Customer retention is a vexing problem for many companies that serve the small and medium-size business (SMB) market. But enterprise software company Vendasta thinks that it has found a strategy to combat SMB churn. The report is based on an extensive analysis of its media and agency customers’ SMB customers, roughly 100,000 being served on its platform.
First, it’s important to use a needs-based approach to selling. From there, Vendasta says that selling more within the first three months, provided the products address actual needs, increases retention: “Upselling at the three-month mark makes the greatest difference on client retention over time, showing a 20% increase.”
Early contact during and after customer onboarding can improve engagement, which also leads to retention. Specifically, “Getting clients to engage five times within the first month of service was found to have the greatest impact on increasing retention” — by 20%.
Of course, in order to upsell, you need to offer more than one product. After two years, SMB retention was positively correlated with the number of products sold: One product resulted in a 30% retention rate, compared to two products at 48%, three products at 50% and four products at 78%, respectively.
Finally, vertically specific products and sales are stronger and better for retention than a more horizontal or generic approach. Vertical tactics boosted retention by 15% at the two-year mark compared with those providers using a more one-size-fits-all strategy.
Source: Marketingland.com, June 20, 2018