Growth comes not only from the acquisition of new customers but also from on-going patronage of a firm’s products or services. Therefore, it is crucial for B2B businesses to concentrate on customer acquisition which spotlights those customers who will be with them for many years to come. Engaging with prospects and customers early in the buyer digital journey with a lead management process, lead scoring and lead nurturing will help to increase the likelyhood of identifying and retaining the right customers.
Reports suggest that increasing your customer retention rate by as little as 5% can increase your profits even by 95%. Further more, acquiring a new customer can prove to be as much as 5 times more expensive than retaining an existing customer. Customer loyalty and retention are imperative for business growth, with high churn rates having a significant impact on revenue and hence profitability.
Fastbase, the B2B SaaS company providing lead generation, marketing automation and sales management software is in the business of helping companies get to know their customers and their buying habits, which coupled with appropriate personalized marketing can increase customer retention. To see how their applications can help let’s first take a deeper dive into loyalty and retention.
The Difference between Customer Loyalty and Retention
It is very important to distinguish the difference between loyalty and retention. Customer loyalty can be described as behavior suggesting a consistent favorable response towards a company and their brand as well as a willingness to engage. It is intangible but a very valuable company asset. Loyalty measures a customer’s tendency to select a business’s product or service as a preference, showing some degree of resistance to the competitor’s solutions.
Retention on the other hand, is a measure of whether an existing customer continues to purchase your products or services. A customer who continues to patronize your business may be retained by your company but not necessarily loyal to you. In order to retain customers, you need to understand their behavior and buying habits but also provide a valuable product or service.
By distinguishing the difference between loyalty and retention you can get a better understanding of your customer’s experiences, interactions and attitudes that in turn drive loyalty.
The Importance of Customer Retention
Customer retention and churn rates have a huge impact on a company’s performance and revenue. As previously mentioned, increasing customer retention rates by as little as 5% can increase profits by anything between 25% and 95%. In addition, acquiring a new customer can prove to be 5 times more expensive than retaining an existing customer. These figures suggest that businesses should do everything in their power to maximize customer retention and minimize customer churn.
Churn rates for businesses vary depending on who their primary customer base is. With the recent outbreak of the pandemic, many businesses looked at where they could cut their spending, causing the biggest monthly churn in SaaS in March and April 2020. Having said that yearly churn rates for SaaS businesses serving large organizations vary between 6-10%, whereas SaaS businesses targeting SMBs can be as high as 50%.
How can you improve customer retention?
These 3 helpful tips can help you to improve customer retention.
1. Understand why customers are leaving
In order to improve customer retention, you need to figure out why customers are leaving in the first place. Knowing such reasons, you can take appropriate action to improve the experience your customers have with your brand. Reducing churn rates will not only improve customer retention but also customer satisfaction and loyalty.
Try to collect and detect the signals of your customer’s impending departure. In order to capture these signals, you need to identify customer behavior, their purchase patterns, product or service usage as well as the history of service inquiries. Analyzing these signals will enable you to take action to decrease churn rates.
2. Improve Customer Experience
Customer experience has a big impact on repeat purchase and retention. Research suggests that 68% of customers leave due to poor treatment and poor customer relations. If customers have a bad experience, they will most likely voice their opinions, which can have a detrimental effect on brand loyalty and repeat purchases. It can also mean you lose potential new customers.
You can only improve customer experience by understanding their problems, wants and needs together with their engagement and behavior when using your product or service. You can use surveys or feedback forms to understand your customers or use automated software to track their interactions with your marketing content and services. Automation yields huge effects in understanding your clients and can help prepare personalized content to improve overall customer experience and satisfaction.
3. Improve Customer Relations
This may sound similar to customer experience, but customer relations describe the ways in which a company engages with customers to improve the customer experience. Many people tend to leave and not make repeat purchases when they feel the company doesn’t care about them. One option to consider is providing perks for long term customers through a loyalty program, rewarding them by providing something extra. However, loyalty programs have to be structured well and customers have to feel that they gain something from showing loyalty to your brand.
How can Software Help You Understand Your Customer’s Behavior?
Understanding your customers’ behavior is about software being able to calculate their position in the buyer’s journey and then based-on that, using the software to automate communications that can personalize their journey and earn their loyalty.
Understanding your digital audience is crucial to nurturing future customers through to sales and also continue the journey after the sale. If you are aware of customers’ behavior after a sale there is a good chance of up-selling or cross-selling. Fastbase’s LeadScoring can significantly help you be cognizant of prospect and customer behavior by tracking, scoring their activity and communicating with them according to their suggested areas of interest. This, in turn, can significantly improve customer retention rates and build brand loyalty as you gain a much better understanding of your digital audience.
Scalable Solutions
Fastbase have been developing SaaS solutions since 2015 and the LeadScoring solution continues that tradition offering a subscription model. LeadScoring’s basic subscription offers a free account with 100 leads – that is more than enough to properly evaluate the benefits. There are a further four subscription tiers, Plus, Pro, Business and Enterprise. The Pro subscription is $75 USD per month for 5,000 leads and subscriptions scale up to Enterprise level which caters for 20,000 leads and 5,000 prospects.
All tiers provide a good ROI based on the corresponding number of leads and prospects they include.
Conclusion
Fastbase’s robust and easy-to-use LeadScoring works with companies and organizations of any size. It empowers you to monitor, engage and understand customer’s behavior, which in turn provides actionable information on how to improve customer experience and relations. As a result of understanding your customer’s behavior and expectations, you can implement appropriate measures to increase customer retention and grow your business. Are you ready to get your first 100 leads?
