In these disruptive and unpredictable times, growth and resilience are on every organization’s mind. Successful organizations create competitive advantages with customer success strategies—delighting existing customers, increasing revenue, and reducing churn—even during uncertain times.
When customers tighten their purses and reduce spending, businesses tend to react by expanding sales and marketing efforts to attract new customers. But when times are lean and customers are apprehensive, these efforts become more expensive and customer acquisition costs go up.
As competition grows more fierce, businesses fall back to competing on price—further driving their profitability down.
So, where is all this lasting growth supposed to come from?
The most often overlooked source of revenue growth lies within the customers organizations already have. Tapping into that revenue requires a change in mindset away from seeing growth as only possible through new customer acquisition.
By allocating resources to ensuring customers achieve results and that value extraction is as effortless as possible, organizations create a competitive advantage. Organizations that obsess over their customers and build strategies around enabling their success can compete on the value and experience they provide rather than price.
What’s more, companies that invest in their customers form longer-lasting relationships that produce growth and stability—even in strenuous times.
All of that sounds great. But how does enabling your customers lead to growth?
How Customer Success Strategies Generate Revenue
Customer success strategies reprioritize company efforts to focus on the entire customer journey and not just the sales funnel. This isn’t to say you shouldn’t pursue new leads, but rather, you should also invest resources to build mutually beneficial relationships with customers to ensure they achieve results.
In simple terms, these strategies enable you to keep customers and place them back into the sales pipeline, expanding their customer lifetime value.
Warning… Industry Term Ahead:
Customer Lifetime Value (LTV) is the average revenue your customers spend over their lifetime. Increasing the amount of time and money customers spend with your organization provides you with a highly profitable—and stable—revenue stream.
This ability to put existing customers back into your opportunity funnel is known as a virtuous cycle. Virtuous cycles make your marketing, sales, and service efforts easier while producing predictable and long-term revenue.
Unlocking the revenue potential residing in your current customer pool requires that you support your customers throughout their journey. This means using the skill sets in your marketing, sales, and service teams to benefit existing customers for the entirety of the time they are in your care.
The image below shows a virtuous cycle in which marketing, sales, and service teams work together to support customers. In turn, those customers spend more money, promote your brand, and are less likely to take their business elsewhere.
The key is to get your teams working together seamlessly to create an effortless and empowering customer experience.
For the skeptics out there, here are some facts on the advantages of selling to existing customers.
- Acquiring a new customer can cost five times more than retaining an existing customer (HBR).
- 80% of your company’s future revenue will come from just 20% of your existing customers. (Gartner Group)
- Improving your customer retention by just 5% can increase your company’s profitability from 25% to 95%. (Bain and Company)
- The success rate of selling to a customer you already have is 60–70% while selling to a new customer is 5–20%. (Marketing Metrics)
- “Loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company.” (Qualtrics XM Institute)
How to Increase Customer Loyalty and Create Virtuous Cycles
To expand revenue potential from existing customers requires a change in how you view, interact with, and support them. You will need to ensure their success, support them through their journey, and keep close relationships so you can recognize mutual opportunities.
Be wary of paradigms and forces in your business that will impede and hinder these efforts. Department silos, disjointed customer journeys, ambiguous customer metrics and feedback, and singularly motivated teams undermine your efforts to connect with customers and recognize revenue potential.
Here are the seven (7) core concepts you will need to embrace to champion your customers and build virtuous cycles successfully.
1. Know Your Customers
Understand the problems facing your customers and how you can help them. Identify your target market and audience and create customer personas. Share these personas with your organization and live by them. Ensure your messaging from your marketing, sales, and service teams speak directly to these personas and address their needs.
2. Map Your Customer Journey
Understand how customers move through your business and how your teams engage them. Know your customers evolving objectives and needs and remove barriers to achieving them. Make touchpoints meaningful and purposeful and deliver value every time.
3. Leverage Digital Systems to Maintain Relationships at Scale
Remember your customers and create tailored and consistent communications. Engage them digitally and over their preferred channel whenever possible. Provide instant and on-demand omnichannel access when and where your customers want it.
4. Set and Measure Customer-Centric and Cross-Functional KPI’s
Promote teamwork and discourage gamification of department metrics by focusing on the customer. Develop cross-department and customer-centric KPIs centered around customer effort, retention, churn, cost of acquisition, satisfaction, and lifetime value.
5. Create Seamless and Effortless Customer Experiences
Build consistent customer interactions and impressions throughout the customer journey. Remove effort and friction wherever possible. Foster accountability and loyalty with central points of contact, single sources of truth, and convenient and candid feedback collection.
6. Anticipate Customer Needs and Empower Them
Know your customer needs and provide access to value proactively. Offer omnichannel access, curate self-help portals, enable digital learning, and provide resources that enable customers to succeed. Use what you have learned to empower your customers, and they won’t need to shop around.
7. Foster Relationships and Identify Opportunities
Use inbound methodologies and customer success strategies to provide value to your customers. Pursue relationships instead of transactions and recognize opportunities to increase your value to the customer.
Champion Your Customer’s Success and They Will Champion Yours
These principles are central to business theory, and many “common sense” tactics and strategies rely on them.
However, as organizations grow and operational complexity increases, it’s easy to lose sight of what’s most important—your customers. When this happens, interactions become transactional, journeys become disjointed, and teams become siloed—encumbering operations and disenfranchising customers.
In these environments—it isn’t easy to maintain relationships, identify opportunities, and create customer advocates at scale.
By reprioritizing your customer outcomes and adopting the strategies and technologies that enable customer connections at scale, organizations can tap into their existing customers’ revenue potential. Organizations that successfully champion their customers create competitive advantages that lead to resilient and lasting growth.
Is your organization expanding customer lifetime value with share success strategies? Have you adopted digital systems to manage and connect with your customers at scale?
Are You Ready For Growth?
SequoiaCX specializes in helping organizations form deeper connections with their customers with digital systems and success strategies. We are happy to share what we have learned and how your organizations can use these techniques.