Behind The Sale: Customer Retention is Sales, not Care

Des Traynor, Co-Founder and Chief Strategy Officer at Intercom, poses a burning question: “would you rather a million customers after four days, or a million active customers after 16 months?”

I know what you’re thinking – is this a trick question? Well, if you’re just looking at the numbers, it may seem like there’s an obvious answer. Before learning about the importance of customer retention, I, too, would have believed that obtaining a million customers right away would be the ideal outcome for any business.

But that is exactly why this question is so important! It’s a key indicator of which mindset you are in – one that focuses on the old-world Software as a Service (SaaS) model or one that has changed to the new SaaS model.

In the past, the SaaS model prioritized customer conversion and tended to focus on the one-time purchase. In recent years, however, there has been a significant shift from this old model to a new way of thinking – the modern SaaS model is one that values customer retention above conversion. But this does not only apply to SaaS companies. Businesses across various industries are beginning to see the importance of customer retention, too!

Conversion is no longer the main indicator of a business’ success. The age of customer retention has begun!

This blog post will discuss:

  • The pillars of customer retention
  • The importance of customer retention and how it impacts a business
  • Why we must begin to think of customer retention as sales, and not care
  • How S&P Data Digital views customer retention and has adapted to this shift

As Des Traynor highlights in the article, “Customer Retention is the New Conversion,” customer retention has changed the business model. Gone is brand promiscuity, sporadic revenue, and a focus on customer conversion. We are now seeing brand loyalty, predictable revenue, and a lean towards customer retention.

As Traynor emphasizes, onboarding is a crucial pillar for successful retention. Onboarding is often overlooked, despite being the bridge between acquiring a customer and keeping a customer. This process determines whether a customer will stay happy and active or will find services elsewhere. Now, I’m sure you can tell which one will benefit your business in the long-run – *hint, hint* it’s the first!

But why does this matter? How does customer retention actually help your business?

  1. Customer retention is cheaper than customer conversion
  2. Customer retention is faster than customer conversion
  3. Customer retention will lead to greater sales than customer conversion

It’s simpler and more cost-effective to retain customers than to acquire new ones. Customer retention is 5x less costly than new acquisition and can increase profits up to 95%.

There is no debating the importance of customer retention. However, the lines tend to blur when it comes to how we view it. Customer retention is often mistaken for customer care and seen as a part of care efforts. Despite what many people think, this is far from the case.

So, how does S&P Data Digital look at customer retention?

As an independent contact center operation, S&P Data Digital is well aware of the importance of sales – but what lies behind the sale? Customer retention. And who better to tell you about this than John Battaglia, Head of Operations and Revenue-as-a-Service expert at S&P Data Digital? According to John:

Retaining subscribers is Sales, not Customer Care.

Search ‘Customer Retention” and you’ll be presented an infinite number of articles on Customer Retention Tips, Proven Strategies, Tactics and Software to improve your Company’s ability to retain more subscribers.

Executives in many companies today are aware they’re operating in a switcher marketplace where one company’s new gross addition is highly likely to be another company’s deactivation loss.

Executives within these companies, primarily those who are personally accountable to deliver business plan new sales, net sales and revenue goals in partnership with their Marketing and Finance colleagues, understand the cost to retain an existing subscriber, when executed correctly, can be much lower than the marketing and introductory pricing costs required to incentivize a prospect to switch from a competitor’s network.

While there is almost universal agreement on the importance of retaining existing subscribers, the real question is who performs your CX retention work.

Many companies see retention as simply a bolt-on into their existing Customer Care operation. Identify higher performing Customer Care agents, give them retention offers, usually pricing discounts, developed by Marketing and based on subscriber value.  In S&P Data Digital’s experience, handing discount offers to Customer Care agents is not very effective at retaining subscribers. When presented with a subscriber who is upset and threatening to cancel, Care agents usually throw out the discount offer and if the offer is declined, they politely process the cancellation request.

Customer Care agents are generally hesitant to make multiple attempts to stop churn from proceeding as most do not want to risk upsetting the subscriber and negatively impacting their NPS or C-Sat survey score, their main performance evaluation metric.

Retaining Subscribers is a Sales position, Retention Reps are Sales Reps.

Top performing Retention Reps are hired, trained and managed as Sales Reps. Instead of being managed to a monthly sales quota, they have a monthly save or account survivability quota tied to their commission earnings.

We’ve seen numerous examples where top performing Customer Care agents were moved into a Retention role and were not successful.  Customer Care agents are trained to ask ‘what is your issue’ then work to resolve, Retention Reps are trained to think ‘I know you want to cancel but by the end of this call I will have changed your mind’.

If retaining a greater number of your existing subscribers is one of your top operating priorities, the agents executing your retention plan need to be Sales Reps.

Retaining subscribers is Sales, not Customer Care.

Conclusion

So, what is the answer to that million-dollar question posed above? This depends on the mindset you are in today. If you look at the question from a customer retention perspective, the answer would be the latter.

The value of a customer only grows over time. Instead of spending more to attract new customers, it is advantageous for businesses to nurture the relationship between their existing customers. In the long run, retaining consistent, active customers will benefit a business far greater than one-time sales.

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