it can be nearly impossible to spot opportunities to grow wallet share or to know which products prospective customers are most likely to buy. Sales IQ uses advanced data science to reveal what customers and prospects should be buying based on your “ideal” customers.
Prioritise Sales Efforts
Without understanding customer potential and what actions to prioritise and discuss with each customer, deciding where best to spend time to maximize revenue is a guessing game. Sales IQ can guide salespeople to the most impactful actions and help them prioritise their time with the customers most likely to buy more.
If you follow this space, you may have heard that Zilliant recently announced a new product, Campaign Manager™, to close the strategy to execution gap. Campaign Manager consumes the aforementioned insights from Sales IQ and allows users to scope, prioritize and refine growth and recovery actions. The system includes closed-loop tracking so sales operations and management teams can measure the effectiveness of these campaigns in real-time and monitor sales rep behavior. The twin solutions offer best-in-class flexibility and self-service capabilities to allow teams to execute faster, and more effectively.
In summary, any lost business is disappointing, but if it is the result of poor insight and insufficient action then it could be catastrophic down the road as the problem compounds. If you experience high levels of account churn, then your company will be in real danger of losing significant market share. There are strategies which you can deploy to help you maintain control of your future, but without detailed analytics to help you focus on the right areas, sales team effort could be ineffective.
About the AuthorMore Content by Paul Umpleby