3 Steps to Reduce Churn and Increase Revenue
Customer churn, or churn rate, refers to the pace at which customers leave your company in a given period. The ideal churn rate would obviously be 0% (i.e. 100% customer retention), as a high churn rate indicates not only a loss of customers but an underutilization of your existing customer base. Any company that is losing customers is also losing out on valuable cross-sell and upsell opportunities—it is essentially hemorrhaging revenue.
As frustrating as a high churn rate can be, there are ways that you can you improve customer retention, all the while identifying post-sale opportunities. More than salvaging customers who might be on the brink of leaving, customer marketing maximizes the opportunities you already have. Here are three steps to getting your customer marketing campaigns up and running:
Step 1: Align Marketing and Sales Objectives
Finding misalignment throughout an organization is easier than picking up fish from a barrel (trying to be politically correct). It doesn’t take much for different functional groups to become opposed due to distinct departmental goals and measurements of success. However, they are all working toward the same objective: make the organization successful. A key to this is improving the customer experience to reduce churn.
A prerequisite for better marketing and sales alignment includes three necessary tasks:
- Define goals: Whether you’re in marketing, sales, customer success, support, or product management, you’ve got a common goal–increase revenue. You may know that growing revenue is the common goal, but everyone else doesn’t always know that since revenue growth comes in many shapes and sizes. Goals that lead to revenue growth for marketing do not look the same as those goals for sales, for example.
- Map out the customer revenue model: New business and install base focus on different areas of the customer lifecycle. The first phase in the customer cycle is enablement. The next phase is adoption, during which a customer starts using your product and its many features and capabilities. During this stage, marketing should start educating the customer on how to successfully adopt and use the product. As the customer’s usage of the product broadens and matures (this can vary depending on your product), you can start introducing complementary products to them for cross-sell or an upgrade to their current product or service.
- Outline processes: It’s important to determine not just where your customer lifecycle begins and ends, but highlight the stages that connect marketing and sales efforts. Leverage lead scoring across demographics, firmographics, and behavioral data to prioritize your best customers who are in the market for additional products or an upgrade. Then, determine the scoring threshold for which customers should be handed off to the sales team for qualification as marketing qualified leads (MQLs) and eventually as sales qualified leads (SQLs) once their interests are validated. Just as important is determining how customers should be recycled back to marketing if they’re not sales-ready.
Creating harmony between marketing and sales does more than make everyone feel all warm and fuzzy inside—it affects your bottom line in clear and demonstrable ways. In fact, our research has shown that alignment extracts as much as 208% more from marketing, all while causing 108% less friction.
Step 2: Run Automated Campaigns Throughout the Customer Lifecycle
Providing the right content at the right time is the key to drawing customers to a level deeper than just an initial transaction. By creating automated campaigns to deliver content to customers based on their behaviors, actions, and stage in the customer lifecycle, you can not only retain them but grow their lifetime value.
Here are a few different types of customer marketing campaigns you may want to implement:
- Cross-sell and upsell campaigns: Create post-sale opportunities by offering logical additions or improvements based on your customers’ previous purchases. At Marketo, we map specific product offerings based on particular demographics and/or stage in the customer lifecycle. For instance account-based marketing for B2B customers or advanced analytics for someone who has been using Marketo for at least six months.
- Customer satisfaction campaigns: Gauge just how satisfied your customers really are. Tracking information from customer satisfaction campaigns will provide insights about why you might be losing customers. You can set up a recurring survey campaign to start collecting this data, and it’s easy with a survey tool integration.
- Product and service improvement reminders: Make sure that all of your existing customers are aware of new features and optimizations. Current customers too often don’t return because they don’t know you have anything new to offer. Our product releases are on a quarterly cadence, so we keep a fairly consistent cycle of product communications. We’ll send out an email outlining the new features about a week prior to release, then have a live webinar a month later with our product management team who demos the new features.
- Post-sale engagement: The simple act of following a sale with an email requesting feedback or offering support creates a hugely favorable customer experience and helps to generate future opportunities. Don’t try to sell more, but offer your support. Use the opportunity to create that relationship with your customer so they know that you’re a problem solver and can continue to assist throughout the relationship.
There are plenty of other potential campaigns you can run, but the important thing is to communicate with current customers in ways that speak directly to their situations. This humanizes your company and turns customers into loyal brand ambassadors and advocates.
Step 3: Measure and Optimize
Bringing your churn rate as close to 0% as possible requires constant measuring, analyzing, and restructuring. It requires being as fluid and adaptable as the people that use your product.
It’s important to have a framework and a timeline for measuring the results of your campaigns, and there are two sets of metrics you may want to consider:
- Engagement metrics are tied to your campaigns and help you understand their early impact so you can optimize as needed. Some of these metrics include:
- Campaign successes: The number of people who take the desired action of your campaign (e.g. downloads or attendance)
- Click-through rate (CTR), click-to-open rate (CTO), unsubscribe rates
- Act Nows: An action demonstrating high buying intent and requiring immediate sales follow-up
- Call Nows: An action demonstrating engagement in a mid- to late-stage campaign, which may indicate buying intent so follow-up is recommended)
- Revenue metrics, otherwise known as late-stage metrics, are critical for understanding how your campaigns contribute to revenue, which demonstrates marketing’s contribution, gives you credibility, and drives budget decisions. These can’t be measured immediately since it takes time to mature and include:
- Revenue won
It’s not difficult to convince anyone that customer retention and post-sale engagement are high priorities, but how you retain customers and grow their lifetime value yields a long list of potential solutions.
Don’t take my word for it. Discover how to win in the world of digital marketing at the 2017 Marketing Nation Summit in San Francisco this April. Register here to throw your name in the hat to win a VIP experience at Summit!