Imagine someone having a baby, only to place it in its bassinet, smile fondly, and wish it luck. Then, with the supreme confidence of never having played the tape forward, they leave the room forever.
Most people scoff at the very idea – if they’re not too busy gaping in horror – yet this is precisely how most businesses treat their “valued” clients and customers. They spend gobs of time and energy bringing them on board, only to wave them out on their own as soon as they get there.
New customers don’t take particularly kindly to this, to say the least. That’s why metrics show that customer retention is such a problem for most businesses. Spendy customer acquisition strategies almost immediately give way to a high customer churn rate once users come on board.
That’s not anecdotal reporting, either.
“The average monthly churn rate for SaaS companies is 3-8%, which would mean the average retention rate should be in the 92-97% range,” says Woopra, adding that “average annual churn is 32-50%, which means the average retention rate should be in the 50-68% range.” And that’s the average, not even the high end of churn.
There are, of course, many ways to address this issue. One of the best ways is to institute a customer training program that teaches existing customers how to use your product. This gives them a sense of self-efficacy and helps them make the most of it, which will reduce churn.
To see why this is such a critical strategy for retaining your customer base, it’s essential first to understand lifecycle revenue marketing: what it is, how it helps, and how to do it. Let’s take a look.
What Is Lifecycle Revenue Marketing (LRM)?
Lifecycle revenue marketing is a compound term that describes the ideal customer experience. It is a combination of lifecycle marketing and revenue marketing, both of which are powerful concepts on their own. When you bring them together, they form a defining approach to customer engagement that will help you maintain the highest number of customers over the long haul.
Before discussing them in concert, it’s worth understanding each of these approaches.
What is Lifecycle Marketing?
Lifecycle marketing describes how SaaS companies and other organizations can guide people through a complete customer experience from sale to purchase (and beyond). The goal is to modify customer behavior to gain more renewals, referrals, cross-sells, and upsells.
While lifecycle marketing places a lot of emphasis on sales and win-back programs, it doesn’t do a whole lot for engaging with customer feedback or truly teaching them how to find success with your product. However, engagement must thread through the entire customer journey from lead generation to renewal.
What is Revenue Marketing?
Revenue marketing is similarly hampered by short-sightedness. Instead of prioritizing customer success and churn reduction, the focus is on using various methods to boost sales and underpin profit margins. While some of the focus is on retention and the onboarding process, it’s not much.
Granted, it’s good to focus on profits. Any company that wants to succeed does have to align its sales and marketing strategies with revenue. The problem is that it focuses mainly on the parts of the lifecycle that involve getting customers in the door.
As such, revenue marketing misses out on the potential of training customers throughout an extended onboarding process to use your product effectively. Only by doing so, though, do you see max revenue.
Together: Lifecycle Revenue Marketing
Enter lifecycle revenue marketing or LRM. In this model, you combine every aspect of the customer journey into one overarching strategy. Combining these two concepts gives you much more of the customer support needed to bring people back again and again.
How Does LRM Help With Customer Acquisition?
LRM helps bring in new customers with positive messaging that centers on the idea that you’re a company that will train them to succeed. Customer academies are ever more popular for the excellent reason that they make prospects feel safe investing in you, which encourages them to give you a try.
Organizations that rely on LRM have a better bird’s eye view because this strategy penetrates every aspect of sales, marketing, system functionality, onboarding, metrics, loyalty programs, etc. You can create stronger relationships and bring in more customers by intelligently segmenting accounts and tailoring messaging to individual businesses (and their decision-makers).
In short, lifecycle revenue marketing puts post-sale customer satisfaction front and center. In using it, you’re doing everything you can to captivate the people who make your business tick … and they can tell. As such, you can simultaneously pull more people in, increase customer loyalty, and boost your customer lifetime value (CLV) metrics.
How Does LRM Help Reduce Churn for Existing Customer?
Customers aren’t buying a system. They’re buying the ability to fix a problem. If you can’t solve that problem for them, they’ll head right back out that revolving door, leaving you with nothing but a hefty bill for wasted ad spend and marketing strategies.
Happily, in addition to upping your sales with proactive strategies, LRM can increase your retention rate. Instead of putting sales first with a “pipeline” approach, you put the customer first with a holistic, learning-centered approach. By focusing on customer success and building your KPIs around it, you can mitigate the loss of at-risk customers sooner.
The financials back this strategy up:
“Customer retention is linked to much lower costs than acquisition,” says Userlane. “Since 70 to 90 percent of the profit generated by SaaS companies is often generated through renewals, upsells, and additional after-sales services, each successful customer deeply impacts the bottom line.”
