Customer Retention is no game.
When it comes to customer renewals, are you taking a chance by rolling the dice on your customers’ experiences? Games are fun but customer retention isn’t a game. Your customers are relying on you to provide a consistent experience, a sure thing. When you create a strategy that guarantees the delivery of a consistent and superior customer experience, you stop gambling and start taking churn management seriously, thereby minimizing the guesswork in churn prediction. Growth in Annual Recurring Revenue (ARR) depends upon the loyalty that comes when customers get what they expect–every time!
So how do you get there, to a place of exponential growth in ARR? Answer: you must remove the guesswork from caring for your customers. In this piece, I’ll demonstrate the financial implications of removing the risk from customer experience and consistently delivering on your brand promise–AKA establishing a basis for customer loyalty.
The Stakes are High
In the competitive SaaS landscape, we all recognize the high value of existing customers. With high stakes on the table, some organizations are simply gambling by hoping current customer success best practices will keep customers from churning without any true strategy behind them. This is a risk you cannot afford to take. In fact, the chart below explains the potential financial loss from a single unhappy customer.
Consider one negative customer costing you nearly $3 million. How does this happen? It happens when a customer is unhappy and socializes that unhappiness, losing you any potential referrals and maybe even some other existing customers. Perhaps you thought the customer was happy because you were surveying customers about their satisfaction. You would think that would be the right move, but it’s not an accurate reflection of customer happiness or loyalty. Surveys are a lagging indicator that, if done incorrectly, only result in variable data from different times in a customer lifecycle that cannot be properly compared and contrasted.
Repeatable processes are the key to churn management
You can’t draw an inference or conclusion about a customer unless you have a repeatable process with measurable indicators. When we use ad hoc measurement for customer satisfaction that isn’t standardized across the organization, we’re essentially trying to measure the health of customers using too many variables, which makes those measurements and insights less valuable. We also can’t hold a specific methodology or person accountable, (know what or who works), if we don’t have a system of best practices to tell what’s working. We don’t know what we should consider a win and what is considered a gamble.
The financial implications of a single loyal customer
The overall difference between an unhappy customer and a loyal customer over the customer’s life cycle is more than $5 million. If consistency is emphasized from day one, the customer experience (and, ultimate success) with your product becomes a sure thing instead of a gamble.
Repeatability instead of shooting craps
Repeatability plays a huge role in gleaning consistent customer data which helps you gather accurate information to ensure customer success and create loyal customers. To do so, follow these four steps:
- Understand and document your current state
- Determine pain points your customers are having
- Determine risks (root causes) throughout the lifecycle
- Understand the gaps that need to be addressed
It’s time for you to stop gambling with your greatest asset–your existing loyal customers. Here are some simple suggestions:
- Segment your customers. Identify what works for each segment and standardize that.
- Understand your desired customer lifecycle(s) and make sure your entire company embraces them, and uses them as their model for customer interaction.
- Define repeatable processes and activities around your customer lifecycles and train your entire company on them.
- Rely upon clean, integrated customer data to inform you of your customer status and health.
- Remain agile. Understand that even the best-laid plans need to be revisited when things shift in accounts. To do this, you’ll need a transparent and comprehensive resource for understanding the current and historic state of your customers at all times.
- And, in a perfect world, have a 360° view of your customers so that everyone–from delivery to research and development to accounting–knows what’s happening with your greatest asset, your customer!
The financial implications of a single happy customer versus a single unhappy one are dramatic, making it that much more important to ensure loyalty by delivering consistently excellent customer experiences. Each interaction with every customer matters, making them nothing to gamble on. Incorporating some basic customer success tactics is the first step in having a churn management strategy. From there, it’s smooth(er) sailing to increased lifetime values.