Customer experience strategy includes your plans for both customer acquisition and customer retention. I can’t emphasize enough that acquisition and retention aren’t either/or options. Companies need both.
Every company needs a way to get new customers coming in the door (customer acquisition). At the same time, companies need clear, consistent processes to keep their customers after they buy for the first time (customer retention).
You have a 60-70% chance to sell to an existing customer, while you’re only 5-20% likely to sell to a new customer. But B2B companies with long sales cycles and even longer renewal periods often think the only way to grow business is by getting new clients. But if those clients don’t renew, or end up switching vendors, doesn’t that seem more like wasted time than time well spent?
Customer acquisition strategies are the start of the customer experience, but customer retention strategies have greater potential to add more to the bottom line. I want to share a story about how I have seen a negative attitude toward customer retention play out, and tips for what you can do to retain customers, grow revenue faster, and operate with more authenticity.
What is Meant by Customer Experience?
Customer experience means the spectrum of a customer’s emotions, interactions, and reactions, from the moment they discover your brand. Ideally, customer experience should never end after that. Wouldn’t it be great if 90% or more of your customers never stopped buying from you? But at many companies, long-term customer retention is seen as a fight against inevitable churn. Here are some average customer retention rates, drawn by Hubspot from Statista’s 2018 data:
- Banking: 75%
- IT: 81%
- Insurance: 83%
- Telecom: 78%
- Professional services: 84%
- Media: 84%
Improving these rates by just a few percentage points would represent benefits like more profit, better reputation, and a greater number of customers acting as brand ambassadors to send warm leads your way. But lots of companies are more worried about filling the funnel than they are about stopping the serious leaks at the bottom.
Example of Harmful Customer Experience Attitudes
I once gave a talk about the value of long-term customer retention. In the middle, one of the participants said, “I don’t think this information applies to me.”
I’ll call this person Bill, which isn’t his actual name. Bill’s comment surprised me and, to be honest, it confused me. His company sells a business-to-business IT product. So why wasn’t he concerned about customer turnover? The answer was because he knew he had long-term customers with a multi-year buying cycle thanks to licensing agreements.
But does that really matter? Short-term or long-term, when the experience underwhelms, customers are more likely to leave a company. Customer turnover costs a company money.
With this in mind, I asked Bill how he figured that long-term customer retention wasn’t relevant to his business.
He said, essentially, that once businesses were onboarded with a service agreement, they were no longer part of an opportunity to grow revenue. To Bill, there was more value in focusing on new customer acquisition than customer retention.
Let’s dig into the validity of this line of short-term thinking. Bill’s company sells a technology product with the following characteristics:
- The product needs to be installed by a qualified professional from Bill’s company that goes to the customer site to manage the IT deployment.
- Once installed, the product is custom-configured to each client, but that configuration is unlikely to be upgraded with new features over the lifetime of the agreement.
- The code will regularly be patched and updated, so there is a high potential every customer will speak to the support desk at Bill’s company at least once a year.
- The license agreement is for five years.
From Bill’s perspective, the customers brought in by sales then became the support desk’s job to keep satisfied. He also assumed that after five years, the effort of changing vendors might dissuade enough customers from leaving that they would simply renew. It was apathy that was sustaining customer experience.
I asked why customers generally chose not to renew, and he shared two reasons. One, they had been deeply dissatisfied with some aspect of their experience—and if everyone’s attitude toward the value of their business matched with Bill’s that would not surprise me. The second reason was that new tech products hit the market every day, so they might find a tool at the right moment that was better suited to their needs.
So there you have it. Unfortunately, at many businesses this sort of approach is exactly what is meant by customer experience. Lots of attention, promises, and empathy are lavished on leads during the sales process, leading them to feel a high degree of trust toward their new vendor. But then, accountability for customer retention is passed off to a service team where the company’s true attitudes are reflected—we already have your money, and you’re under a contract, so you will have to deal with what you get.
I don’t even have to wonder if my readers have had an experience like this, because we all have in some form. So now that we’re good and riled up remembering those companies that didn’t value our existing business enough to work to retain us, let’s talk about how to do better.
Using Customer Experience Theory Can Inspire Customers
Customer experience training teaches us to think about both customer acquisition and customer retention in the same four key phases:
- Engage the Audience
- Convert Leads to Customers
- Fulfill Expectations
- Nurture Your Customers
When you read “engage the audience” you might think this only applies to new customers. But every time you have the attention of existing customers they start again at the beginning of this funnel. This is true whether they need support and troubleshooting six weeks after signing up, or when they are on the verge of renewal.
Every time a customer has a great experience, you have converted them again, and get the opportunity to meet their expectations again.
But this cycle only fully functions when you have paid close attention to the fourth step: nurturing your customers. Just meeting their needs when they reach out to you isn’t nurturing. Building customer loyalty starts with exceeding expectations but is achieved by keeping their attention through storytelling and follow-up. That could be your company blog, scheduling a quarterly meeting with each client to see how things are going, or something as simple as an email update about growth and new initiatives at your business. Or ideally, all of the above and more.
Yes, all that takes effort. But if the effort of nurturing existing customers leads you to hesitate, that is a signal to check in with (and be totally honest about) your company values and mission. Spending energy to care for and support existing customers impacts more than just the quarterly profit sheets.
Through these strategies, a business sends the message that existing business is deeply valued. That message, heard by both customers and employees, is reflected in attitudes toward the work you do. If sales and marketing aren’t prioritizing the experience of existing customers, that attitude of “we already got your money” will filter over to customer support. And when the time does come to replace or upgrade a product, your current customer is likely to take their business elsewhere.
Customer Experience Goals Examples
Customer experience goals examples often include:
- reducing customer return rates or service cancellations
- reducing the response delay to customer concerns
- increasing the number of referrals from satisfied customers
- increasing the frequency with which existing customers purchase new services or products.
You’ll notice that all these goals relate to customer retention, not customer acquisition. But why are companies setting customer experience goals?
- 32% want to achieve better customer satisfaction.
- 33% want to achieve better customer retention.
- 42% want to achieve easier cross-selling and upselling.
These statistics are encouraging to me because they show that the most forward-thinking customer experience strategies are created with an understanding of customer experience principles. But again, these things aren’t either/or. Customer satisfaction and customer retention are linked, and both lead to easier cross-selling and upselling. It just takes the right strategy, from a foundation of organizational commitment.
Achieve Better Customer Experience with Alignmint Growth Strategies
When your company focuses on a unified idea of the customer experience you want to provide, not just to new customers but to all customers, you’ll reveal opportunities on the path to growth that you might currently be overlooking.
Initiatives that get existing customers excited and build relationships lead to more renewals and more referrals to new customers. But this only translates to long-term revenue when all the departments of the business are in alignment about how to serve customers, and why.
Alignmint Growth Strategies specializes in helping companies implement holistic customer experience strategy that puts expressed values into action. From customer acquisition to customer retention, both sides of the coin get brighter when it is being polished with intention. We are here to help your business outshine the competition and grow your revenue with authenticity.