As part of a startup business, you’ll know that there is no greater desire to win your first customer or your tenth customer. You’ll do whatever it takes to call a customer your own. That quest will become so all-consuming, you’ll practically fantasize about it.
I’ve heard some entrepreneurs compare that feeling to owning their first pet.
It’s a neat analogy:
Like customers, pets get stolen, escape, or get lost. Even if they don’t, you just have to accept that a pet has a lifespan—sooner or later, they will be gone. You will grieve, and you will question what more you could have done. But eventually, you accept it and think, “that’s life.” So, the cycle continues.
As a founder of a startup myself (we’re six years old now, in fact), I know those feelings all too well.
When you’re starting up, worrying about customer retention seems a million miles away. There’s just too much to do, on top of winning those first few customers. Who has time to worry about stopping customers leaving, when you’ve only just started winning them?
That’s understandable. But eventually, when you’ve won your 500th customer and you still have yet to fully focus on retention, you’ll be missing a big trick.
I’ve just spent the last 18 months focusing on customer retention (as opposed to winning new customers) and I started thinking how cool it would be if customers could somehow live forever.
Don’t accept that customer churn is inevitable
Customer Thermometer, the SaaS provider I founded six years ago, has been steadily growing and our loyalty rate has always been high. But I knew it could be higher.
Sales and marketing spend, no matter how targeted, is always going to be more expensive than hanging on to the customers you’ve got.
Despite what anyone tells you, you can always do more to drive down customer churn. It doesn’t have to be as inevitable as many accept it to be. What’s more, you can achieve high retention, very sustainably, through the right approach.
Being a SaaS provider that helps our customers retain their own customers, we knew we had to get this right!
We proved it when we decided to make customer retention our only goal for an entire 365 days, and grew annual revenues 130 percent as a direct result.
Not only did customers stay and spend more, they were happier, more engaged, and helped us grow a better business.
We also benefited from the greatest unintended consequence of focusing solely on existing customers: gaining lots of new customers. After this successful experiment, we put together our customer retention guide to share it with the small business community; feel free to take a look at it.
Based on our experience, here are five techniques you should be focusing on to improve customer retention in your business and enjoy the same benefits we’ve seen.
1. Maximize the bad customer feedback you receive
Reducing the amount of complaints you receive doesn’t mean you’re making customers happier—it means you’ve got fewer opportunities to understand customer perspectives and improve your service accordingly. So, as counterintuitive as this sounds, you should be working hard to encourage customers to point out deficiencies and problems with your product or service.
Give them a simple process to do this. Don’t make it onerous. Don’t send them a 20 question survey when they’ve had a one-minute interaction with your business. Sounds crazy to say it, but plenty of people do!
By encouraging feedback and making an open and blameless place to talk about it within the business, you will improve the culture and environment of your company. It’s about using complaints to train and develop, instead of to blame.
If you share mistakes openly, you can stop them happening again. It’s vitally important to encourage everyone on the team to learn from each other’s mistakes and not just their own.
If you don’t, then they won’t improve.
2. Ensure company founders do customer support
Businesses increasingly rely on autoresponders and other carefully orchestrated sequences of email communications to support onboarding and winning customers.
Create more opportunities for your founders and top execs to disrupt these automated processes by manually intervening to communicate greater sincerity and authenticity—and not just with the customers who spend the most!
As founders of Customer Thermometer, Mark Copeman and I now invest more of our time in finding out about new customers and getting in touch with them, asking questions such as “Can we help?” or “Have you thought of this?”
The objective is to help them feel confident that we will personally help them if they need us to, not purely to elicit the maximum response. We also personally work on our chat channel at least twice a week.
These initiatives have enabled us to discover a real-time intimacy with customers that we didn’t have before. We understand their perspectives better and can give the highest possible level of service.
The investment in time is not inconsiderable, but very worthwhile.
3. Publish your one-off content to the widest possible audience
When you’re focused on helping a particular customer, quite often, you produce content just for them. It may be a slide deck to help them justify your product internally, or a positioning paper providing insight to support their wider strategic needs.
This content is of immense potential value to lots of other existing customers, or even potential new ones. It’s so often just filed away and never repurposed, shared, or seen again.
It might be because you originally wrote it for a niche reason and haven’t considered expanding it out. You may also think that the content is “too valuable” to put in the public domain.
When you test these boundaries, you’ll find that they don’t exist.
Many of the pieces of content I consider niche have been our most successful.
As far as “withholding” really good content is concerned, if it makes you question whether you’re giving away too much, then surely that’s a good sign people will want to consume it? After all, that’s the whole point!
4. Be more customer-driven with changes to pricing and billing
Be very careful about making changes to billing and pricing until you’ve explored every angle of how it will impact your customers.
I learned this the hard way and now think about how much easier life would have been for us and our customers if we had avoided the “heart transplant” of changing our day-one system to a much more customer-orientated billing system.
In the early days, our old dunning (payment chasing) processes followed a built-in assumption that any customer whose credit card expires deserved constant, noisy harassment to the point of distraction. That’s now been replaced with a calmer, friendlier system that’s more inclined to leave our customers alone when it naturally takes a short period for a replacement credit card to activate after an expiry.
Our pricing structure was similarly overhauled when we realized we were forcing customers to cancel their monthly subscription just because they wanted to take a break. An “At the Beach” option now provides that pause button at a negligible cost, which has not only stopped churn, but put it into reverse gear, all while reducing customer hassle!
5. Don’t just respond faster—change faster
Defining minimum response times amongst customer support teams invites complacency and the misguided belief that you are delighting customers. As we’ve found through a lot of experience, it’s far better to focus on delivering real answers and support as quickly and effectively as possible.
We don’t have any traditional metrics in our customer support team. Instead, we’ve focused on the human aspects.
We have called it our “Ministry of Magic” and—strange as it seems—this encapsulation of a customer support vision has brought untold benefits. Our customer support “magicians” are immensely motivated to live up to the standard, and customers have reacted proactively to remark on their dedication.
At a product level, we have moved our static, twice-yearly software release cycle to an ongoing development roadmap where new features are released every few weeks. Just last month, a key customer had a specific request and we put it in the product within 10 days. They used to have to wait six to eight months to see their new feature rolled up with hundreds of other new, unfamiliar ones in the next major release. Development is now far more evolutionary.
Customer retention needs to be woven into your business
Becoming a customer-focused business can mean rejecting conventional wisdom like minimizing complaints and founders sitting in ivory towers, and it means being ready to change entire product development and payment processes to please even just one more customer.
The simple truth is that metrics alone can be dehumanizing, which can lead to the ultimate disaster—no longer viewing customers as people. If you do genuinely need metrics, be truly customer-centric in the ones you choose to follow.
As for treating customers like cherished pets—if you feed and water them regularly and look after them well, they will live for a very long time.