Retention is easier than acquisition

Here’s what you can do about it and which tools might prove useful

The economic situation is yet another factor that makes entrepreneur’s life ever so entertaining. According to Milton Friedman, the ups and downs are to be viewed as common fluctuations rather than business cycles on top of which some additional, unexpected events, such as the COVID-19 outbreak, might occur. What happens to the business in such cases? In face of the 2020 pandemic, as in any market slowdown, the first thing that most companies do is cost-cutting — important as it is, but what about your topline? What about the growth you have planned? What will happen to your revenues?

Focus on retention

It is no secret that for most businesses customer retention is easier to achieve than acquisition. Although you may think of it pretty often, now is the time to focus on it even more. According to the study, it costs 5 times as much to acquire a new customer than to keep the existing one. In addition, improving retention by 5% increases profits by 25% to 95%. Seems like a low-hanging fruit, doesn’t it?

One-size fits no one, and costs you more

Even if your customers are in the same industry, their situations are not the same and neither should be your strategy. That’s why the first thing that you may do wrong about improving customer retention is a “one-fits-all” strategy, as the probability of churning differs across the segments. It means that a different level of effort from your side is required to make each of them stay. Take a look at the Harvard Business Review’s guide to segmentation and try to understand which segment:

· faces the biggest problems and is the most likely to churn?

· is negatively impacted, but may be open to negotiate?

· is wealthy enough to be rather immune to the current situation?

· makes decisions spontaneously despite the conditions?

Use both qualitative and quantitative approach, segment your customers and tailor your actions to specific groups.

Helpful tools: your own CRM (customers’ profiles), research on impacted sectors, own churn prediction model or ready-to-wear ones, e.g. ChurnZero

Keep your product healthy

Be honest and trust your net promoter score (NPS). Despite the possible costs, you should keep modifying your product and adjust it to your customer’s needs. Check whether all the features are relevant and working well. Are they really what your customer wants and needs? It is the moment of truth for your offering and you should react quickly. To assess whether your vision of the product is in line with your customers’ perception, talk to them. You can use NPS but having a call with some of your customers is also a good idea.

Helpful tools: your own CRM (usage statistics), customer feedback tools e.g. Survicate, online meeting tools e.g. Google Meet or Zoom

Teach your customer

Many of your customers will revise products and services they use and some of them might consider churning simply because they don’t understand the value behind it. After checking whether your value proposition (VP) matches their expectations (and potential VP adjustments), you should spend a bit more time on understanding what the problem is. Start with analyzing customers’ behavior, then produce educational materials, such as videos, use cases, manuals. If you or some of your team members have the capacity, you may also organize webinars as well as one-on-one meetings and consultations.

Helpful tools: your help desk tool, Hotjar for customer behavior analysis, Wistia or Parmonic for video trainings, Calendly for consultation booking

Empathy & excellence

Make your customer service people be much more empathetic, available and efficient. It’s the right time to show how much you care about your customers and definitely avoid getting on their nerves. Try to improve the response rate, think of materials you can share with your customers as a pain-relief. Take a look at as many complaints as you can to see if there are any patterns yet.

Helpful tools: your help desk tool, chatbots for customer service e.g. Chatbotize or Kustomer

To sum up, economic downturns may be a very painful experience and it is difficult to predict a winning strategy during this time. But! If you only pay enough attention to your customers during this time of hardship, many lessons might emerge. This is the chance to improve the product-market fit and make your team become more customer-oriented, which will only make your business stronger when the slowdown ends.