It’s no news that when it comes to revenue, retention beats acquisition.
Unless, of course, you’re developing software (or, should I say, “shelfware”?) in the 1990s with the only goal to sell it and never worry if it’s even going to be used. But for all of us living in the 2000’s with the subscription-based economy, success is all about making those who bought from us stick around.
So it’s natural that the internet is full of different customer retention strategies and tips. When it comes to achieving customer loyalty, there’s no one-size-fits-all approach; ultimately, it’s all about learning what works for your business and industry.
One thing, however, rings true across all businesses and niches: keeping your quality customers and creating a holistic customer experience is a company effort.
Without further ado, allow me to share the best customer retention strategies that guide our hand here at Leadfeeder. These principles help us and our customer base maintain jaw-dropping client retention rates with a steadily growing monthly recurring revenue (MRR). Feel free to borrow them to keep quality clients around.
Client retention is a lot like trying to keep a toddler from running away from you.
You need to keep them close, so they don't escape and get hurt, and it’s way easier to do when they’re interested and content. It's all about balance — the right amount of attention, interest, and care mixed with a dash of independence.
The same is true for your clients.
In practice, client retention is all about understanding the needs and expectations of your clients and tirelessly meeting (preferably exceeding) them. But most importantly, it’s about establishing relationships with your clients. How? More on that in a minute.
First, you need to understand your customer retention rate or how successfully you retain existing customers over a given period.
To calculate this metric, you need to divide the number of customers that stayed with you over the estimated period by the number of customers you had at the beginning of the period. Just make sure to exclude new customers you acquired during the period from this calculation.
Here’s the equation:
Total # of customers at the end of the period – Total # of new customers acquired during the period – Total # of customers churned during the period* / Total # of customers at the beginning of the period.
Note: only consider those churns that resulted from customers you had at the beginning of the period.
There are many ways businesses can measure their client retention rate, ranging from Gross Sales Volume to MRR to Customer Churn Rate and so on. But you’re free to come up with your own KPIs to track. In Leadfeeder’s case, we track our client retention rate by measuring our MRR at the start of the month against the end of the month.
Now, let’s dig into client retention strategies that help Leadfeeder and our clients build long and happy customer relationships.
These client retention strategies help our clients make the most out of Leadfeeder’s tools, build long-lasting relationships, and continuously increase our customer lifetime value (CLV).
Here’s what we do (and you should too):
Start with attracting the right customers
This might not be what you want to hear, but loyal customer retention starts long before your customer success team takes over. In fact, it begins even before your sales reps close the deal — somewhere around customer engagement. Before everything else, your customer loyalty lies in attracting the right customers.
Who are the “right customers,” you ask? They are the customers that match your ideal customer profile (ICP) – the quality clients who actually understand the value of your offering and need it in its current form.
Think about it: what happens when your sales reps manage to force your product on someone who doesn’t really need it? There are two options:
1. The client will churn shortly after the deal, or
2. You will need to bend over backward to keep this client who is remotely pleased with your service, losing time, money, and your will to live.
In other words, if you want to keep your customer churn rate in check, consider the whole customer lifecycle, starting with pre-sale.
Here’s a simple example. We know that Leadfeeder’s functionality is perfect for medium-sized companies that want to amp up their lead generation. That’s why we don’t market ourselves to small businesses that might not need all our features or particularly massive enterprises for which our functionality might not be enough.
Know who your product is the best fit for and sell it to them. This is the core principle of targeted lead generation that will help you up your lead gen game and win the hearts of the people who are much more likely to stay with you for the long haul.
Be human and treat customers as people
You might’ve noticed that when we address our clients, we often use the word “people.” That’s because we treat our customers as such, and it shows in the testimonials from our customers.
Remember: people buy from people. It rings true in the B2B SaaS environment as much as anywhere else. If you don’t want to give your clients a sour feeling after buying from you, you should be guided by the desire to help, not to sell.
Here’s what it means in practice:
1. Focus on the person and their pains. Before hopping on a call with a lead, do your research: check their LinkedIn, and see if they’ve published anything on Medium. Ask questions during the call. People can always tell when you intend to prove helpful with your product or simply close the deal.
2. Be honest. If you don’t know the answer to a question, just admit it and promise to come back to the person when you find a solution. If they want something you can’t deliver, be honest and explain how your offering can compensate for that.
3. Tailor your delivery to each person and their industry. You wouldn’t share the same meme with your friend and your grandma, right? An odd example, but the same goes for presenting your offering. Use the information from your research to highlight the functionality that matters for this individual and their company/industry. Don’t waste time selling them what they don’t need.
4. Handle objections with dignity. When they object, ask specifying questions. Listen. Acknowledge their reasons. Use facts to explain how you will affect their bottom line.
Simply put, be a person when you communicate with people. It always pays off.
Make your onboarding a smooth ride from the very first touch
The quality of your onboarding has a long-lasting effect on your client retention and the overall bottom line. It is the biggest breaking point in the customer journey, responsible for an average of 23 percent churn. This is a sensitive stage of the customer lifecycle when the customer has given you a shot but is still ready to back down at any moment if you make them uncomfortable.
