The humble but truly effective growth principle we tend to overlook—and 4 ways to make it work for you.
Many of the technology organizations I consult with have one primary marketing priority: GET NEW LOGOS!
It happens at my organization too—everyone gets excited when we secure a major new customer. We open champagne, toast the great accomplishment and sing the praises of the key contributors who led to the win.
But what happens when, say, your largest customer renews for an additional 2-year commitment (without requiring procurement, RFPs and competitive bids)? These retention wins may represent a larger opportunity and/or higher margins, but do we invest our marketing dollars as heavily toward these wins?
I think intuitively we know that customer retention and growth contribute more profitably to the bottom line than acquiring a new customer. But if we need more nudging, here’s a powerful reminder from Sean Geehan, author, speaker and leading expert in B2B executive strategies.
The Business Case for a Retention Focus
I had the pleasure of hearing from Geehan at ITSMA 2011, where he reminded us of the Marketing 101 principle: It costs 3-5 times more to acquire a new account than it does to retain an existing customer.
His useful chart, shared below, clearly demonstrates a best practice model for ensuring the greatest ROI from marketing spend AND has been the baseline model for helping many organizations catapult growth.
When HCL realized that 70% of their revenue came from just 70 customers, they formed a Customer Advisory Council (CAC) as the centerpiece of their highly focused marketing efforts. Essentially, C-level executive and thought leaders from 80 HCL customer companies met regularly to exchange ideas, experiences and best practices.
In the process, the CAC shared the honest requirements of their businesses with HCL, and ultimately steered a lot of product direction. Meanwhile, HCL helped customers address more of their problems, nurturing trust and senior relationships.
As a result, Geehan notes in his B2B Executive Playbook, establishing a Customer Advisory Council can:
- Improve strategic relationships with key decision makers
- Enhance companies’ ability to sustain, cross-sell and grow large strategic accounts
- Validate that the company was launching the right solutions at the right time
- Create a customer reference program
- Elevate the company’s positioning in the customer’s mind: true partner vs. vendor
4 Ways You Can Drive Retention Efforts Worth Celebrating.
- Showcase your expertise via thought-leadership content! Being a thought leader is AS important with customers as it is with prospects. Customers are looking for partners to support growth and innovation, so keep them informed and in tune with your organization’s best practices. You never know when they’ll have a need for them.
- Marketing can drive increased account penetration by developing targeted Account Based Marketing campaigns for customers. Here’s how it works and 5 ways to get started.
- Consider whether a Customer Advisory Board makes sense for your business. Geehan shares some very compelling evidence for the importance of this function within large tech organizations. Regardless of how you execute, access to customer insights, challenges and opportunities is essential.
- Remember the math: It’s far more profitable to retain/grow customers than acquire new ones. Treat your customers as your organization’s #1 asset. Customer appreciation efforts go a long way!