Before Broadridge introduces a new product or service, the global fintech company may call on the most relevant of its 10 "stakeholder committees" to provide their honest reviews. In return, committee members, comprising some of Broadridge's existing and biggest spending customers, learn how the company's new technologies will help them grow their own business.
"It's a storytelling exercise," says Rob Krugman, chief digital officer at Broadridge, referring to working with the stakeholder committees. "A behavioral approach focused on the customer journey enables us to create a narrative that ensures alignment between the customers' needs and the value propositions our solutions provide."
The stakeholder committees provide solid returns for Broadridge, which has a 97 percent customer retention rate, according to Krugman. "Customer retention is one of the most important parts of our organization," Krugman says. "It allows [the brand] to lead through thought leadership, and customers want to hear from the companies they're doing business with."
Deborah Bussiere, global CMO at Broadridge, adds: "Our secret sauce is Broadridge's relentless focus on the needs of our clients and being proactive to anticipate the issues and demands they face now and down the road. We help them navigate change, whether it's changing markets, regulations, consumer and investor preferences, or increasing cost pressures."
Broadridge's clever approach to customer retention is not the rule within the B-to-B space. According to an industry report released earlier this year by Corporate Visions and Demand Gen Report, 80 percent of B-to-B companies spend less than 30 percent of their time and budget on customer retention.
The report, titled "Customer Retention and Renewal Messaging: Mission Critical But Missing In Action," is based on a survey of more than 400 B-to-B organizations. The survey found that nearly half of companies invest less than 10 percent of their marketing budgets for renewal and up-sell/cross-sell efforts.
"Companies are singularly focused on demand generation in order to load the [sales] funnel and drive more pipeline," says Tim Riesterer, chief strategy and research officer at Corporate Visions, a provider of corporate marketing and sales consulting and training. "As a result, customer renewals have almost become an afterthought."
Many B-to-B companies, he adds, wrongly think that customer retention/messaging "will take care of itself," and thus a marketing vacuum ensues.
"Marketers are treating existing customers like they're prospects and don't account for all the 'white space' among paying customers to cross-sell and up-sell," Riesterer says. "These are customers who need to be rewarded, nurtured, and encouraged." (See "3 Ways to Bolster Customer Retention," below.)
Owning the Messaging
Who owns renewal messaging is the central issue. According to the Corporate Visions/Demand Gen Report survey, roughly half of all companies don't involve marketing in creating renewal messaging, despite the fact that marketing plays a key role in creating 75 percent of demand gen messaging. Often, renewal messaging is left to account management or sales/business development/enablement.
In addition to fragmented ownership, many companies fail to differentiate their content messaging strategies when it comes to distinguishing paying customers from mere prospects. Indeed, nearly 60 percent of respondents to the aforementioned survey said a provocative demand gen message should still be applicable in a renewal scenario. For companies that are eager to differentiate their messaging approaches, more than half (53 percent) don't have the time or resources to do so.
In that case, Riesterer says, brand managers need to consider reconfiguring their budgets, lest they underserve existing customers. "If you can't have more budget, you need to redistribute it based on the biggest bang, which comes from existing customers," he adds.
The HALO Effect
For HALO Branded Solutions Inc., a provider of promotional merchandise to more than 50,000 companies, both its sales incentives and marketing spend are geared toward customer retention and customer acquisition equally.
"We're constantly focused on lifetime customer value (LCV)," says Terry McGuire, SVP of marketing at HALO. "If a good portion of sales compensation is built around customer acquisition, there's no incentive for marketers to focus on customer retention. The onus is on both sales and marketing to create a balance between customer retention and customer acquisition."
HALO offers its clients several marketing products and programs to help strengthen their relationships with existing customers. For example, its Marketing Activity Planner, or M.A.P., enables clients to plan and budget a year's worth of marketing activities, implemented by an assigned marketing consultant. These consultants also assist clients with custom projects designed to reach existing and prospective customers.
HALO's marketing spend is split evenly between client acquisition and client retention. It's working: The company's customer attrition rate is less than 10 percent annually, according to McGuire.
