Updated: Mar 9, 2020
Blog Author: Shane Arcuri, Customer Success Manager
Webinar Presenter: Marc Pierce, CEO
It is well known that it costs companies a lot more money to acquire a new client than it does to retain a current one. Despite that, companies continue to under-invest in their current clients and neglect the retention piece of the customer life cycle. When, eventually, it is time to renew the client and continue business, they are surprised to find that the renewal isn’t going to happen, and they’ve lost the account. This is costing them thousands of dollars annually! So, why aren’t companies doing anything about it?
View this webinar or read below for a quick synopsis. And we want to thank GreenRope for sponsoring and hosting this webinar. GreenRope is a CRM leader in marketing automation, sales pipelines, and customer service.
Here are the 9 most common reasons why companies under-invest in retention and take retention for granted:
1. Less than 5% of companies systematically check the pulse of their key constituents
Checking the pulse of key constituents on a systematic basis is difficult. Often times normal day-to-day business gets in the way, new projects require your attention, or a large number of other things interrupt your focus and demand a high priority from you. To do it properly, it requires companies to dedicate precious time and resources to the effort while we’re already being spread too thin to begin with.
2. Companies spend most of their time on large clients or the ones that make the most noise
We’ve always heard that “the squeaky wheel gets the oil”. This holds true for the largest and noisiest clients in your book of business. Unfortunately, we can fall into the illusion that smaller clients or quieter clients don’t have as many needs or don’t require as much attention.
3. Many companies rely on sales and account manager self-reported input into CRM systems
This data is often biased and inconsistent across account managers. Technology is only as good as the people using them. If the employees inputting the data are undertrained, overwhelmed, or even fearful of their managers, the data being input is likely to be inaccurate or misleading.
4. Traditional surveys are sometimes used, but are not consistently deployed, analyzed only at the summary level, or are too time consuming and expensive.
Companies spend too much time on aggregate results and not client-by-client. However, retention is on a client-by-client level so, if you’re not considering each individual client, you may be missing the mark on what you need to do to retain them. Also, if you don’t have in-house market research expertise, it is likely that this will be a very expensive project in terms of both time and money, nor will it produce the results that you need to make educated decisions.
5. Companies look for an easy path like measuring Net Promoter Score (NPS). NPS is NOT a good predictor of customer sentiment, especially for B2B companies.
There is a HUGE disparity between how people answer NPS questions and how they really feel. This is especially prominent for B2B companies that don’t have very many competitors. We have found that these companies will be recommended in an evaluation set, but this doesn’t always mean that you will be selected. So, this question is fundamentally flawed in this scenario and the NPS will often be inflated due to this.
6. Account level planning is very time consuming
Many companies excel at account level planning in the first year of acquiring a new client. However, as time goes on, normal business functions tend to get in the way as you become busier and busier. It becomes increasingly difficult to come up with new plans year over year and eventually it becomes neglected.
7. Afraid of the answer
What you don’t know can’t hurt you, right? This is often the sentiment around gathering feedback from your clients. Many Account Managers avoid gathering customer sentiment because it may make them look bad. The idea of beginning to know what your clients think of you can be scary. It can uncover more work or reveal some major issues that some will be embarrassed about if management finds out. So, they avoid the topic altogether.
8. Front line Customer Service may not take poor feedback seriously enough
Often times, the customer service front is taking several calls a day, back to back. They are worried about call times and several other metrics that they are measured by and can get jaded by all the customers complaining. Relying solely on front line customer service to handle customer feedback may result in not getting the full answer from your customers.
9. Not sure which actions to take
Even if you find out a customer is unhappy and plans to leave, many companies don’t know what to do about it. It can be a case of “too late” or “we knew this was going to happen” or “there’s not much we can do about price”. The good news is that there is ALWAYS an action you can take, but a big part of it is the timing of that action. You don’t want to wait until the last minute to find out that a customer is leaving. You want to identify the issues as early as possible to give yourself enough time to properly address and solve them. If you’re short on time, at the very least, acknowledge the issue directly with the client. This will buy you much needed time to rectify the situation and provide some sort of remuneration no matter how big or small.
In the end, no matter how many or how few of these points apply to you and your business, a proactive approach is highly preferred over being reactive. Always take action and, better yet, design your own playbooks for situations that you find are common across the clients that are at risk of leaving. Having an action plan for common “red flags” is going to help you retain more clients, generate more revenue, and break the desperation of trying to acquire more clients than you lose in a year. A mere 5% increase in retention can generate an incremental 25-75% in net income. What kind of doors will open for your business once you achieve that?