What’s the most valuable asset at your company? The people, right? Well, sure. But not just the employees. The customers, too.
Your current customers not only keep your business afloat, but they also are the most profitable people to sell to. Retaining, upselling, and cross-selling to existing customers is between five and 12 times less expensive, according to Gartner research, than acquiring new customers. So why are most marketing teams only or mostly producing content geared toward new prospects?
Don’t be like most marketing teams, distracted by shiny, new leads. Instead, make the smart move and take advantage of the most criminally underrated source of profit: your existing customers.
Here’s how marketing teams can get the most value out of your most valuable asset:
1. Change your mindset
According to Gartner research, many B2B marketing leaders don’t consider account retention or growing account revenue part of their job description. Which makes sense, since account managers and customer success managers generally share primary responsibility for whether clients stay or go.
However, not taking responsibility for increasing wallet share and customer lifetime value (CLV) leaves a ton of value on the table for marketing, and makes our jobs much harder. That’s because it’s much easier (and more profitable) to retain and sell to existing clients than to obtain new ones. It makes no sense for marketers to leave the most profitable work to other departments when marketers have skills that are incredibly useful to upselling, cross-selling, and retaining customers.
Marketing is good at:
- Synthesizing customers’ expectations and communicating those expectations to sales
- Building trust with buyers as they travel down the sales funnel
Therefore, it makes sense to task marketers with nurturing the trust build during the prospecting and sales process. That means marketers should continue to work with sales after the sale to create the content that assures customers no one has forgotten about the expectations marketing and sales set during the sales process. When buyers trust the brand, they are more likely to stay and buy again.
Revenue from current customers is often more predictable, offer higher margins and reduce the need to continually close many new customers every quarter. That is why successful B2B marketers often measure CLV as a key performance indicator.
2. Change your metrics
Getting more revenue from your customers requires alleviating some of the pressure from financial markets, investors, analyst firms, the media, and upper management to ensure a certain number of “new logo” prospects sign deals in a period.
New deals cannot be the only goal for marketing. While it’s tempting to see those deals as the main indicator of where the company is heading, it’s also foolish. Marketers need to sell their vision throughout the company, and beyond, that customer retention is as important, or maybe more so, than new customer acquisition.
Besides being higher-margin than new customers, revenue from your current customers is also more predictable. And they’re an excellent source of new business because they’re more likely than new customers to refer you to their networks.
Therefore, B2B marketers should measure CLV as a key performance indicator.
Application performance monitoring and management tools company AppDynamics did just that, and got excellent results. The company set a concrete goal. They wanted to see somewhere between 60% and 70% of their business originate from current accounts choosing to spend more. Despite having fewer than 1,000 employees, the company pushed marketing to join the sales and support teams in deploying new upsell and cross-sell programs. The result? AppDynamics enjoyed more revenue, plus more customer referrals and increased customer advocacy.
Step one? Make sure you’re measuring the extent to which you are:
- Selling complementary or related products and services to existing customers
- Upselling a premium or higher-priced offering
- Renewing maintenance agreements, licenses, and contracts. Subscriptions are an essential source of recurring revenue
- Adding business units or departments for the purpose of extracting more revenue from existing customers
3. Get all up in their business
The better you know your customers, the better you can market to them. Knowing who your customer is and what they want means you waste less time and money presenting the wrong message to the wrong people.
Knowing your customers well enough to identify cross-sell and upsell opportunities and effectively capitalize on them is the secret to success. The jargony keyphrase for this is “account-based marketing.”
So what are you looking to learn? You want to know which of your customers could benefit from additional products or services. You want to know which of your satisfied customers are capable of clearly communicating to others the scope and kind of value they get from your company.
So how do you get to know your customers better? First, make sure you’re consolidating the information you get from multiple channels into your CRM.
Effective account-based marketing requires tracking and storing key information on every interaction a customer has with your brand. This means every marketing interaction, sales call, support request, referral, and purchase.
A lot of the information vital to effective account-based marketing lives with other departments, including sales, support, training, and upper management. To do your job effectively, you’ll need to first make sure those departments are indeed collecting the data you need. Then, you’ll need to set up systems and processes for actually getting that data into the CRM.
4. Deploy the data
The whole point is to sell more. So, once you have the data in place, use it!
Alright, time to throw a new buzzword at you. “Predictive analytics” takes all that data you’ve been collecting on your customers and turns it into the holy grail: action items for getting the most value possible out of them.
For instance, it would be helpful to know how many and what kind of support requests users of a particular product submitted. That way you could reach out to the people who have the same kind of issue/question with an additional product or service that could help them.
What if you could quickly see all the customers who have requested a certain kind of new feature, and market an upgrade or additional product or service that closely matches that need to them? Or maybe you find that customers who don’t attend your training sessions buy less. In that case you can offer trainings for free or at a discount, on the assumption that you’ll make up the cost in additional sales.
Virtualization company VMware analyzed the data they collected on their small and midsize business customers in order to increase revenue from this segment. This analysis revealed that SMB customers who bought an entry-level product were less likely to buy more products than other customer segments or SMB customers who bought higher-level products. After validating the findings with data from focus groups, VMware created an upsell campaign called “People Like You” to target these customers.
“People Like You” showed internal prospects that their peers were using VMware solutions they weren’t to successfully overcome their IT challenges. According to Gartner, the “People Like You” campaign showed that marketing to current customers can yield a quarter more prospects in the sales pipeline, along with 45% more leads and conversions in the US, and increased open and click-through rates, compared to a similar SMB campaign from the previous year.
So how can you achieve similar results?
You need software that makes it easy to explore your data, identify patterns in it, and build models based on it.
The gold-standard is a cloud-based dashboard that easily connects your internal data with external data sources. Vendors include Datorama, Domo, GoodData, Microsoft (Power BI) and Tableau.
But the most important thing is to collect the right data, get it all into one place, and look for useful patterns.
Marketing teams have an abundance of existing customer data, yet most marketing teams produce very little content aimed at guiding customers toward upgrading or buying additional products or services from the company.
B2B marketing teams have started dipping their toes into predictive analytics and account-based marketing. But they’re still behind B2C in using relationship marketing techniques to sell to their existing customers.
Factors keeping marketing teams from using existing customer data to retain customers:
- Immature processes
- Uneven data collection
- Poor data quality
Marketers must first make a mind-switch. We must see ourselves as responsible for bringing in new leads and retaining and upselling existing customers.
Technologically, we need to use software to collect, store, and analyze relevant customer data, from our customer challenges, to what tools and processes customers are currently using to deal with those challenges. Marketing teams must also use predictive analytics to identify which customers are ideal targets for upselling and cross-selling.
Do you mine your customer data for insights on how to better upsell, cross-sell, and retain them? Let us know what tools you use for this in comments.