Retaining Revenue in Tougher Times: 6 Critical Factors to Consider in Customer Retention Across Key European Markets
The diverse economic conditions and cultural differences in the European Market contribute largely to customer behaviour and expectations, driving Customer Success Partners to build and tailor their retention strategies accordingly.
Our Customer Success Snack events, a testament to our collective success, have been instrumental in gathering CS leaders all over Europe. These events, which have connected us with over 450 professionals from companies like TrustPilot, Workday, Zoom, and Udemy, have not only provided a platform to learn about the critical factors in retaining revenue in more challenging times but have also shaped the insights shared in this report.
Here are some notes on what we’ve learned from the event. Our great moderators, Catherine Van Raemdonck, Kristoff Bonne, Sally Hamdam, Jose Luis, and Sally Stoewe, made this article cohesive and insightful.
Amsterdam: Adapting to Market and Customer Changes
Market and customer changes can significantly impact retention rates. Whether due to economic fluctuation or changes in industry regulations, any shifts in the market can alter spending patterns and customer priorities.
One testament to the changes in spending habits can be traced back to 2020 – during the pandemic surge. Every consumer shifted their spending priorities, saving more on essential and emergency funds than on discretionary items. The emphasis on this type of spending led to a decrease in people’s disposable income, causing a decline for most businesses in the leisure industry.
Various changes in the customer’s organization, like revamps and reevaluations of vendor relationships, can also be overwhelming. As a valued Customer Success Partner, your role is crucial in managing these evolving customer needs and preferences. Your ability to adapt strategies while prioritizing customer satisfaction and maintaining strong retention rates makes our business successful.
Ghent: Streamline renewal process in contract management
Customer Retention is a vital factor in contract management. In general, acquiring a new customer is six to seven times more expensive than retaining an existing one. According to the Harvard Business Review, organizations can lose up to 40% of their value because of the difficulties associated with inefficient contract management. Likewise, most participants in Ghent agree on the churn in contract renewal processes.
Well, how do we address this churn then? Here’s what you need to factor in:
- Bottlenecks. To significantly improve customer retention rates, we can start by addressing bottlenecks. Ask yourself this question – What are the main pain points or obstacles that prevent our customers from having a seamless and satisfactory experience with our products or services?
- Flexible Pricing Models. Introducing flexible pricing models can also be a strategic way to guarantee less churn.
Photo by: https://dealhub.io/glossary/flexible-pricing/
- AI and Innovation. AI entrants have intensified the challenge of retaining customers, posing a domino effect at the sales management level, including upselling and cross-selling.
Continuous innovation in products and services is a crucial driver of customer retention. It enhances competitiveness and customer retention by emphasizing unique features and value in marketing and sales efforts. Regular competitive analysis is essential for understanding and countering rivals’ strategies effectively.
Photo by: https://asana.com/resources/competitive-analysis-example
- Partnerships. Strategic partnerships with complementary service providers can be a game-changer in customer retention. Complementary partnerships signify innovation for your loyal customers.
These partnerships can offer bundled solutions, significantly increasing customers’ overall value and making it harder for competitors to replicate. According to McKinsey, companies that innovate and adapt quickly can achieve up to 30% higher revenue growth than their peers.
- Feedback System. Implementing a robust feedback system, including surveys, user interviews, and NPS scores, is crucial for understanding customer satisfaction and areas for improvement. Additionally, providing educational content, training, and best practices further helps customers maximize product utility and adopt add-ons, ensuring they get the total value of their investment.
Copenhagen: Demonstrating Value and Building Enduring Customer Relationships
Our moderator from the Copenhagen event, Harry Bandell, shared fascinating points on revenue retention.
One is the importance of creating and demonstrating both “existing” and “future” value early in the client’s journey.
Customers must understand the potential beyond their current engagement to build trust and foster enduring relationships with providers. Decision-makers are concerned not only about the immediate benefits but also the sustainability of the solutions they invest in.
Given the current state of marketing strategies and rapidly evolving products, it’s even harder for companies to keep up with instilling the value of their offerings. But that does not mean it is not doable either. You can overcome these challenges and adversities with consistency and a shared success plan.
Nowadays, Customer Success teams need to be more active. You must be more strategic and focus on what helps and affects conversion.
Here are some strategies to consider:
- Be upfront and transparent with Customers. Increasing openness with customers, even on internal restructuring, helps manage expectations and build trust.
- Appreciate cultural differences. Improve internal and external communication through adaptation.
- Focus on onboarding. A strong foundation pays off in the customer adoption process.
Paris: Communicating openly with Customers
80% of customers are likelier to stay loyal to openly communicating brands. Research suggests that demonstrating transparent communication and value strengthens customer relationships and retention. In short, a better business relationship boosts customer confidence to purchase.
Now, how do you communicate? Let’s admit it. With more ways of doing business communication, we find it difficult to assess which is the best platform to address our customers. The truth is, there is no best platform, only the best way of communicating.
With the help of our speakers, we were able to gather three (3) workable tactics to build better communication with customers:
- Reply promptly. Customers need to know what to expect and when to expect what. The rule of thumb is to address messages within 24 hours of coming in. If you think you don’t have enough manpower to do so, then it’s time to re-evaluate the number of people in your Customer Success department or the cause of high message volumes.
- Address online issues insightfully. You can answer a customer concern directly via messenger or through the comments section, and you’re more likely to keep them than if you opt for a long, insight-lacking email. The online place is a very messy business, and one negative comment can affect other’s perception of your brand. It’s important to steer away from the bad impression immediately.
- Make it a two-way street. Ensure that customers can reach you and vice versa. For instance, in X or threads, allow them to voice concerns and reply to the same comment thread. On Facebook, utilize your messenger to discuss questions and concerns privately, or directly.
Madrid: The value of additional services and customized solutions for client retention
A study by the Harvard Business Review revealed that customers who receive additional services throughout their cycle are 68% more likely to continue doing business with the company. In addition, a study by Epsilon found that 80% of consumers are more likely to do business with a company if it offers personalized experiences.
Now, what do these numbers tell us? Additional services and providing customized solutions or personalized experiences to customers can prompt high retention rates, which is why they should be amongst the focuses of businesses that are struggling to retain revenue.
Let’s take Starbucks’ personalization strategy as an example. Naming the cups requires no cost, but it significantly enhances customer experience and engagement. Starbucks’s Reward Program can fall into the additional services category, and the leeway to customize drinks is a nod to customized solutions.
What can you start doing now? For starters, you can offer free months to yearly contracts or tailor solutions accordingly to add value to the solutions you sell. Europeans appreciate personalized offerings and services tailored to their needs and are likelier to purchase from businesses that offer customized experiences.
Dublin: CS and the Product Team Relationship
Knowing what causes churn alleviates retention, and one mis-looked-over area is the relationship between the CS and the Product Team. With CS at the frontline for customer dissatisfaction, keeping an executive relationship with the product is ideal for prioritizing fixes.
The relationship between these two teams is crucial as it ensures customer feedback is effectively translated into actionable product improvements. Insights from the CS Team can ensure that the new updates and processes align based on customer feedback.
In a recent survey by Pendo, it showed that 80% of product managers believe that feedback from customer service teams is essential for product improvements and developments.
This statistic attests to the effectiveness of having the CS and Product Team working together to achieve business success.
Did you enjoy what we’ve written out here? Join our events for more insights on the Customer Success Landscape and trade conversations with European CS Professionals.
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