Why Marketers Should Prioritize Customer Retention Strategies: Q&A; With Brightback’s CEO, Guy Marion

“Acquisition without retention may increase vanity metrics like total sign-ups, but it’s impossible to expand your active user base substantially.”

For any marketer who’s selling a product or service, it’s important to retain customers and identify when and how the customer makes a purchase. Guy Marion, CEO of Brightback, talks how smart customer retention strategies translate into profitable business outcomes. He explains how marketers can strike a balance between acquisition and retention, and gain insights to improve the customer experience.

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As a revenue-focused SaaS leader, Guy’s expertise in marketing automation, attribution, CRM, marketing technology, and customer service allows brands to successfully retain customers and amplify their customer reach. In this candid interaction with MarTech Advisor, he shares the most effective way to measure customer retention, to track the impact of engagement and new initiatives on incremental revenue retention.

Key takeaways from this Q&A; on customer retention strategies with Guy Marion:

• Learn how customer relation management works
• Insights on how personalization drives customer experience and retention
• The latest trends in customer retention management for 2020 and beyond
  
   

Highlights of the Q&A; With Guy Marion of Brightback

Here’s the full interview with Guy on the best way to leverage customer retention strategies:

Guy, to set the stage, tell us about your career path so far and what your role at Brightback entails.

In my career, I’ve learned that acquisition-led growth alone is not enough. Retention-led growth is required for online subscription companies today. I’ve led marketing, operations and online sales for companies like Autopilot and Zendesk, and lessons from the marketing technology industry have helped shape Brightback. I’ve experienced first-hand the importance of personalization, segmentation and multi-channel engagement. I saw an opportunity to use those strategies to build a systematic approach to retention, not just acquisition. I have a science Ph.D. in my past life, so I’m deeply committed to continuous learning via experimentation, and Brightback makes that possible for marketing, customer success and growth leaders. As the founder of the company, I’m involved in product development, sales and operations. My favorite part of my role is meeting with customers to hear their feedback and taking the insights back to our team.

Can you tell us about the importance of customer retention management, and how it works to reduce customer churn?

If you’re growing without retaining users, you’re pouring water into a leaky bucket. Acquisition without retention may increase vanity metrics like total sign-ups, but it’s impossible to expand your active user base substantially. The key to retaining customers is meeting them at the point of cancel and providing the information they need based on their reason for leaving. When a customer shows intent to cancel, companies should test an array of personalized offers to help them stay⁠ much in the same way we test a range of offers and messages to get customers to buy. When you’re actively experimenting in retention, you save more customers and gain insights to better your customer experience. When this is done effectively, we see companies reduce churn up to 20%.

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How can automation reduce customer churn and enable data visualization? Can you share a use-case or two? 

Automation and visualization are dependent on having the right customer data in the right place. Reducing churn in an automated way starts with capturing customer data, then integrating your tool stack and, finally, executing on retention workflows like engaging through email or sending an in-product message. When a customer is at risk for churn, your systems should work together to automatically provide personalized engagement and alert the right teams to act. For example, if a customer says they didn’t have time to set up a service, they should be given the option to connect immediately with a customer service rep or onboarding specialist who can help get them started. In the case of a customer missing a key activation metric like using a feature, a notification can prompt them to give it a try.

An effective way to measure customer retention is to visualize cohort performance over time. This kind of reporting illustrates how long a customer continued to be retained after they were initially saved. Cohort analysis allows you to track the impact of engagement and new initiatives on incremental revenue retention.

An example of retention performance by cohort analysis

What role does personalization play to drive customer experience and retention?

Just as personalization increases conversion rates in customer acquisition, customizing engagement and the overall cancel experience helps retain customers. Everything you know about your customers (age of the account, usage, billing terms, plan type, etc.) should feed into creating a personalized experience with your company, including cancellation.

An effective cancel experience builds loss aversion and provides paths for customers to stay based on their reason for canceling. Loss aversion is about tapping into the psychological desire to not lose what we have. In a cancel experience, a customer should be reminded of the emotional connection that was first established at purchase.