"The challenge for B-to-B companies is to avoid taking one step forward and two steps back," he says. "Companies are driven to land new customers, but then they have to scramble to replace the revenue from new customers who are not then retained. The way to grow is to retain existing customers, while adding 10 percent to 20 percent in new client revenue per year."
Marketing and sales metrics must inform the customer retention/messaging strategy, McGuire stresses. Marketers "can't take action unless they measure the results of their marketing activities for new and existing clients," he says. "An extensive customer dashboard with key metrics on new client acquisition and client retention is essential to success."
Late last year, ClickSoftware, a provider of field service management software, introduced the customer service program "LeadersClub." It features a variety of rewards tailored both to the business and the personal needs of its customers. Rewards can be earned for participating in reference and/or co-marketing activities, such as speaking engagements at conferences and webinars, taking reference phone calls, hosting site visits, or contributing to an article or blog, says Noa Schuman, senior director of global communications.
LeadersClub reference rewards, Schuman says, are tied to the personal and organizational development path of ClickSoftware's customers. Rewards include promoting a customer's brand, providing early access to ClickSoftware's product roadmap, training, and professional services.
Technically, once a customer engages in a reference activity, ClickSoftware captures the data via its "ReferenceView" platform, which immediately grants customers points to redeem for various rewards.
"Customers' easy transition between vendors creates a challenge to retain customers, making it more important than ever to build a great experience, loyalty, high engagement, and good references for our customers," Schuman says. "Moreover, according to advocate marketing experts, 92 percent of all B-to-B buying decisions are influenced by word-of-mouth recommendations."
So far, more than 30 percent of ClickSoftware's existing customers are active and contributing members to LeadersClub, Schuman says.
"It's been good for the company and good for our customers who benefit from a professional environment that generates a high level of engagement between top managers of strategic organizations," she says. "We have VIP customers and we treat them like that, so they can collaborate with us and we can elevate their own success."
3 Ways to Bolster Customer Retention
B-to-B marketers' penchant to allocate a disproportionate amount of their budgets to lead generation, at the expense of customer retention, is a problem in need of serious fixing, says Kevin Joyce, CMO and VP of marketing strategy at The Pedowitz Group, which specializes in marketing operations services and revenue marketing.
"A lot of B-to-B companies are in a rut with using traditional marketing techniques for lead generation and haven't recognized that they need to extend further into the customer lifecycle," Joyce says. "New marketing is data-driven decision-marketing, delivering the right content to the right people at the right time."
But time is precious, and existing B-to-B customers will vote with their feet if they think brands are failing to meet their needs. Against that backdrop, Joyce recommends three tips for business marketers eager to improve their customer retention activities.
- Better customer lifetime value measurement. To get a better gauge of those customers prone to increase their spending on the brand's products and services, marketers must improve their measurement programs across the board. Job one: Create a chart with the amount spent on the vertical axis and an individual customer's time spent with the company on the horizontal axis, Joyce says. "To maximize sales, marketers need to go under the curve to see how much customers are spending in the first year, and whether there's an increase in the second year, the third year, and so on," he adds. "Marketers then need to introduce new product features that will enable customers to get deeper into adoption, which can extend and expand the spending curve" with the brand and grow customers' lifetime value.
- Boost account-based marketing (ABM) campaigns. To acquire and retain the biggest spending customers, which is at the heart of ABM, B-to-B marketers must adopt new technologies designed to strengthen sales and marketing alignment and home in on the brand's most lucrative customers, Joyce says. Marketers can pick the top accounts to help inform the kinds of messaging that spark the healthiest returns. Deploying such technologies also helps sales and marketing teams to locate other B-to-B buyers who are part of an existing account but don't necessarily deal directly with sales reps.
- Distinguish customers from prospects. No longer can brands solely rely on email marketing campaigns that don't distinguish their customers from prospects. It muddies the waters and disrupts marketing budget allocations. Joyce stresses that B-to-B marketers should integrate CRM/marketing systems and configure campaigns to gain a more accurate description of buyers (as opposed to prospects who may simply be window shopping and/or have no power over the purse). Marketers also need to identify those repeat customers who are spending real money with the company and have demonstrated brand loyalty. That enables marketers to broaden the relationship with buyers (and not just blindly pitch the next product) and spot those customers willing to be brand advocates.