Customer Success: The Best Strategy to Reduce Churn
How do multi-billion-dollar companies like DocuSign continue growing sales by 30% every year? A big reason is DocuSign has a low churn rate and a high level of repeat business. Why are Iconic companies like Box, Zuora, and Domo trading at 3x annual revenue when companies like Slack and Zoom are trading at 40x annual revenue? Both Slack and Zoom have less than 1% churn.
Source: Cloud Index
Acquiring new customers is important to growth, but retaining customers is critical to the survival of your business. The cost to acquire a new customer can be 5 – 25 times more costly than retaining an existing customer. By keeping and expanding your existing customers, you reduce your customer acquisition cost, therefore, increasing your profitability ensuring long-term business health.
80% of a company’s revenue comes from existing customers, according to Garner Group. In the growing subscription economy, driving net retention is becoming the new growth engine.
So, what is the best strategy for Net retention?
Invest in Customer Success (CS)!
Customer success is the core element that determines how successful your firm is at keeping your customers.
Here are four customer success best practices you MUST do today!
1. Understand Customer Health and Pay Attention to Churn Signs
Customer success is all about understanding your customers. And the best way to do so is to compile fragmented data into meaningful insights, known as customer health.
Customer health helps you create detailed customer profiles.
With the customer profiles, you can take a proactive approach towards churn prevention. You want to find out early because the longer you wait, the more likely the churn will happen. And once churn occurs, it’s impossible to reverse!
But how early can you predict churn?
The more you track, the better the prediction becomes. Currently, there are several customer success management tools you can use to predict churn.
If you have a successful business and are scaling fast, you have to have one of these tools integrated into your CRM. It will make your life easier!
However, the usage and need for these tools vary across industries and dependant upon each customer success manager/leader. Some managers prefer inputting data manually for better control and personalized metrics, while others require advanced solutions to automate their process for extensive data analysis.
If you find yourself in the latter group, you will be amazed by how much your profit can skyrocket with AI implementation. Here are a few benefits:
Ultimately, you need a customer success management tool on hand. Otherwise, you would fall behind the competition.
Now that you have established the foundation for customer success by creating comprehensive customer profiles, it’s time to win them over.
“Your customer doesn’t care how much you know until they know how much you care” – Damon Richards.
“91% of consumers are more likely to shop with brands who recognize, remember, and provide them with relevant offers and recommendations.”
For example, you are a customer success manager at Salesforce and want to increase revenue this quarter to meet your Objective and Key Results (OKRs). You are looking for an opportunity to upsell.
You notice ABC’s customer base has doubled since last quarter, and they have yet to upgrade their plan. They are your golden ticket to upsell. It’s a no-brainer!
On the other hand, XYZ’s growth has been stagnant since 2018, and the pandemic has dramatically affected them. You found out that they have downsized. Perhaps, they don’t need the premium service they have been paying for. Showing empathy with the firm and helping them downsize might be the better strategy for both parties. You might just turn a ready-to-churn customer into a loyal one.
Acknowledging customers’ different needs in different stages will help you better enhance customer experience and improve customer success management.
3. Enforce Continuous Feedback Loop
Third, collecting feedback is one of the most significant ways to grow your business because it gives your firm a chance to take corrective actions while exploring new business opportunities. There are several creative ways to do so, but it all boils down to communication.
Frankly, communication is the key to success.
Frequent interaction between brands and customers contribute to stronger bond and customer loyalty. However, it doesn’t mean that you should bombard your customers with 10 emails a day.
Social media is the next best alternative and an excellent outlet for firms and CSM to communicate with the world.
93% of U.S consumers researched online for a business
Social media is extremely crucial because it connects you with the customers on a personal level. You can share with customers about yourself, your team, and your business that they would never know otherwise. In other words, social media humanizes your brand!
The more frequent the engagement between firms and customers, the more bond and trust you create.
For starters, Story and Polls are two examples of creative features on these platforms that facilitate your communication with customers.
These interactive tools allow you to bridge the knowledge gap between your firm and the customers and bring everyone closer together. You will establish more meaningful relationships/connections by just engaging with customers, learning about their concerns, and addressing their problems.
In addition, these polls and responses you collect will also serve as a powerful market research tool. You can use this information to build brand value and improving customer satisfaction.
And the best part, it’s free and can reach global markets!
4. Follow-up and Follow-through
As mentioned, collecting feedback (whether through in-app surveys or social media activities) is the crucial first step to customer retention, but taking action is what truly matters.
Understanding their struggles and following through with your promises will significantly improve your brand reputation.
After knowing the what, finding out the how is your next big step.
To successfully follow through, you must identify clear goals and steps to implement them. You want to ensure that your plan aligns with the overall business strategy.
Lastly, a metric to track progress and measure success must also be in place. This metric will help you stay on track and make any necessary changes to accomplish your goals.
You Need Customer Success
Customer retention goes hand in hand with customer acquisition. Both are essential to your business growth and sustainability.
And the best investment you can make to improve your customer retention effort is customer success. And customer success best practices are:
- Understand Customer Health and Pay Attention to Churn Signs
- Enforce Continuous Feedback Loop
- Take Action.