Unfortunately, according to the same source, we’re a long way off from realizing the maximum results of LRM: “50 percent of businesses still don’t know how to track results even though over 80 percent of executives are aware that in the near future, they’ll have to boost interaction with their customers through different channels.”
Think social media followers, newsletter subscribers, outreach within workflows, and other strategies that prioritize retention rate. Without such strategies, there’s no way you’re getting off the churn train.
So, then, what are those tools and strategies?
What Organizational Strategies and Tools Help Teams Implement LRM?
Lifecycle revenue marketing seeks to transform sales-centric strategies and incentives and transition them to ones focusing on the customer’s success.
Take the digital academy model, for example. This is an excellent tool to engage buyers at any journey stage. Although academies are built for the user, they can be made public and indexed on Google, so prospects can also engage and learn from the content.
This can help you recover churned customers agnostic of the period they’ve been gone for. Simultaneously, you can cross-sell a new product as it comes along, plug your CRM at strategic points, or collect credit card information with smaller plans that grow organically into bigger ones.
1. Define Stages to Identify Opportunity
If your goal is to put the revenue in marketing technology – and it should be – then your first order of business is identifying opportunities for each stage of the customer.
It doesn’t take a rocket scientist to understand that a lead (just now considering what to do about their problem) has different needs than a business that’s just made its first purchase. Similarly, wooing lost customers is different from upselling to happy ones.
Despite this, reps often don’t distinguish that well between various types of customers and the stages they’re at. It’s time to start seeking out pivotal moments when customers are primed to take specific actions.
As Forrester explains, “Delivering real-time audience engagement across all opportunity types (acquisition, retention, cross-sell, and upsell) and the customer lifecycle, using shared data and insights, leads to more consistent, quality customer experiences.”
2. Adopt a Customer-Obsessed Mindset
Customer attrition is a problem at any business, but you can reduce churn risk by constantly striving to create a better user experience. You can substantially decrease involuntary churn by becoming obsessed with your customers and their success.
Naturally, it’s not as easy as rubbing a lamp. Companies must make a dedicated effort to align their internal departments and functions, removing the siloing that can create fault lines in the customer experience.
Usually, says Userlane, that’s not the case: “Only 34% of customer success teams are structured as stand-alone units reporting directly to the CEO, while 14% of them are still considered sub-divisions of marketing or sales.” Moreover, “Only 40% of customer success managers are involved in support, and only 20% are expected to work on upselling activities.”
That’s a big disconnect, and if you want to stop revenue churn, you need to bridge it by making a concerted effort to reach across departmental divides and set common objectives.
3. Establish LRM KPIs
Much like objectives, shared KPIs lead measurably to improvements in your bottom line. If you don’t identify metrics – think monthly recurring revenue (MRR), net promoter score (NPS), or customer acquisition costs (CAC) – then you can’t know if your strategies are working. This muddies or obviates any meaningful churn analysis.
Without implementing marketing or sales campaigns, setting upsell or cross-sell goals, or trying to woo back lost customers, SaaS businesses have little chance of recouping lost revenue and addressing high churn rates.
4. Create Collaboration Between Growth Teams
Perhaps most importantly, you must actively foster collaboration. It’s all very well to talk about identifying opportunities, focusing on the customer, doing away with siloing, and establishing joint KPIs. But if you don’t create a culture where teams want to work together, then you’ve failed. They can all use the same metrics and still take a partisan approach that dismisses other departments and ultimately reduces the chances of customer success.
Collaboration among growth teams allows you to check several essential boxes. For instance, it helps you:
Address content waste
Deliver it to the right people at the right time
Measure content performance
5. Segment and Prioritize Accounts
Another issue many organizations face is that their customer segments aren’t clearly defined. Again, this hampers the ability to meet customer needs and seriously devalues customer data.
Instead, creating sharply divided buckets into which customers can flow would be best. This offers more information about them to your success team, which makes it easier to define touchpoints and upsell. It also means that customers aren’t receiving messages that don’t apply to them, which can increase churn.
6. Make Your Features More Accessible to Customers
One of the biggest problems with creating happy customers is not presenting your features clearly enough. No matter how amazing they are, they can’t do their job if hidden.
Therefore, you need to create a cohesive internal content structure that enables your digital academy to do its work without doing the heavy lifting for the customer. Then you must train all departments to deliver a cohesive experience and create a universal content taxonomy for customer navigation.
Implement Lifecycle Revenue Marketing and Fight Churn Today
Ready to do away with that old funnel and start seeing the results of robust LRM today? Raven360 is here to help with a fully defined, customer-facing strategy to help build their skills and your success simultaneously. All you have to do to learn more is get in touch today.