Customer retention today is more critical than ever before, not only because customers have more choices than ever before, but also because they are not afraid to exercise these choices if products don’t meet their needs. An important driver of this change is the arrival of the Subscription Economy, and as Zuora CEO, Tien Tzuo, explains, “In this new era, it’s all about relationships. More and more customers are becoming subscribers because subscription experiences built around services meet consumers’ needs better than the static offerings or a single product.”
So how can companies compete effectively in this environment and retain their customers? As technology continues to increase in complexity and the competitive landscape across nearly every industry continues to expand, retaining customers will increasingly rely on organizations’ ability to demonstrate the value of their product throughout the entire customer lifecycle.
Defining Customer Retention
According to Customer Success software company Gainsight (a Skilljar customer):
“Customer retention refers to the strategies used to keep customers from spending their money elsewhere. When a customer leaves, it’s known as churn. A successful customer retention strategy will build symbiotic business relationships, drive brand equity, and encourage customer loyalty amongst your customer base.”
In order for organizations to stay competitive, particularly those in the SaaS industry, they can no longer assume that their users will just “figure it out” after the purchase is made. For truly impactful, long-term adoption and engagement, businesses must empower their customers (and their employees and partners) with the right, most relevant information to understand how to derive value from the product.
Through the creation and dissemination of tailored, on-demand resources, and other training methods, companies can equip customers with the information and skills to achieve their business goals, and in turn, improve customer retention and promote expansion.
Levers for Improving Customer Retention
1. Offer accessible, multi-channel support
According to a study from Microsoft, 89 percent of U.S. customers expect a brand to offer a self-care portal (and 90 percent of customers globally). Research from American Express further found that more than six in 10 U.S. consumers say that their go-to channel for simple inquiries is a digital self-serve tool such as a website, mobile app, voice response system, or online chat.
By offering on-demand resources, including online FAQ pages, live chat, and other services, your customers can find the help they need, when they need it. That said, even as technology and automation have become more prevalent, 71 percent of Americans would still rather interact with a human than a chatbot or other automated process (PWC). Self-service support certainly has a role, but it is important that customers can reach a human when needed. Having a dedicated customer success and/or relationship manager for each account can make all the difference in ensuring that a valued business partner is supported effectively.
2. Create opportunities for customer feedback
In a related vein, having a dedicated customer manager offers customers the opportunity to share feedback and voice their opinions. As HubSpot’s Sophia Bernazzani explains, “It’s hard to improve your business if you don’t know how your customers feel about it. You need a process for obtaining customer feedback and sharing that information with the rest of your organization. This is where a customer feedback loop provides a system for collecting, analyzing, and distributing customer reviews and surveys.”
Whether in the form of emailed surveys, post-purchase feedback forms, or verbal conversations, direct customer insights help elucidate where your company is winning, and where there is room for improvement. As Bernazzani continues:
“Once gathered, you should analyze your survey results by looking for trends in customer behavior and areas to enhance user experience. Then, share this information with teams that will benefit from it most. For example, product reviews should be distributed to engineers and development teams so they can address flaws in your product’s design. By using this system to collect and share customer reviews, your business can efficiently address criticism and improve customer experience.”
Along with feedback from existing customers, it’s also important to understand why churned customers leave in the first place. Online marketing expert, Neil Patel, explains, “If you know the reasons that lead to dips in your customer retention rate, you can take steps to tackle those reasons and to improve your customer’s experience of your brand … One strategy you can adopt is to obtain customer feedback from those who have decided to no longer be customers. As soon as a customer decides to terminate their account, you can send them a personal email to ask them why they decided to end the relationship.”
Patel acknowledges that not everyone will provide feedback, but those that do “will provide a performance indicator and some valuable insight into what you need to be doing better to improve your retention rate and how to improve your customer loyalty program.”
3. Prioritize effective onboarding
One of the most effective means of keeping customers satisfied is by ensuring they quickly find value in your product through a strong onboarding program. For our purposes, onboarding refers to the training and educational activities that enable your customers to effectively engage with your product over the long term. This includes both new customers just starting out with your technology, as well as existing users who may need training on new product features or integrations or refresher material they can refer back to as needed.
