While you’ll always want to be marketing to and acquiring new customers, forgetting about this key element in your customer acquisition strategy is an expensive mistake…
When I mention ‘Customer Acquisition’, what comes to mind first?
Perhaps you begin thinking about your marketing initiatives and content strategy. Maybe you visualize a sales funnel or your team of SDRs. A dozen other ideas may have floated into your mind…but I’d bet your client’s satisfaction wasn’t one of them.
In an outdated model of a customer acquisition strategy, the process ends when your prospect signs a deal. Closed/Won = Closed/Done.
While you’ll always want to be marketing to and acquiring new customers, forgetting about retention in your customer acquisition strategy is an expensive mistake. According to Profitwell, Customer Acquisition Cost has increased by nearly 50% over the past 5 years and it can cost 5x more to attract new clients than to retain existing ones. If your focus is solely on moving prospects through your funnel, without considering the implications of churn, even with a steady stream of clients you run the risk of decreased profit.
In the words of Sapper CEO Jeff Winters, “It’s like a bucket.” The bucket metaphor is a tried and true motto to explain churn initiatives across many companies – including ours. If Sapper Consulting is the bucket, our clients are the water filling it up. If there is a hole in the bucket, we lose water – aka, churn. We need to both address the leaky bucket (customer satisfaction) as well as add more water (customer acquisition) to keep it full (meet our revenue goals).
Why Client Satisfaction is Key to Customer Acquisition
First and foremost, if you’re losing less water you’ll have less to replace. Whether you want to grow your business or maintain your current revenue, retaining your current clients allows any new customer acquisition to live as a net gain. Additionally, increasing your customer retention by 5% can increase profits anywhere from 25-95%.
Your ‘water’ is worth its weight in gold; here’s why:
Your consumers are more educated and less trusting than ever before. While you may have top tier salespeople, an incredible social presence, and a kick-ass product, social proof may be what you need to move the needle.
And who provides that proof? Your happy clients.
As it turns out, your current clients may be more effective at selling your product than your salespeople. 55% of consumers no longer trust the companies they buy from as much as they used to, while 81% trust the advice of family and friends over businesses. In another study, BrightLocal found that 76% of consumers trust online reviews as much as recommendations from family and friends.
In short, your buyers trust your clients more than they trust you. While you should always strive to build rapport with your prospects, social proof inspires trust and increases conversion more than your ads or emails. If your current clients aren’t sticking around – and don’t feel the need to refer a friend, leave a review, or be involved in a case study – you’re not only more likely to churn clients, you’re less likely to acquire net-new.
Increased Lifetime Value
At this point in my life, I have easily spent entire paychecks at Comet Coffee, a locally famous cafe. While there are dozens of other coffee shops in St. Louis that offer almond milk lattes & croissants, Comet has earned my brand loyalty and I will go out of my way (even if inconvenient) to buy their lattes. I’m even willing to pay more for it because I know that I will always have a positive experience. I’m not alone in this! Happy clients are more likely to have an increased lifetime value.
Through upselling, new offerings, and extended contracts, you can increase customer lifetime value and organizational revenue – but this only comes from satisfied customers. Keep in mind that expanding with your current clientele should not come as an afterthought. Build systems to prompt opportunities and train your services and sales team to be prepared to have conversations around upselling and expansions. Even better, create a specific internal role whose job is to find upsell opportunities and who owns that process from front to end.
Secrets to Increasing Client Retention and Managing Churn
Take on the right clients.
Your product or service is not for everyone. And while your sales team may jump at the opportunity to sign anyone who is willing, taking on clients that won’t truly benefit from your services is bad for everyone in the long run.
Not only will your client churn and leave with a negative impression of your business, they likely will share their experience with colleagues, social media, or in an online review. According to BrightLocal, only 53% of buyers would consider using a business with less than 5 stars.
Finding and signing the right clients requires alignment between sales and marketing. While your lead generation should target within the parameters of your ICP, it’s up to your sales team to continue qualifying prospects to ensure a mutual fit and manage expectations.
Motivate Towards Retention
At Sapper, we promote retention tactics across the organization. While the KPIs of our services team reflects a combination of performance and churn, we have also made client retention a part of our culture. In fact, we even have ‘Burn the Churn’ tee shirts to show our organizational commitment to retaining clients
One of our company values is to Have the Client’s Back; in times of stress or dilemma, we’ve trained our team to flex back to this principle. I asked a few of our Client Success Managers how they build strong relationships with their clients; I think their answers speak for how Sapper shows up to this value;
“People don’t care how much you know until they know how much you care. That’s why I build a personal relationship with each of my clients, while working on a professional level with them. All of my clients know that I have their best interest at heart and trust me with their pipeline because I not only care about the success of their business, but I care about their well-being as people too.” – Bella
“At the end of the day, it’s all about putting yourself in your client’s shoes; That’s what is going to sustain your drive. Show up for them each supplementally based off of needs and really foster a partnership that is always teeing up to the future. True partnerships are developed through integrity, sincerity, and a whole lot of transparency.” – Anna
“To keep my clients happy, I tailor my partnership with them to whatever best suits their needs. If they are more data-driven, we talk about reply rates and other campaign numbers a lot. If they prefer questions and updates via texts rather than email, I cater to that preference. Here at Sapper, we avoid cookie cutter approaches to our clients’ campaigns and focus on creating a custom experience for each of our clients.” – Erin
Track Your Net Promoter Score
You can’t address the problems you don’t know about. By tracking a Net Promoter Score, you can keep a pulse on your clients in real time. While you can tackle problems as they come up, you can also get a sense of overarching trends in your organization that keep you from delivering an 11 Star Experience.
At Sapper, we utilize Ask Nicely to track our NPS. We get data and reviews from current clients, can see which members of the services team they work with, and have this information fed to an internal Slack channel. By surfacing issues while clients are still clients, rather than waiting until they churn, we can improve our customer experiences on the individual and systemic level.
From marketing strategy to client retention, a customer-centric business model will improve every aspect of your acquisition process.
To learn more about the differences between customer acquisition and lead generation and how to make each stand out, get a copy of our free eBook.