Why Should You Invest In Customer Success & Retention
Let’s be honest — landing a new customer or client is a rush. Sales floors all over celebrate with banging a gong, ringing a bell, or a poorly performed yet passionate dance move. But what about when a customer or client decides to renew? Crickets. In this post, we discuss why the biggest celebrations should be for customer success and retention.
Customer acquisition is expensive
Customer acquisition is expensive. In fact, acquiring customers costs on average five times more than retaining an existing customer. This is in large part due to the fact that you have to spend money on getting in front of your prospects and building trust. This looks like social media ads, content marketing, events, outbound prospecting, and more — all very expensive mediums and these are just to get inbound leads and meetings. From there, you’ll accrue more expenses through the cost of running your sales teams — pricing discounts, commissions, etc. All of these costs tally up to your total customer acquisition costs or CAC.
Good customer success is a sales and growth strategy
A customer who has turned into an evangelist is one of the best (and cheapest) sales tools. They can provide you with free marketing collateral in the form of video testimonials, case studies, etc. Having these success stories from customers significantly lowers the barrier of entry for potential customers by reducing the potential risk. Additionally, people talk. Word of mouth growth is one of the most effective growth tools, but it’s contingent on your customer having a positive experience. Customers who have had a positive experience are also more likely to expand with you. Invesp Consulting performed a study where they found that the probability of selling to an existing customer is between 60-70% where selling to a new prospect is between 5-20%. Lastly, customers who are growing with your business, adding seats, purchasing more, etc. is a good litmus test to prove you have product market fit. If you can’t retain customers, you might not have product market fit. This allows you to make educated decisions around product updates and naturally will benefit both your sales and support efforts.
Why do businesses focus on customer acquisition more than retention?
There are several reasons why businesses put such an emphasis on acquisition over retention. For one, customer acquisition is an easy way to boost the vanity metrics — website traffic, graphs going up and to the right, and can be an easy way to make yourself feel better in a board meeting. Additionally, customer acquisition has a much shorter feedback loop so you can see results of your efforts sooner than on the retention side. This is not to say that you should throw customer acquisition out of the window, but rather to make sure your business has a healthy balance. Here at Leverify, we’ve found that equilibrium at 60-40 with an emphasis on Customer Success. How does your company’s balance between customer retention and acquisition look?
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If you’d like to discuss how Leverify can help your company drop us a line at sales@getleverify.com