As Lincoln Murphy, author of the book Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue, explains, “Proper onboarding isn’t done to prevent churn; it’s done to ensure the customer achieves their desired outcome. Retention comes from that.” A strong customer onboarding program is based on the specific needs of each user and takes into account their respective level of knowledge. In addition to these two components (needs and knowledge), onboarding content must also communicate specific value to your users – in other words, it must be clear why they should care about your product and how it will make their job easier. The driving force behind your customer onboarding program must be delivering value to your customers.
Establish value for your customers early and often through engaging and efficient onboarding practices. As you can see in the below diagram, investing in a customer onboarding program early can have an increasingly positive impact over the long-term:
It is also important to keep in mind that the customers who onboarded when your company signed the contract will not necessarily be the same users a year from now. Current employees switch teams or leave the company, while new users may join the company to take over their roles. This reality of this type of turnover means that customer onboarding should be a replicable process that can be easily called up as needed. And remember, long-term customer success and retention are often a direct reflection of a customer’s onboarding experience.
To learn more about customizing your onboarding program for specific user needs, download our eBook: A New Segmentation Model for Customer Onboarding.
4. Drive continuous value and engagement
“You’ve got to love your customers, or you’ll lose them. If you don’t help your customer get continuous value from your product, they won’t renew. If they don’t see the value in staying with you vs. your competitors they won’t renew.” – Adam Avramescu
For the reason Avramescu elucidates above, it’s important to recognize that onboarding is not an initial, one-and-done, point-in-time exercise; it’s an ongoing process. After a customer has achieved initial value through onboarding, there are numerous opportunities to strengthen the customer relationship via ongoing customer training and education. This may be in the form of providing product updates (particularly around major new features or releases), training new team members, offering refreshers, sharing best practices for using your product or delivering resources for advanced topics, certifications and other related products. When customers regularly find value in your product (and your training), they will keep coming back.
Learn how U-Haul helps more than 67,000 students stay up-to-date with U-Haul University in this Customer Spotlight.
5. Adopt an expansion-centric long-term strategy
Just as your customers change and evolve over time, so too does your product, your company, and your offerings. As you continue to prioritize retention, it’s critical to keep customers apprised of these changes and unlock opportunities for expansion. Existing customers are more likely to try new products or buy additional services since they already trust your brand and know that your product provides value. If you properly engage these customers and help them succeed, you’ll increase loyalty and customer lifetime value. Gainsight echoes this idea as well:
Growth through expansion is one of the most important upsides to the subscription business model. In business-to-business, this is even further amplified. As your customers grow and become more profitable, they should be scaling alongside you. But if they don’t like doing business with you, they will not grow their investment proportionally. In fact, they’re more likely just biding their time until they can either accomplish what you sell them internally (a build vs. buy scenario) or until you’re disrupted by competition.
In addition to pitching and bringing awareness to your company’s new or updated offerings, long-term customers are also ideal targets for beta testing new products and features. Not only does your company receive feedback from invested product experts, but your customers also feel rewarded for their loyalty and have the sense that their feedback and their needs are being taken into consideration as your company and product develops.
To learn more about how to market your training program as a value-add, download our eBook: 4 Ways to Market Your Customer Education Program.
As you delve into the specifics of measuring retention (and churn), there are a number of indicators to consider – we refer to them as Business Impact metrics. Business Impact metrics help you measure the impact of your training program on customer retention, lead generation, and revenue. Below, we’ve broken down these measurements by retention drivers.
Long-term customer success and retention are often a direct reflection of a customer’s onboarding experience. The below metrics will help you track if users are successfully onboarding on your product. You’ll want to pay particularly close attention to the delta between the number of software licenses sold and the number of users taking training and logging on to the product. Also, pay close attention to the tasks you have outlined for users to derive value from your product in the first 90 days. If you’re not seeing users complete these tasks, that’s a red flag.
Continued Engagement & Expansion
Not only is training an excellent way to deliver continuous value to your customers, engaged customers are also more likely to succeed with your product (and renew in the future). To measure the ROI of ongoing education, consider these metrics. They can be particularly helpful when addressing stakeholders from the Customer Success and Sales teams.
For a comprehensive, downloadable resource on training measurement, download our eBook: The Definitive Guide to Customer Education Metrics.
- eBook: Building a Business Case for Customer Training
- eBook: A New Segmentation Model for Customer Onboarding
- On-demand Webinar: The New Formula for Customer Onboarding: Preventing Customer Churn and Driving Product Adoption
Want to learn more? Connect with us below.