Winning new customers builds internal enthusiasm and turns sales champions into company heroes. A Bain & Company study highlights that increasing customer retention by 5% can increase profitability by 25% to 95%. Within the US credit card industry, Forbes reports that providers deal with annual churn rates of 20%. Imagine the massive profitability of retaining even the top quartile of their best churning customers.
Reduce customer churn and increase profitability through:
Understanding the data
It’s tough to develop a customer retention strategy if you don’t understand the depth of the issue. A lead generation company can help. Not all customers are profitable, so losing the bad ones may be a good thing. But there are predictors, patterns and customer behaviors that can all forecast the probability of churn, order shrinkage and lifetime customer value. While there can be a mass of complexity in understanding the data, some smart thinking from a lead generation company can establish a streamlined process and customer segmentation strategy that is applied on a standard cycle and refined ongoing.
Take preemptive action
No company wants to give away margins. Yet new customers like those off a lead generation company list often get better deals than loyal ones, which drives negative customer sentiment. How do you get them before they defect? Make them feel important, because they are. It may well be a special offer to incentivize a longer-term commitment, before they defect. Or perhaps a simple “thank you” incentive just for being a customer will shift the sentiment. The answer depends on the industry, the customer value and frankly, what works.
Create a sticky relationship
The more imbedded a company is with a customer, the more difficult it is for the customer to disengage. Software as a service (SaaS) is a good example of a business category where there is stickiness, with churn being limited to 5-7%, according to SixteenVentures.com. The SaaS sale has gone from a transactional purchase to one that has longevity. And with that longevity comes the opportunity to build a real bond, to drive value into the customer relationship, and to become more imbedded with products and services that the customer values. Remember, the key is providing something that is of value to the customer – not only of value to the seller.
How can we help
If you’d like to discuss how to get new customers and increase profitability through understanding and improving customer retention, our lead generation company services can help. Contact us.