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3 Strategies to Reduce Customer Churn

Author: KLA Group CEO Kendra Lee

Selling is challenging enough without losing your existing customers. Suddenly your new business development quota of one or two new accounts per month becomes three or four new accounts per month. The pressure is on to replace lost customers while also finding new customers, but the revenue to invest in new business development is gone.

Ironically, when you’re providing great service without failure, you can actually lose customers at a higher rate than when you have issues and solve them quickly.

That’s because customers have a short memory.

The Customer Loyalty Situation

As you continue to successfully serve them, your customers forget all the issues they had in their business before you solved them.

They forget the downtime they were experiencing, the security concerns bothering them, and the challenges their staff had accessing data remotely when you first met. They forget that nobody was providing them strategic IT direction or introducing them to new technologies that could help their business run more smoothly and actually grow.

Now you do all those things and your customers are happy. But are they happy enough to continue buying from you?

Customer memory loss is especially prevalent if you’re a managed IT service provider, software as a service provider, or a VOIP phone provider. If your company provides an ongoing service that solves a business problem and keeps that problem from recurring, your customers may not be as loyal as you think.

As customers forget how bad things were before you solved their problems, their loyalty to you wanes. Impossible to believe they could forget, but they do.

Customers start to look for lower cost solutions. Suddenly you’re at risk of losing them – but everything’s going great.

So how do you keep customers loyal without resorting to creating failures you have to solve? (Because, no, you don’t want to do that! Issues only create their own set of problems.)

How to Keep Customers Loyal & Reduce Churn

There are three sales strategies you can use to remind your existing customers about the value you provide and solidify their commitment to you.

1. Change your sales conversation. As you share your process for addressing prospects’ problems, also share the process you use to keep the issues at bay long-term. Highlight your competitive differentiators. Tell them they may experience customer memory loss as things get better. Caution them not to give in. Let them know you’ll remind them not to give in!

2. Educate customers. Once they become customers, visually show them what you’ve “done.” If you’re a managed IT service provider, you might show the number of patches applied, help desk calls taken from their staff, and the number attacks on their servers. Show anything that you can consolidate to demonstrate value related to the issues they were experiencing when you started working together. The trick here is to make the report pretty and simple to consume. Schedule a regular meeting to discuss the findings.

3. Show the money. When you share what you’ve “done,” go a step further and translate it into what that means financially to their business in avoided costs, productivity losses, staff retention – whatever cost benefit your service provides. During the sales process, identify what the business challenges are costing them, then use those metrics as your baseline after they become customers. Your customers will often struggle here, but don’t let that deter you. Push them to think about the value they are getting from the service you provide.

Make Customer Loyalty Strategic

How you keep customers loyal doesn’t just happen with good service, although that is definitely important. It starts during the sales process, then gets reinforced through your account management process. You need to consistently remind customers what you’ve done for them today and why they need you.

Don’t get complacent.

While they love you, customers may be enticed by a lower cost. Help customers recognize the value you’re providing before they get lured away. Show them they can’t get those same results somewhere else. Implement quarterly business reviews, semi-annual business reviews, or strategic visioning sessions. Whatever you want to call them, plan a specific type of meeting where you can demonstrate what you’ve done for them lately – and what you plan to do for them tomorrow.

Make customer loyalty a strategic cornerstone of your sales and account management process so your customers can’t possibly forget all you’re doing for them. When you do that, you’ll retain a higher percentage of your customers, giving you the revenue you want to invest in new business development.


Kendra Lee is president of KLA Group, which works with companies to break in and exceed revenue objectives in the Small and Midmarket Business (SMB) segment. Read more blogs from Kendra here.

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1 Comment

Comment

    Jim Barnet:

    Hi Kendra:

    I think this is a very timely article. In a cloud based world, customer loyalty, customer satisfaction and user adoption become paramount, because the portability of a customers business is much higher than it was previously in an on premise solution world.

    For me, this was the most important aspect of your article “Implement quarterly business reviews, semi-annual business reviews, or strategic visioning sessions”.

    I love your comment about customer memory loss because it’s not something that is top of mind for many vendors. Vendors remember the value they initially added, but forget that the solution before them (the one that they replaced that had all those problems and limitations) was once upon a time the vendor solution that added significant value back in the day.

    Customers needs evolve. If you want to continue to be the vendor that adds significant value, you need to be the vendor that solves ‘todays’ customer business problems and challenges, not yesterdays business problems and challenges.

    We do bi-annual reviews with customers, and we still get surprised sometimes with how much a customers needs have changed in that short period of time. But those reviews allow us to get in front of those issues which can typically be segmented into 1) Training issues, 2) Configuration/Re-Configuration issues, 3) Business process changes, 4) Legitimate functionality gaps/Enhancement requests.

    These reviews also allow us to share best practices, which truly add on-going value to our customer relationships.

    The most surprising thing about these customer reviews, is how few vendors do them, and how appreciative our customers are (and candidly speaking, how surprised some of them are) that we take the time and invest the resources to do them. And that is one of the most valuable aspects and biggest opportunities for these kinds of reviews.

    Regards,
    Jim Barnet
    Promys PSA
    Director Sales & Marketing
    Tel: 905-847-6539, ext. 2972
    Cell: 647-239-2942
    jbarnet@promys.com
    t: @PROMYS_PSA

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