But onboarding isn’t just about “locking” the client. It’s also about ensuring they understand what to expect from your offering. Your crucial task during onboarding is to play up all the benefits without giving false hope, so the customers don’t end up relying on the product for things it doesn’t deliver.
To ace onboarding, get clear about its goals. From there, it will be easier to plan the specific actions and touchpoints needed to achieve this:
Making the person feel important and welcome by properly handling their personal information, sending welcome emails, and greeting in-app messages
Providing all the information they need to get started at their own pace with guided tutorials or setup wizards
Setting expectations by establishing what the person can achieve using your offering and within what timeframe by having regular calls and signing an SLA agreement
Helping them get the most out of your offering and meet their objectives by planning bi-weekly calls where you respond to their questions and help them tackle challenges
At Leadfeeder, we have regular check-ins with our customers to make sure they’re getting the most out of our tool and are on track to achieve their goals. This shows our clients that we care about their victories and helps us prevent potential dropouts.
Make customer feedback your best friend
Of all the ways you can boost the lifetime value of a customer, nothing beats leveraging direct feedback from your clients. Even if clients go on pause, downgrade, or walk away forever, as long as they leave feedback you can grow from, you’ll be ok.
Asking for feedback is a cost-effective tool that works on multiple levels. First, it demonstrates to the customers your interest in what they have to say, your commitment to helping them, and your willingness to improve.
In other words, encourage customers to innovate with you. In return, they will provide you with a continuous source of valuable ideas that will guide your iterations.
For example, we use Canny to capture and manage customer feedback. As of now, Leadfeeder’s board in Canny contains around 432 feature requests along with 1180 product ideas posted in our Slack product discussions channel. We also set up follow-ups with customers whose problems we committed to solving.
Customer feedback also provides your churn data with much-needed context. For example, when your analytics show that product usage is low, turning to customer feedback can help you understand why and fix the issues.
But be ready to ask the right questions and read between the lines. For example, when customers say, “Your tool is too expensive,” what it means is they don’t see the value that would match the price. The solution would be to pass their case to your sales reps, who can address their doubts and physically show them the value of the product.
Provide your customers with resources for support and education
No matter how stellar your customer support and customer success teams are, your clients must have the option to solve their problems on their terms and at their pace. Providing them with resources gives clients that and reduces the load on your CSM team, helping it focus on more strategic and impactful tasks. It can also be your way of establishing thought leadership and demonstrating your expert edge.
Self-service can take many forms, most popular including knowledge bases, FAQs, blogs, and courses that educate your clients on how to use your product or service.
For example, at Leadfeeder, we have an ample resources section that includes high-quality webinars with leading experts, an academy where our clients can take courses on how to get the most out of our products, and a blog where we cover topics ranging from lead generation and digital marketing to customer retention.
All this, on top of our help center and communities on social media, makes customer success unavoidable and ensures high levels of satisfaction.
Integrate with other services your clients use
Integrations have a massive effect on bolstering brand loyalty. They make your product an inextricable part of your customer’s life by providing value even when they don’t use it directly. That’s what I call exceeding customer expectations.
The more your product becomes a part of your clients’ lives, the harder it is for them to walk away from you. In other words, it’s all about making people depend on your offering, in the best sense of the phrase.
For instance, Leadfeeder can integrate with multiple services our clients use, including CRMs, Google Analytics, Slack, Mailchimp, and various other automation tools, creating a holistic system across all the channels our clients use.
Make sure you address customer complaints on both tactical and strategic levels. Place your customer support team in charge of putting out fires and solving immediate requests, leaving customer success folks responsible for prevention and proactively building relationships with customers.
Address causes instead of symptoms. Teach your teams to scratch beneath the surface and find the “why?” behind the client’s “what?” Why did their account go idle during onboarding? Why don’t they use these features? Why do they think you are too expensive? Ask your current customers the right questions, and analyze their answers, and you will have your solutions for high customer retention.
Loyalty programs are a tried and tested way to optimize customer satisfaction and make your users feel like a VIP. Handsome discounts on yearly plans, early access to new products or features, and other incentives can all be a part of your customer loyalty program.
Leverage help desks to allow customers to contact you 24/7 via a channel of their choice to automate problem-solving and show them what great customer service really looks like.
Never stop improving your product. This will bring you repeat customers who make repeat purchases more easily than the first time. But always make sure that you work on the things your customer needs. Remember the advice about leveraging customer feedback, and you won’t be strapped for ideas ever again.
Let customers become your brand ambassadors. At Leadfeeder, we have a Partner Program — a word-of-mouth referral program for our partners that turns our most loyal customers into affiliates who get rewarded for introducing Leadfeeder to more people.
Customer retention is all about attention — I mean, if it rhymes, it must be true.
Joking aside, if you really want your customers to stay with you, you have to build a relationship with them. And to do that, you have to listen to their needs and make sure you understand their pains.
Be human. Be responsive. Be the company they can trust because it has never let them down. Make onboarding easy and pay attention to their feedback — even if you don’t like it. Offer resources that help and educate them while making your clients feel they’re not alone and can always contact your support. Just be there for them, and your clients will be happy to return the favor.
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