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Engage Proactively with AI Across the Customer Journey to Deliver Operational Efficiency and a Superior CX

Get out your imaginary scale and weigh the effort and budget your company puts into customer acquisition versus customer retention. Which side of the scale is tipped? For many businesses, it’s tipped toward customer acquisition. In a recent Forrester survey, B2C marketing decision makers indicated that 37% of their marketing program budget is spent on new customer acquisition, while in contrast, only 20% of their marketing budget is spent on driving retention of existing customers or upselling to them.1

Why is over-focusing on customer acquisition and under-focusing on customer retention a problem?First, costs. Acquiring a new customer costs, at a minimum, 5X more than the cost of retaining an existing one.2 So, unless you are retaining every single one of your customers, it makes more sense to spend $5 retaining 5 existing customers than it does to spend $5 acquiring 1 new customer.

Unfortunately, customer service is often seen only as a cost rather than a revenue generator, but keeping a customer happy enough to buy from you again generates revenue. Not only do existing customers tend to spend more the next time they buy from you, but they become brand advocates and encourage others to buy from you, too. Research by the inventor of the net promoter

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score, Frederick Reichheld of Bain & Company, shows that increasing customer retention rates by 5% increases profits by 25% to 95%.3 So, the true cost is losing them as a customer and having to spend more on acquisition.

Second, tipping the scales in favor of acquisition creates a disjointed customer journey. The majority of the customer acquisition cost is spent on market-ing to prospects during the discovery, exploration, and buying phases of the customer’s journey.4 And so a lot of businesses are looking at software solutions to help with these early phases of the customer lifecycle. That means those early acqui-sition stages get a lot more resources behind them than the later ones — the ones when your custom-ers are using your product or service, reaching out for support and developing a relationship with you. Post-purchase is when your customers experience the value of what they’ve just paid for, but if most of

your organization’s resources are spent just getting them through checkout, you could be setting them up for disappointment.

This disjointed customer journey is both a symptom and cause of our third problem: siloed organiza-tions. Businesses use disparate tools, teams, and increasingly even offices or locations to handle the acquisition and retention sides of the customer life-cycle. Dividing and conquering may make sense to each side as they laser-focus on their goals, but it’s highly inefficient for the greater organization and jarring to the customer who bought from one group and is passed onto another.

marketing budget for driving retention/upselling

existing customers

marketing budget for acquiring new customers

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ENGAGE PROACTIVELY WITH AI | 2

1 High Churn Rate How much does it cost your company to acquire a new customer, and are they staying customers? Take a look at your customer churn rate and examine the percentage of customers who ended their relationship with your company in a particular period. How much did it cost to acquire them? Have they spent more or less than that amount with your company? Consider that you may be spending too much money to attract the wrong type of customer.

2 Creating a better experience for prospects than for customers You met or exceeded expectations in order to convert prospects into customers. Are you under-delivering on those expectations in the customer phase? If during the prospect phase you anticipated their needs, interacted with them through modern tools built to impress, and made it easy for them to ask questions and ultimately make a purchase, then that’s what they expect after becoming a customer. Anything less creates suspicion about your company and leaves the customer unlikely to consider you again the next time they make a purchase.

Is your organization tipped in favor of customer acquisition? Here’s how to know if you need a better strategy.

Symptoms of Imbalance

3 Under-utilizing customer insights across teams If your business is siloed by customer lifecycle stages, you’re probably not using valuable insights gained in one stage to improve another. For example, are you carrying over insights about a contact in the prospect phase over into the customer phase to maximize upsell and cross-sell opportunities?

4 Not extracting the full value from your existing customer base You should be seeing the value of customer loyalty in dollars, such as higher spending per transaction and brand advocacy in number of referrals. Companies that focus on building loyal relationships keep costs to a minimum and are far better positioned to remain strong in a turbulent market. Forrester shows that even a small improvement in CX scores result in revenue gains across all industries. For example, a one-point increase in CX scores for auto and home insurance providers results in $14.32 incremental revenue per customer per year. Since that industry has an average of 15 million customers per company, that’s $215 million total revenue.5 Nothing to sneeze at.

