Alex Clarke argues B2B marketers need to re-weigh the balance between customer retention and acquisition to ensure they’re maximising returns
Over two-thirds of your customer base is ready and willing to take its business elsewhere. Let that sink in for a second. On average, 71 per cent of buyers are either indifferent towards the companies they buy from or are actively disengaged. Grab a paper bag, take some deep breaths and try not to panic.
Now we’ve all calmed down a little, let’s take a closer look at just exactly what is going on. The statistic above is drawn from a groundbreaking report from Gallup, based on over 100,000 B2B respondents and more than 19,000 businesses. And the pattern of disengagement is apparent across every vertical: from heavy manufacturing to pharmaceuticals and law firms.
Missed opportunities
Clearly, B2B marketers are not doing enough to keep their customers satisfied. And it seems this is because their focus may be elsewhere. An Econsultancy survey revealed a third of B2B marketers planned to increase investment in acquisition last year, while only 18 per cent intended to focus on retention. Further to this, 82 per cent of respondents in an Act-On Software report said they have objectives related to lead generation, while only 43 per cent count customer satisfaction as a key goal.
Many marketers in B2B are not getting the balance between acquisition and retention right. This inevitably results in existing customers being left in the dark, and missing a myriad of opportunities for cross-sell, up-sell and other retention-orientated strategies.
In the early stages of a business, acquisition has to be the key focus. It’s how start-ups build their brand and their revenue. These businesses need references, to have the ability to point towards the respected clients that use their product or service. But, over time, companies must recognise they need to create a loyal customer base. And that’s where the trouble starts: where should marketing allocate its time and budget?
Who’s in charge of what?
With so many departments charged with so many different aspects of both customer acquisition and retention, it’s no surprise one of the main challenges that arises is confusion over who owns what. In an ideal world, B2B companies would have marketing and sales teams focused solely on acquisition: we’re talking about those lead generation and content marketing strategies. Then there’d be the sales and marketing teams charged with educating existing customers on how they can expand on the service or product they’ve invested in. And, of course, you’d have your post-purchase customer success departments and technical support teams to boot.
And herein lies the problem. The intertwining of these teams and departments is exactly why customers are becoming disillusioned and, more worryingly, disengaged. Marketing needs to be the spearhead for customer centricity, working in harmony with sales to find out how to reactivate lapsed customers.
"Signing up a new customer is more exciting. It’s the creation of a new relationship and a new partnership. On the other hand, customer retention is just the continuance of the status quo"
Marketers love to win
So, why are so many B2B companies still struggling to strike that balance? It comes down to this: acquisition is the trademark of marketing. Winning a new customer is exciting; it’s an indication of campaigns and strategies coming to fruition. It’s why marketers love marketing, especially in B2B.
Will Craig, MD at Digital Impact, agrees: “Signing up a new customer is more exciting. It’s the creation of a new relationship and a new partnership. On the other hand, customer retention is just the continuance of the status quo. It is intrinsically not as exciting, even if it is more profitable.”
Until B2B marketing can mature as an industry, by moderating its ego-fuelled customer acquisition obsession and striking a healthy balance between new and existing, it risks sacrificing the very customers it has worked so hard to gain in the first place.
As Daniel Bausor, MD at Famous4, puts it: “There needs to be a more grown-up conversation about the balance between customer retention and acquisition. More often than not, the conversation is dominated by lead generation, i.e. acquisition – usually because there is a lack of data on what business is coming from existing customers versus new customers.”
A new age of B2B buyers
Clearly it requires more effort and cost to acquire new customers: Gartner reports it costs five to 10 times more to acquire a customer than retain an existing one. So, once you’ve got your customer, you need to pay attention to them to make sure you’re maximising their value. This is particularly relevant in the SaaS (software as a service) world, where customers pay on a yearly, or sometimes even monthly, subscription basis.
It has completely redefined the dynamics of customer retention, as Joe Staples, CMO at Workfront, explains: “Some people have month-to-month contracts, and some companies offer no contracts, meaning a customer can cancel at any time. This introduces a dynamic whereby users are constantly looking around asking: ‘Is there a better product or service out there?’”
“Businesses need to continually demonstrate value. They have to continue to help their customers see what they’re getting because of the product they purchased"
The SaaS model has made it easier than ever for B2B buyers to take their business elsewhere if they are feeling unsatisfied with a product or service. In the past it could have been possible that an old-school B2B company be accused of institutional laziness, content to sit back and relax once it had made its £500,000 acquisition. Job done, right? After all, what right-minded customer is going to even consider a new product or service after they’ve just sunk half a million pounds into one? It would often prove difficult for a customer to shift their business elsewhere because of the cost involved.
Keeping hold of your customers
We’ve established it’s cheaper to retain your customers than acquire new ones. Additionally, it certainly does no harm to your brand’s reputation. Just take a look at the B2C world, where brands actively attract new customers by advertising the way they look after their existing ones.
In B2B, companies need to look at how they can encourage customers to use more of what they offer. Brands have to upsell their tools or services to an existing customer in order to continually demonstrate the value of their business.
The objective, and therefore the challenge, for a marketing team is to continue demonstrating value to existing customers. It’s not enough to assume the customer will retain the same attitude towards a product or service as when they first purchased. If marketers become too obsessed with acquisition-led KPIs, such as lead generation, these opportunities will be lost.
Staples says: “Businesses need to continually demonstrate value. They have to continue to help their customers see what they’re getting because of the product they purchased. If businesses step back from this and simply assume this will happen of its own accord, that’s when retention levels suffer.”
Above all, companies need to keep their customers engaged. The Gallup study found B2B brands with high customer engagement scores achieve 50 per cent higher revenue and 34 per cent higher profitability.
Businesses need to definitively understand their customers’ goals and objectives by guiding and serving them, rather than just selling to them and leaving it at that.
Ultimately, marketers need to refocus their acquisition/retention balance. Expanding your customer base is an integral part of business success, of course. But the very essence of marketing should be firmly rooted in retaining the customers you’ve won. B2B needs to recognise that no matter how big or small the investment, their customers can always walk away.
