Customer acquisition is all the talk. Targeted advertising, lead generation, and social media are just a few ways to snag new buyers.
But what about your current customers?
Show them some love with a B2B customer retention strategy.
B2B customer retention builds long-term relationships with your current buyers, in hopes that they’ll stick with your company. And relationships aren’t the only thing you get from customer retention, but increased brand loyalty and lifetime value, too.
In this guide, we’ll help you identify whether you need customer retention and five ways to get started.
Let’s dive in!
What’s So Great About Customer Retention?
There are two parts to building a solid customer base: Customer acquisition and customer retention.
As a growing company, you’re likely to focus on customer acquisition. And it makes sense! New buyers support your ever-changing pricing strategy and product. The more customers you acquire, the more you’ll grow.
But here’s the thing: Customer acquisition isn’t sustainable over long periods. Since 2018, organic and customer acquisition costs have increased by 50%.
Other than burning a hole in your wallet, a heavy acquisition model leaves out your current buyers.
This is where B2B customer retention kicks in.
Retention prolongs customer engagement and can increase your overall lifetime value. Plus, it helps you identify where your product falls short.
Consider the following scenario:
Brandon is a photographer who needs reliable accounting software. After doing some research, he found FotoAccounting, an accounting software made for photographers.
“This looks perfect for me!” Brandon exclaims, “I’ll sign up for a one-year subscription and see how it goes.”
As the year goes by, FotoAccounting supports Brandon with live support, educational resources, and quick email responses.
When the year comes to an end, Brandon thinks back to all the times FotoAccounting helped him out. He doesn’t hesitate to renew his subscription and even recommends it to fellow photographers.
Do you see what happened here? FotoAccounting increased their lifetime value AND brand loyalty (Brandon’s friends). It’s a win-win!
Where Does Your B2B Customer Retention Strategy Stand?
Before executing a retention strategy, you’ll need to know where you currently stand. You can use one of the three strategies below and identify how well you’re retaining buyers.
1. Revenue Opportunity Scoring
Revenue opportunity scoring calculates which customers are likely to repurchase, upsell, or upgrade within your company.
Here’s how it works.
First, revenue scoring uses intent to identify any potential upselling opportunities. It also pinpoints customers likely to churn with contact scoring and product analysis.
Identifying upsell opportunities and potential churn customers is a chance for you to put your retention strategy into action and:
- Win back churn customers
- Upsell current buyers
- Understand why buyers will either stay or churn
Learn how you can scale your retention strategy, book a demo on Breadcrumbs today.
2. Calculate Your Customer Retention Rate
Your customer retention rate measures your total percentage of repeating customers. This percentage measures how well you’re retaining customers and whether you should stick to or rev up your current strategy.
To get started, you’ll need to choose a time period. Let’s keep it simple and choose 2020.
Now you can answer the following three questions:
- How many customers did you have at the start of 2020?
- How many total customers did you have at the end of 2020?
- How many new customers did you retain throughout 2020?
Did you answer each question? Great!
All you need to do is subtract the number of new customers remaining at the end of 2020 by the number of new customers added throughout 2020.
Then, you’ll divide the result by the number of customers at the start of 2020. Last, you’ll multiply this answer by 100.
Once you have this percentage, compare it with the average retention rate in your industry. If you’re falling behind, it’s time to reevaluate your efforts.
3. Calculate Your Churn Rate
Another way to evaluate your B2B customer retention strategy is by calculating your churn rate. Your churn rate includes the percentage of customers who leave your company.
A 5-7% churn rate is average among SaaS companies—let’s see where you measure up!
If you calculated your customer retention percentage, you could flip this percentage to find the churn rate. For example, a 92% customer retention rate means you have an 8% churn rate.
You can also find your churn rate by dividing the number of churned customers at the end of your time period by the total number of customers at the beginning of your time period. Then, you’d multiply your answer by 100.
Something to keep in mind is that churn rate isn’t a one-size-fits-all definition.
For some companies, the churn rate is the number of customers who cancel a membership. For others, it’s how many buyers downgrade their plan. Clearly define what churn rate means to you before calculating it.
