Customer Loyalty: CEO’s #1 Focus to Protect Revenue This Year – Part 4
Three key customer loyalty metrics to stabilize and improve revenue
Over the past couple of months, I have been talking about why Customer Loyalty (CL) is the number one focus for CEOs and business owners interested in stabilizing, generating, and predicting revenue. Research shows that loyal customers are worth up to 10 times as much as their first purchase. Here are just four ways that this can be accomplished: 1. Securing recurring revenue streams, 2. Increasing quantity or frequency of B2B purchases where your customers buy more per purchase occasion or more often 3. Transitioning up – buying a more expensive product or service and, 4. Drawing B2B customers away from your competition.
CX: The Means to the CL End
It’s obvious that you need a CX strategy to protect the bottom line. As stated at Rutgers Center for Innovative Education, “In fact, companies who successfully implement a customer experience strategy achieve higher customer satisfaction rates, reduced customer churn and increased revenues. Furthermore, research by American Express found that 60% of customers are willing to pay more for a better experience.”
But Bob Thompson’s CustomerThink article shows us that less than 1/3 of CX initiatives are successful. And this fact is difficult to swallow. To truly understand the importance of this, we have to ask ourselves, “What are we really trying to accomplish with all our CX initiatives?” The answer is simple: creating Customer Loyalty.
The metrics used in CX programs are well known: customer satisfaction surveys, Net Promoter Score (NPS), Customer Lifetime Value (CLV), Repeat Customer Rate (RCR), web analytics to discover the intentions of visitors, and completion measures surrounding deliverables or projects. But with so many ways to measure CX, how do we know which are the most effective ways to assess and strengthen customer loyalty?
3 Key Metrics: Retention, Reviews, Referrals
Generally, B2B CL can be understood and managed with 3 other easy guideposts. The three “Rs” of customer loyalty need to be at the very top of every CEO and marketing department’s list and empowered from the top down.
More cost effective than going out and finding new customers by 5x, retention wins hands down and is measured by churn (e.g., if you started the quarter with 100 customers and lost 5 your churn rate is 5%). You can also measure churn through the number of customers lost by period, the percentage of customers lost, the value of monthly recurring revenue (MRR) lost and the percentage of MRR lost. To combat churn, here are 5 focus points to ensure strong retention: Track, Train, Talk, Transform, Trust.
b. Train. Good account managers or reps in charge of your critical touchpoints, have a crucial influence on customer retention so be sure to hire right in the first place, and then train and empower your managers to do the right thing.
c. Talk. Top on the list of best retention practices is communication; this is as easy as holding regular meetings with customers about performance, deliverables and expectations.
d. Transform. Never stop improving. Always strive to be the best (and most easy) option available for your customers and prospects.
e. Trust. Trust goes both ways. You need your customers to trust you. You deliver value to your customers; otherwise, they would not be your customers. As long as they are benefiting from the value you provide, and understand that you are their best option, trust that they will stick around.
Build up a pile of good reviews! That doesn’t sound too scientific, but here is a rule of thumb: You can never have enough! Our friends at Hubspot have an excellent guide for programs to get feedback from your customers. Having the right reviews on third-party websites will make a huge difference in keeping the customers you have. B2B buyers are the same as B2C in that people want to see that their choices are popular and backed up by good reviews to know that they are doing the right thing. When their choice to use your product or service is popular among their peers, it builds confidence and strengthens customer’s resolve. We encourage our clients to use the power of reviews on their websites, but also in third parties like G2Crowd and analyst reports.
84% of B2B customers start off the buying process with a referral – thus, getting new leads through referrals from your current clients is essential to the health of your business. This is the reason the NPS – how likely your customers are to recommend you to their friends or peers – is so popular. We at Fusion completely agree. The NPS is a simple and critical measure. But along with understanding the NPS, take action by rewarding referrals with exciting and generous initiatives. Partner with your current and past customers and prospects to build enduring positive referral relationships.
With all the ways to measure, these three R’s are easy to remember and rolled together will guide your B2B customer loyalty program strategy and ensure your business reaps the revenue benefits. Gain CL, beginning by understanding and communicating your competitive advantage—assessing and improving your brand and customer journey, and by using these CL best practices and metrics.
- Customer Loyalty: CEO’s #1 Focus to Protect Revenue This Year – Part 4 - March 12, 2018
- Customer Loyalty: CEO’s #1 Focus to Protect Revenue This Year – Part 3 - February 13, 2018
- Customer Loyalty: CEO’s #1 Focus to Protect Revenue in the New Year – Part 2 - January 9, 2018