Maybe you want to say, “two new customers.” And sure, it is. But what’s better still is actually retaining an existing customer.
Businesses are very occupied with the net new names metric. They want to see growth in new business. Few things are more personally exciting than closing that next deal — especially when it’s a big one.
But at the same time, retention of customers actually costs a lot less and has the potential for a lot more. After all, you went to all that trouble acquiring those existing customers in the first place. The further your relationship goes, the more of a win that initial acquisition is.
The ROI of Retained Customers
Compared to the cost of acquisition, the cost of retaining an existing customer is low. You already know this customer. You’ve gotten their contact information. You know why they’re interested in your product or service. And of course, you’ve already convinced them that you’re the right partner for the job.
The biggest mistake many companies make is assuming the sales and marketing work is done at this point.
Without a careful approach, you risk losing your existing customers.
- They may not understand how to properly apply your solution and assume it doesn’t work
- Competition may contact them and win them away from you
- They may simply feel unheard and undervalued
This is where retention marketing comes in handy.
What Is Retention Marketing?
HubSpot has a pretty good definition of retention marketing:
“The Marketing activities used to increase the likelihood of a recurring customer, while focusing on increasing the profitability of each repeat purchase.”
You probably have some base rate at which customers are retained. This will be down to a mixture of how good your product or service genuinely is, how well it applies to the customer’s problem, price, and how naturally it lends itself to repeat purchase, among other factors.
Let’s say you’re an IT company selling cybersecurity services. After you’ve made the initial sale and got a business onto a monthly retainer, you may find that after, say, a year, with the obvious onboarding work done, customers start asking what they’re still paying for.
What’s cheaper: making sure that an existing customer is appropriately informed about the ongoing industry threats and updates about how your company remains ahead of the trends — or going through all the trouble of contacting a fresh company and going through a sales cycle that doesn’t start paying for itself for six months?
If you sign customers on a yearly basis and see a lot of them dropping out at the end of the contract? Well, getting retention marketing right allows you to multiply the lifetime value of that customer by the equivalent of an entire new customer every time it succeeds.
Retention Marketing Is Even More Important Now
A few years ago, you could rely on the boom in social media and search engine marketing to pull new traffic in fast enough that you could afford to sell to someone once and never again — because there was always someone new coming.
But this is no longer the case. Ads are more expensive, and in many industries, major players have been able to dominate the field. When the cost of acquisition rises, the smart option is to find the right balance between acquisition and retention.
Want to Know How To Retain More Clients?
Flawless Inbound has worked with more than 80 B2B companies across Canada and the US, and we’ve worked both to help them acquire new clients and retain them. We’ve produced winning retention marketing campaigns that have helped companies overcome the churn barrier. Find out more about what we do here.