Now that you know where your B2B customer retention strategy stands let’s inspire you with five B2B customer retention strategies.
5 Ways to Improve B2B Customer Retention
1. Start a Community
A brand community is a group of loyal customers who chat about your company and similar topics. On the flip side, you’re serving community members with support, free content, and an insider’s look at your products.
Communities are on the rise because they work—55% of businesses agree that building a community has increased sales.
Brand communities are also a way to:
- Gather product feedback
- Connect customers with like-minded people.
- Interact with customers on a 1:1 basis.
- Create relevant content based on customers’ needs.
- Update customers with the latest company news.
Imperva, a cybersecurity SaaS, provides customer support and encourages product feedback in their forum.
Imperva showers customers with resources, live support, and new connections, all for free. The best part is, Imperva can read through the community and collect zero-party data and product feedback.
How to get started: Turn to a paid solution like Zendesk. Or use a free platform like Slack or Facebook groups. Once you’ve built a community, give your current customers a heads up and promote your community over email and social media.
2. Personalize Your Onboarding
Personalization never fails to “wow” your customers.
ConvertKit turned a simple onboarding email into a powerful experience. Using video, ConvertKit recorded a personalized welcome email for new subscribers.
All ConvertKit did was say the subscriber’s name and offer a few actionable tips. And yet, their videos were a hit! Matt Ragland from ConvertKit shared how “People’s responses were amazing. They were so thankful to have something just for them.”
How to get started: Segment your email subscribers by behavior, purchase, or lead generation. Then, personalize your onboarding email with something your subscribers will love. A few examples include:
- A video
- An interactive quiz
- A freebie
3. Educate New Customers
Investing in a new product can be quite the learning curve. Imagine how overwhelming it must be for new customers to learn your product features.
A quick fix to “product overwhelm” is sending educational content to new subscribers.
Ahrefs welcomes new users with a list of how-to articles. Providing support from the moment someone signs up helps them feel more confident in their purchase.
The best part about this retention strategy is that it takes little time to execute. It’s easy to repurpose past tutorials and blog posts into digestible guides!
How to get started: Use your customer research and identify their biggest questions and concerns. Then, create or repurpose content around those pain points and include them in your onboarding email.
4. Upsell Current Customers
Current buyers already know your product is valuable. They don’t need much convincing to upsell or upgrade their plan.
In fact, the probability of upselling a customer is 60-70%. This percentage drops down to 5% for new customers.
EverNote uses the New Year to upsell its premium subscription. To incentivize users, they offer an extra six months of Evernote in exchange for investing in a yearly subscription.
This is one of the many upselling techniques.
Current customers are already aware of your value, so it’s a no-brainer when they see opportunities like the one above.
The takeaway: Identify customers who use your product enough to upsell. You can do this by analyzing product usage, behavior activity, or with a scoring tool.
5. Offer Invaluable Customer Support
Live chat, email support, and tutorials are the bare minimum for customer support.
But what if you took it a step further?
After 30 days of being a customer, Hypercontext’s CEO, Brennan McEachran, provides a space for customers to get support with a 1:1 call.
Brennan shares how “These calls are spent asking customers how we can improve the product, listening to challenges they’re currently facing, and, when applicable, sharing how they can achieve that with our product.”
On top of providing support and hearing feedback, Brennan adds, “by the next time we speak with the customer again, we’ve typically knocked off one or two of their suggestions or frustrations with the product.”
Solving the customer’s problems is HUGE for business.
Plus, these 1:1 calls go “Beyond retention. These calls help with expansion revenue, referrals, and brand loyalty too.”
How to get started: Encourage customers to share questions and feedback over a call. Then, use the feedback you hear to fulfill your customer’s requests. Once they’re fixed, let them know directly.
There are many ways to go about B2B customer retention. But the golden rule is executing a customer-oriented strategy.
What do your existing buyers want to hear? And how can you support them after they buy from you?
Once you clearly understand your buyer’s needs, turn those ideas into action with one of the examples we covered today.
Want to get ahead of the game? Use our scoring tool and identify which customers are ready to upsell and churn. Go ahead and book a free demo with us today!