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“Many firms today are wasting half their marketing expenses

on disloyal customers who will never stick around long

enough to pay back the acquisition investment.”

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Strategy: Revamp it

Companies need to prioritize existing custom-ers as high (or even higher) than they prioritize prospective customers. Bain & Company reports that too many businesses are missing their biggest opportunity to keep costs down: building loyal relationships with customers and other stakeholders. Return customers tend to buy more from a company over time, and as they do, operating costs to serve them decline. They also refer others to your company, and often pay a premium to continue to do business with you rather than switch to a com-petitor.6 Focus on metrics that matter to the entire organization, such as growth, renewals, and customer lifetime value (CLV) rather than metrics focused solely on acquisition.

People: Find the right customers

Overspending and over-focusing on customer acquisition can result in high churn. “Many firms today are wasting half their marketing expenses on disloyal customers who will never stick around long enough to pay back the acquisition investment.”7 Instead of examining which cus-tomer acquisition strategies yield the highest number of signups, determine which acquisition strategies lead to signing on the highest number of loyal customers. By narrowing your acqui-sition focus to the right customers, you’ll save money that can be better invested after they’ve become a customer.

Stripping down one area and focusing on another won’t cut it. The whole customer journey lifecycle must be considered with an approach that spans your business strategy, the kinds of customers you target, your operational process, and technology solutions.

The solution to a multisymptomatic problem is to take a holistic approach.

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Process: Break down walls

Siloed and disjointed organizations can make contacts feel that they’ve started working with a different company or brand after becoming a customer. Coordinate efforts across the organiza-tion, from BDRs and sales reps to customer care and support, to ensure each contact has a cohesive experience as they move through the customer journey.

Break down information barriers so customer data can be utilized across teams and departments. Disparate teams and systems should be unified around the customer so everyone in the organiza-tion has access to real-time information and can give the customer the best possible experience.

With insights coordinated across the organiza-tion, you can take advantage of opportunities to cross-sell and upsell, providing the customer with everything you have to offer that is relevant for them. Take a holistic approach to customer data management so you can leverage insights captured about a contact during the prospect phase after that person becomes a customer.

Technology: Use a single solution to engage proactively across the customer journey

Don’t divide your organization with separate acquisition, engagement, support, and ser-vice solutions that tackle bits and pieces of the customer journey. Invest in one solution that can be used across the organization to extract value throughout the complete cus-tomer lifecycle.

With a unified engagement solution, your businesses can manage proactive outreach in a holistic way. Disconnected systems mean some departments may be reaching out to customers too much, and others too little, and none have visibility into what the others are doing. Only the customer sees all of the communications coming from your business, and it can look very jumbled from their point of view. A single proactive engagement solution ensures you deliver timely and relevant information to your pros-pects and customers at the moments that really need you.

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Why One Customer Engagement Solution for the Complete Customer Journey Works

You’ll encounter less wasted spending on acquiring the wrong type of customers that will quickly churn.

You won’t let down customers. The modern, personalized, digital experience that they received as prospects continues when they become customers and need support.

Since customers stick around longer, you can reap the benefits of loyalty: higher spending with your business, and brand advocacy that sends new business your way.

The Expert’s Checklist

If you invest in a solution like Bold360 that can provide consistency across the complete customer journey, you’ll provide a better customer experience, which leads to a high return on your investment.

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Sources

1 Forrester Analytics Global Business Technographics® Marketing Survey, 2016

2 Harvard Business Review, The Value of Keeping the Right Customers, Amy Gallo, Oct 20, 2014

3 Bain & Company, Prescription for Cutting Costs: Loyal Relationships, Fred Reichheld, Oct 25, 2001

4 Forrester, The Perspective Problem in the Customer Life Cycle, David Truog, Aug 28, 2017

5 Forrester, Drive Revenue with Great Customer Experi-ence, 2017, Maxie Schmidt-Subramanian, Dylan Czarnecki, and Laura Garvin Tramm, Jan 2017

6 Bain & Company, Prescription for Cutting Costs: Loyal Relationships, Fred Reichheld, Oct 25, 2001

7 Bain & Company, Prescription for Cutting Costs: Loyal Relationships, Fred Reichheld, Oct 25, 2001

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