Many scare tactics were published last year about the inverted yield curve. This metric measures when the value or payback on short-term debt instruments is higher than for long-term debt. It signals that people are more invested in their short-game than the long-game.
It is essential to be able to separate the lede that bleeds, signaling a recession, from the data points you see in your own business and that of your colleagues. Do you really see hemorrhaging, or is there a sudden conservatism about balancing efforts to ensure existing customers don’t lose to the promise of future business.
Feed the bird in your hand.
A shift to prioritizing the bird in the hand
While I didn’t buy into the notion that recession was at our doorsteps in 2019, I am privy as an agency owner to data on many different businesses and where they are focusing their efforts. There is no denying that companies small and large, public and private, B2B and B2C are bringing their current customers in focus for 2020.
It may be subtle, but you’ll notice more presentations, earning calls, or planning sessions that emphasize organic growth or reduced churn over top-line growth. This focus is crucial because it guides the actions you take, the projects you prioritize, whether you shift incentives for sales and account management, and the way as leaders you talk to the world about what 2020 is all about.
A closer look at churn & its impacts
Brightback, a company whose wheelhouse is customer retention and churn reduction, had a ready data set on the progress and performance of companies who have made these measures a priority. With the reliance on so many SaaS-based and subscriptions in our economy, tools and benchmarks around retention are fundamental to the ability to project revenue, profit, and growth.
In addition to the data they have on hand, Brightback has done a study of 435 companies to see how they manage their operations and what they focus on. You may not have time to read all 25 pages, but some interesting takeaways I noted:
85% of B2C and 69% of B2B Companies have a published company-wide churn rate. We all know you “get what you set and measure.” Publishing your current retention and churn in the breakroom, in the sales cube farm, on the company dashboard or over the coffee pot signals to everyone that the business knows where they stand and they want to see these numbers move in the right direction.
84% of those surveyed listed customer expansion as their #1 priority. Expansion is a different exercise than acquisition, and it relies on different channels and tools to do the job right.
54% have client onboarding as a top priority. Particularly in the technology space or in the complex B2B area where integration and implementation set the foundation for future adoption, success, and growth, planning to do more and better onboarding is critical to future revenue.
I could go on recounting the data points from this survey, but I already know them to be true from my daily interactions with our customers. The more important questions are what the organizations will do to ensure retention and reduce churn.
Do more than change what you measure, change how you engage customers
Anecdotally, I can confirm that all our global clients have customer penetration and diversification at the top of their list. They not only talk about their priorities; they change the way they execute to ensure they achieve their goals.
Among the actions they take to ensure success are:
Designing campaigns, deployed through their Marketing Automation or CRM platforms, around getting customers better educated on their products, more proficient at using them for success, or trying aspects of solutions that they own but have never tried.
Developing sales tools that lead their customer through a longer-funnel of adoption, meeting them where they are, but pointing them to a more integrated or higher-performance future through greater adoption. An example of this is a client who has four levels of customer offerings, which 100% engaged at level 1, only 50% engaged at level 2, 10/% engaged at level 3, and none yet at level 4. They don’t focus on begging the customer to stay or incentivize them not to cancel, but actually, paint the picture of greater performance through deeper levels of engagement.
If customer retention and reduced churn are critical for your business in 2020, ask yourselves if you’re still wired for top-line, net-new growth or whether you have adjusted your sales, marketing, and product function to prioritize your current customers.
If we’re honest about it, sometimes a bird in the hand is worth 5 or 6 in the bush, but it takes a different kind of focused discipline to operate that way.