The value of a customer’s subscription is emphasized when they recall their account history and past successes. And when customers indicate a reason for canceling, they should be met with a personalized offer to stay that satisfies their unmet need. The more custom the experience, the greater likelihood a customer will be retained.

How best can Chief Marketing Officers (CMOs) and Chief Strategy Officers (CSOs) leverage customer retention management solutions that leads to stellar business outcomes and ROI?

Instead of looking beyond their customers to bring in new business, CMOs and CSOs should turn their attention to the customer base already within their grasp and invest in keeping current customers happier longer. The subscription business model requires being set up to support customers in an ongoing relationship instead of a transactional moment. That means the sales organization must most likely be retrained to make sure customers buy and are successful for 6-18 months. Leadership in marketing, sales, strategy and beyond must be motivated and incentivized to optimize the entire customer lifecycle not just to close new bookings or upsells and renewals. When it comes to measurement, a single churn goal needs to be communicated from executive leadership to the rest of the company. The entire organization needs to commit to actively showing customers how to understand and love what they're buying in order to keep them coming back.

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What mindset and skillsets will a B2B marketer need to thrive in the next decade?

Marketers need to shift their focus to the full customer lifecycle instead of purely acquisition activities. Marketing leaders will be more responsible for Customer Acquisition Costs and Lifetime Value (CAC:LTV), not just CAC, which means acquisition programs and strategies will be optimized around the ideal customer profile (ICP) over solely lead conversion. We need more specialists in the areas of customer insights, advocacy marketing, lifecycle marketing and account-based marketing. I think these will be major disciplines within subscription and SaaS businesses in the coming years.

What are the challenges with customer retention management that still need to be addressed?

Companies need to ditch their exit surveys and think about cancellation in a totally different way. Many believe that when a customer is trying to cancel, the opportunity to retain them is lost, but that’s simply not true. Between 15-30% of customers cancel for reasons that are within your control, but a cancel experience that consists only of a reactive exit survey allows them to just walk out the door. Cancellation isn't about finality. It's more of a signal from customers that their expectations aren't being met. It’s possible to step in and save more customers than most people realize.

What are the upcoming projects in customer retention management at Brightback that you are most excited about?

Our customers include SaaS and subscription companies of all sizes and industries. As we work with our customers, we’re excited to establish benchmarks and build on our best practices for customer retention. We’ve found that despite all of the labels or theories, cancellations come down to a handful of reasons related to product concerns, inability to execute, changing needs, pricing concerns, poor service and internal/company changes. Many of these issues can be resolved in the moment to reduce churn. We’re excited to share our knowledge about how to test retention strategies at the point of cancel, compare metrics against our benchmarks and optimize for retained revenue based on what we’re seeing in the market.

Could you share any predictions in this space for 2020 and beyond? 

For high-volume subscription businesses, the customer base is not an ocean of homogenous numbers and signals. It’s a collection of people who have problems to solve and opinions of what that experience should be. In the future, companies will be able to classify and rearrange their customers in smarter ways - combining their needs, sentiments, interaction histories, and likelihood to respond - then proactively reaching those customers in the most meaningful, personal way possible. This means solving customer problems before they even realize they have a problem. The best customer experience is generally the simplest one, where the customer is offered what they need before they’re even aware they need it.

Neha: Thank you, Guy, for giving us your insights on the benefits of customer retention strategies for marketers. We hope to talk to you again soon.

About Guy Marion:

Guy Marion is CEO of Brightback, the first automated customer retention software for subscription businesses. He brings unique SaaS growth, product, and sales experience, from launch to $100M ARR to IPO. Prior to founding Brightback, Guy was an Entrepreneur in Residence (EIR) at Matrix Partners, Autopilot COO, Zendesk Head of Online Sales, CollabNet VP & GM, and CEO/growth at Codesion (acq. by CollabNet, 2010).

About Brightback:

Brightback is the first automated customer retention software for subscription businesses. High volume subscription businesses such as Copper and Crazy Egg use Brightback to successfully retain customers by reducing up to 20 percent of cancellations. The company is headquartered in San Francisco and includes a remote-first workforce of mostly Silicon Valley emigrants now living across the globe.

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