Take a minute to think about your ideal customer. This looks different for every business, but there’s a common thread, no matter what industry you’re in: The ideal customer is the one that lasts a lifetime.
Take a minute to think about your ideal customer. This looks different for every business, but there’s a common thread, no matter what industry you’re in: The ideal customer is the one that lasts a lifetime.
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With the advent of Software as a Service (SaaS) and other subscription-based business models, it’s more pressing than ever to prevent churn and turn your customers into lifetime users and brand advocates. Small changes have dramatic impacts: Your business can reach a 20 percent higher multiple in valuation with just a 2 percent reduction in churn. Reduction of churn is so important to sustaining this new model that an entire industry (Customer Success) has sprung up to assess customer health.
Broadly, Customer Success focuses on driving product adoption and adding value to the customer’s lifecycle. All good things come from product adoption: Customers who consistently use your product will consistently renew and may even purchase additional products. The components of each Customer Success program will depend on your business goals and objectives, and there are many aspects to building an effective program that are industry-specific. No matter the space your product operates in, though, there are some general strategies that will help any business develop a plan to keep customers for life.
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Build the Foundation
Your most valuable customers are looking for a relationship with your company, and all good relationships start with a strong foundation. In customer management, the way to build this strong foundation is to look beyond simple customer metrics and developing a 360-degree understanding of your customer.
Too often, businesses get stuck looking at the a few numbers: how much a customer is worth to them based on their sales figures alone or how many licenses are being utilized. While these are important, a better way to understand your customers is to develop a full profile that brings together data from CRM, marketing, financial sources, usage history and more. Analysis of this comprehensive material will yield better insights and a picture of customer health, which will give early warning signs into whether or not a customer is in jeopardy of churn or if there is opportunity to expand and upsell.
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It will also help you develop relevant marketing efforts based on the level of customer engagement. For example, if you’re sending a tutorial email to an end-user that your data tells you is a power user, that message is going to be seen as spam and damage the relationship.
Stay Ahead of Red Flags
After developing a profile, you now have the tools in place to begin proactive customer management. The most important step in creating lifelong customers is staying ahead of red flags, and changing the way you manage a customer base. Instead of being stuck in reactionary mode and trying to save customers on the edge of churning out, proactive management addresses potential issues before (or as) they arise, helping you prioritize resources.
This proactive management comes in many forms. One method is providing continuous training to every user throughout a customer’s lifecycle (not just at the beginning) to ensure successful product adoption. Another strategy is to conduct business reviews at designated intervals to go over progress, usage adoption and expansion opportunities. Having an early-warning system for accounts that have issues is also key for ensuring that customers are satisfied with your product and renew.
Maximize Revenue
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Expansion opportunities and renewals are critical for long-term customer retention. Renewal management should begin at point of sale, meaning customer success managers should be continuously monitoring customer usage and health. If proactive, corrective actions can be made for at-risk users before it is too late and they decide not to renew their contract.
Customer managers should also be on the lookout for any upsell opportunities. This can be done by making sure that customers are successfully adopting the purchased product and advising them on new products to drive even greater business value.
Customer Advocates
Building a strong foundation is only the first part of forming a relationship with your customers. For the strongest relationship, it is vital to listen and incorporate customer feedback to expand and improve your organization.
Aside from recognizing and addressing issues in your company, creating an ongoing dialogue with customers will increase customer satisfaction. Just think about it: if a company truly listens to you and you can see your feedback being incorporated into the product in a noticeable way, you’ll likely want to stick with them.
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Combining the above elements gets you to a place where you can create customer advocates. Identifying brand ambassadors who can positive testimonials and references can be extremely beneficial in helping you gain new customers at lower costs. Don’t forget that advocacy goes both ways, though – You have to advocate for them too and make them feel empowered.
Remember, empowered customers are happy customers — and ones that can last a lifetime.