Customer retention is critical if you want to grow and boost the total value of your business. On the flip side, customer attrition can cost you a bunch of money you don’t really want to lose and also can leave you feeling panicked . You need those customers to stay, especially if you are trying to build the value of your business for a potential valuation and purchase.
According to RingCentral, “As A Service” companies have CRR (Customer Retention Rates) of 35% or higher. Your CRR could be worse, could be better, but the point is, you need to give it some attention. The higher your retention rate, the higher the valuation of your tech services company will be. If you’re not tracking and working on improving CRR, your business simply isn’t worth what it could be. For example, even increasing your customer retention by as little as 5% can lead to profit increases of 25% or more. So, yeah, you should be looking to improve that if you want to maximize the value of your business.
Why are customers leaving in the first place? Here are the top 3 reasons along with the fixes to stop it from happening:
Reason #1: Poor customer service
Fully 2 out of 3 customers report having stopped being a customer due to poor customer service. There are some fairly obvious areas many companies ignore. When your customers call, do they usually get voice mail? When something goes wrong do they feel that blame is often pushed in their direction? But there are some less obvious areas of customer service that are much deeper than that, much more operational in nature. Things that can deliver on better customer service without a human having to do all the heavy lifting. The secret: Automation. A couple of examples of things you can do that will go a long way to improve customer service without having to hire more people:
- Online self-service resources and knowledge bases. People don’t always call you because they want to, it’s just that you don’t give them any other options. Some of the most popular videos on YouTube are “How-to” focused. Many of the things people call you for are probably repetitive and predictable and you can create resources to help your customers solve many issues on their own. They’ll thank you!
- Thoughtful auto-email responses. When customers email you for support, far too often the messages are simply “We have received your request and somebody will be in touch with you within the next 24 hours”. Ho-hum and dry. Not very personal. What about “We’re sorry you’re having an issue and we’re going to move heaven and earth to get you back on track as quickly as possible. You’re kind of a big deal to us and we’ll be in touch within 24 hours, we promise”. In both cases, you said you’ll get back them in 24 hours: It’s not always the what, but often the HOW. Show them you care in every word you write!
Reason #2: They don’t feel the love
Even when things are humming along perfectly and your customers aren’t calling you for customer service issues, they could still feel less than awesome. One of the problems with being a managed technology provider is that when we do our jobs properly, our services are practically invisible. Humans like to feel like they are being paid attention to, right?! In a recent Forbes article, over 86% of buyers said they would even be willing to pay MORE for a better customer experience. Here’s how you can do that for them:
- Showcase their awesomeness. Customers love sharing how awesome they are at running their businesses, so give them a platform to share their expertise. Write up a case study with them, include them in a blog article, have them as a guest in a podcast, show them that you really understand how awesome they are by showcasing what they do. Need some inspiration? Here’s a video interview we did with one of our awesome customers on this very topic
- Conduct periodic business reviews (PBRs). Meeting in person or online with your customers once a quarter to review the awesome ways you’ve helped them as well as digging for areas you could improve will go a long way to boost customer experience. That invisible thing we talked about earlier? If you do these PBRs on a consistent basis they’ll feel like you care, because you’ve shown them you do! Pro tip: Make sure you schedule them in a series to ensure both you and your customer make time for the PBRs, and use your business automation platform to automatically generate the reports you’ll use on a scheduled basis too.
Reason #3: Your offering is too narrow
The pandemic hit most of your customers’ bottom lines pretty hard. As the economy reopens many are looking at ways to run “Lean”. One of the ways they are doing this according to an article in the MIT Technology Review is Vendor consolidation. The article states that an average IT initiative often involves more than 10 vendor relationships! That’s a lot of meetings, a lot of accounts payable transactions, a lot of different places to try and seek solutions when things go wrong. If you pride yourself on offering only one thing and doing it really well, that value proposition may actually cause customers to leave you for those that do MORE for them as they look to go Lean, even if the sum of the parts is less awesome than your single thing. Don’t let that happen. It will take some work, but there is a huge upside beyond customer retention for you too: Increased revenue and profits from your existing base as you work to maximize the overall value of your company. Here are some considerations to get you started:
- Download the Converged Services eGuide: Failing to plan is planning to fail, right? Make sure you understand the market size and growth potential for offerings you may add to your portfolio. This is jam-packed with diversified services offerings, along with their CAGR (CAGR) to 2025, average seat revenues, and total market sizes. Download the guide.
- Buy the expertise: Adding a new line of business will be hard, period. Organic growth and building from scratch can take a lot of sweat equity and time. If you are thinking about increasing value in your company for a future sale, sometimes buying another existing business can be the answer. The process of valuating another company could actually go a long way to help you do a better job of understanding the value of your own company. There is a great article in inc. that has a lot of great tips by somebody who has actually done this and you can read it HERE.
We trust you’ve gained some gold nuggets here as you work to keep as many customers as possible while growing and maximizing the value of your business. Whether you are looking to sell or not, keeping your customers paying customers is always good business sense! Do you have some ideas of your own that you’d like to share? We’d love to hear from you and you can leave your comments below!
