4 Unusual Ways Successful Companies Keep More of Their Best Customers

Customer retention is invaluable when your business lives or dies on subscriptions.

If you provide some type of monthly subscription service, such as a product or software as a service, it’s vital to increase customer lifetime value and retain more of your best customers. But how do you do it?

Is it to build a better product? Well, obviously you want to make your product more valuable and more essential. But this isn’t always easy to do because of the time involved.

Customer retention has been one of my top focuses for eight years at the software company I founded, WordStream. We’ve probably done more than 1,000 experiments over the years. Now I’d like to share some of my findings.

Here are four unusual ways to reduce churn rates and increase overall customer lifetime value.

1. Set the right expectations.

The number one source of churn is actually setting the wrong customer expectations. How does this start? During the sales process.

Here’s the problem: salespeople are trying to close deals every month to meet their quota. So sometimes they might sell to the wrong customer (a buyer who doesn’t really fit into your target market) or make lofty promises that go beyond the reality of the services you provide.

You need to know what your salespeople are selling. Make sure it aligns with what you actually offer.

How can you ensure your salespeople are laying out realistic expectations and targeting the right customers?

One of the worst things you can do is implement a clawback, where a sales commission goes away if your customer doesn’t last for a set amount of time. This is negative punishment and is absolutely terrible.

The smarter way to do it is to give everyone a commission for the sale, then add a meaningful bonus or deferred compensation that is payable based on retention. So if a customer lasts longer than 90 days (or whatever threshold you choose), then your salesperson earns the additional compensation. Totally positive reinforcement!

2. Build meaningful relationships.

You’d think that helping you customers achieve success through use of your product would result in less churn. Nope.

In fact, we found a negative correlation between quality of the results that were being delivered and the average customer retention duration. The better performance we gave, the more likely they were to churn — we helped them out so much they didn’t need us anymore!

You’ll actually find more success by focusing on building a personal relationship with your customers. Make sure you’re on good terms with the stakeholders. Try to be their best friend.

Having fun, great calls together correlates strongly to longer customer lifetime value. You’ll find this is true of pretty much every product or services company.

One way to do this is to avoid switching your customer service people around a lot. If your customer service person is changing every three months, it will be hard to build any sort of meaningful relationship with your clients.

3. Focus on pivotal moments.

Map out the journey your customers take. You need to figure out which moments matter most in their journey and invest heavily in these key moments. Delivering a great customer experience at these times will pay off.

There are certain pivotal moments in a customer relationship where if they have a great experience, they will love you forever. And if they have a terrible experience, they will remember that forever as well. More important: they won’t last long as a customer.

Obviously, these key moments will vary, depending on your business and industry. For example, at WordStream, we focus on moments such as the customer onboarding experience, setting up their first AdWords campaign, and configuring their call tracking.

These moments are so very, very critical to reducing churn. They need to go well. So we try to over-prepare and over-service these parts of the customer journey.

4. Just say no to certain types of customers.

Figure out what elements of your customer market churn or quit at higher rates than other segments. Once you dig into your customer retention data, you’ll likely find all kinds of interesting relationships.

For instance, one thing we discovered was that larger companies were far more likely to stay on longer as a client. If they had a lot of money to spend, they stuck around much longer.

But tiny companies and companies doing affiliate marketing? Not so much. No matter what we did, they wouldn’t remain clients very long.

Insights like these will help give you a good idea about which market you should target or completely avoid.

Based on our insights, we eventually decided not to chase or take on certain types of clients. Certain types of customers just weren’t committed to seeing our product through because of how they were hoping to use it.

Don’t be afraid to just say no to certain types of suspect customers.

Will everything discussed in this article instantly cut your churn in half or double your customer retention? No. But these four points will help you chip away at it.

Obviously, the biggest way to reduce churn and extend customer lifetime value is to make your product or service infinitely more valuable than your competitors’.

Bottom line: it’s critical to keep your best customers. You’ve already spent money to acquire and onboard them, and you’ve already paid commissions to your salespeople. Every month you keep them will bring considerable value to your business. It’s money in the bank!

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About The Author

Larry Kim is the CEO of Mobile Monkey and founder of WordStream. You can connect with him on Twitter, Facebook, LinkedIn and Instagram.


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