Customer retention and marketing

Can marketing influence client retention?

During our initial introduction, our new client casually shared that their company had lost about 25% of their subscribers annually. Our new client stated this fact as if it was an acceptable fait accompli. They had built their revenue model on the assumption that 25% of their clients would leave them each year. It was accepted company wide. The sales team’s targets took into account this annual loss . Customer Relations felt disconnected to clients because one in four would leave at the end of the year.  And budgets were set with this in mind.

We were not convinced that this loss model was set in stone.  We asked if we could look at how the company created relationships with their subscribers to see if we could strengthen the bond to the product delivered and the brand. With a shrug the client said, “I don’t think it will change, but sure.”

After careful examination we found three areas where the relationship was not only missing, but company policies actively discouraged the formation of relationships and proposed solutions:

  1. Issue: Brand confusion. In some places the focus was on the products and in some places the company. In the end the subscriber could never connect with the brand.  They did not feel that our client offered the solutions they needed. Subscribers felt that they bought a tool and used it, but that others could provide the same solution.  The brand confusion lead to lack of brand loyalty.
    • Solution: Clean up the brand architecture and be intentional in putting the company brand first and the products second. Build recognizable bonds between the brand and the solution.
  2. Issue: Communication. After the initial purchase, the subscriber only heard from our client if there was a billing issue. The subscriber was left to reach out if they had a problem or question. User behavior data showed that subscribers used less than a third of the features and functions of the product.
    • Solution: Consistent communications – sharing tips and tactics to help the subscriber take advantage of the platform. Build a relationship between the company and the subscribers by offering help and solutions.
  3. Issue: Billing. Our client billed the subscriber once a year for a large sum. When renewal time came the subscriber looked at the cost, and too often they were having a hard time justifying the expense.
    • Solution: Shift in mentality. The subscriber had no allegiance to the brand. There was brand confusion and no meaningful communication.  By aligning the brand experience and increasing communication, our client created a strong relationship with the subscriber.  Our client helped them, solved their problems and was there for them when they needed help. When billing came in the subscriber started to weigh the pros and cons of ending that relationship.  Where would they go to get their needs met? They had to ask themselves: did they have the energy and interest in creating a new relationship with an alternative solution who may or may not be there when they needed help?

Following this shift it took about a year to see results. The results were not just higher profitability and increased sales, but also included a higher engagement internally. Sales team members did not feel defeated before the year began. Customer Service felt proactive and responsible for creating and nurturing relationships and stress was reduced overall, knowing that subscribers were here to stay. Company-wide, profits improved, and growth projections were obtained.  After 3 years of increased sales and subscriber retention, our client was able to attract a buyer and sell their company – which was their goal all along.