Anne Janzer is the author of Subscription Marketing: Strategies for Nurturing Customers in a World of Churn, which she wrote to help marketers managing the disruptions of the subscription economy.
Excerpt from next week’s Business901 Podcast:
Joe Dager: We all know it’s easier to maintain a customer than trying to obtain a new one. In a SaaS company or in a subscription model, I would think it would be a much greater issue. Do we budget that appropriately? I mean are most companies putting money in that area or is it completely unbalanced?
Anne Janzer: I agree that it’s easier to keep a customer than to try to obtain a new one. And yet, most of what we know how to do with marketing is finding new customers. In fact, I think you have to look at the finances or the money, the money trail. It’s actually much more cost-effective to maintain a customer than to try to find new customers. It’s a huge customer acquisition cost for most SAAS businesses. Each customer that you retain is one you don’t have to earn new. When you are keeping customers, all of the new customers that you earn become growth, instead of replacement. I think of this kind of like saving for retirement. It’s a compounding metric and the more you save earlier on, the happier you are years down the line.
I think most people realize this about customers, and clearly, they understand most businesses that they need to keep their customers happy, keep them loyal to retain them. The problem is that we put our behavior where our metrics are and in a lot of marketing organizations, success is still measured, and sales as well. Success is measured on that short-term metrics like the net new sale and not customer retention, customer loyalty, customer referrals, and these longer-term metrics that has to do with what happens after the sale.
I talk to people who say; this sounds great. I want to do this, but I’m being compensated on how many leads I generate, or I’m being compensated on net new cells and not on these other longer term things. What we sometimes have is a mismatch in terms of how we’re compensating, and evaluating, and aligning what we do with the different divisions of the business.
Subscription Marketing: Strategies for Nurturing Customers in a World of Churn