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LSA19: The Science Behind Increasing Customer Retention
The document discusses strategies for increasing customer retention rates based on analysis of data from 200,000 small and medium-sized businesses over 3 years. Key findings include: 1) SMBs that purchase more products and services from a channel partner have higher retention rates. 2) Bundling new products with existing offerings increases retention by 49%. 3) Highly engaged SMBs that interact once per day have a 95% retention rate over 3 years, 151% higher than rarely engaged SMBs. Providing marketing services also increases retention significantly. Focusing on specific industry verticals leads to a 34% increase in retention rates compared to generalists.
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LSA19: The Science Behind Increasing Customer Retention
- 1. | The Science Behind IncreasingCustomer Retention
- 2. | Speakers 3 Brendan King CEO andCo-Founder Lex ten Veen EVP Partnerships Neil Crist VP Products
- 3. | Why churn isa bigger problem than ever 4https://www.livechatinc.com/blog/churn-rate/ Customer Churn
- 4. |https://hbr.org/2014/10/the-value-of-keeping-the-right-customers, https://www.entrepreneur.com/article/227946 Gartner: a5% increase in retention can increase your profits by 25% – 125%. Harvard Business Review: acquiring a new customer can be 5x – 25x more expensive than retaining an existing one. 5
- 5. | The exponential benefitsof rentention What makes clients churn and burn? You focused on deliverables, but not results You lost key relationship staff You over-promised You under-delivered You didn’t communicate well You didn’t showcase your achievements Your services were not robust You lacked important knowledge You were too tactical You didn’t show the ROI Partner side Turnover on the client side has caused lost relationships They had unrealistic expectations They don’t know what you do They did not let you optimize the solution They had a weak market They had unstable finances They shot down your ideas They were thinking short term They don’t see your value They don’t have the time for marketing Client side 6
- 6. | 7 How dowe keep customers? 2 Perspectives Fundamental research Data backed insights By By
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- 9. | Methodology Moz surveyed 1400+local marketers and ask them 30 questions about their work in the industry. Responses where analyzed individually, by marketer type (agency vs. in-house), by company size, and as a whole. The respondents represent a broad range of local marketers across industries, marketing job tiles, and role level 10
- 10. | 11 Local searchis a broad field that’s constantly growing and changing, challenging marketers to keep up. No matter what kind of company they work for, today’s marketers need both the big picture — relating to customers in the real world — as well as little details like questions submitted on a Google Knowledge Panel. 1. Local search marketers must be versatile to succeed
- 11. | 12 Today’s marketersneed more than great tactics; they need to learn to be great communicators. Getting clients on board with strategies is difficult when they don’t fully understand the goals and metrics, and teaching them is getting harder as the SERPs become more complex. 2. Clients don’t understand local search
- 12. | With a lackof serious competition for Google and an increasing presence of paid results, local search marketers are broadening the scope of their work. SERPs will always be important, but marketers are now also focusing on alternative platforms like email, word-of- mouth, and real-world community building. With all local businesses focused intently on Google, the ability to see other marketing opportunities can make companies stand out. 3. Local marketing is about more than just search 13
- 13. | Top strategies areall over the map, lacking clear best practices 14 In a field where versatility is key to success, we see a remarkable spread of priorities for local marketers. Some tactics that are hyped, like in-store tech, have very few proponents, but even the #1 priority — on-site optimization — gets less than 20% of the votes. This paints a picture of an industry that marketers are still trying to understand, probing different strategies as they figure out what works.
- 14. | 62.2% of clicks Organic 90% SEM 10% SEO 2.8%of clicks Google AdWords 35% don’t click Spend Clicks 15
- 15. | Clicks 57.1% don’t click 40.9% ofclicks Organic - SEO 2% of clicks Google AdWords - SEM 16
- 16. | Organic drives more clicks than paid20x Clickson Paid Results Clicks on Organic Results 17
- 17. | thinkwithgoogle.com/infographics/mobile-search-trends-consumers-to-stores.html Local is thenew front door 7.6 Billion local searches in U.S. every month …that ensures overall marketing effectiveness 76% of people who search on their smartphones for something nearby visit a business within one day 28% of those searches for something nearby result in a purchase PAID MARKETING INVESTMENT SALES $ SEO Why is local crucial? Local is a strategic investment in your Bottom of Funnel… 18 $$
- 18. | A QSR pizzachain was launching online ordering and new locations with aggressive revenue goals. Moz took over this pizza chain’s local listings management and within six months the client was so satisfied with the results that they increased the number of local listings managed by Moz by 92%. 92% With Moz Local, they reached 63% more pizza buyers. Their listings accuracy improved by 36%. 36% Listing accuracy improvement Increase in local listings managed by Moz 63% More pizza buyers reached 19 Moz helps Pizza Chain Achieve Explosive Growth
- 19. | 24 Brendan King CEOand Co-Founder
- 20. Increasing SMB Retention Data-BackedInsights to Help Fuel Growth 25
- 21. 26 SMB retention isincreased by: 1. Selling more products & services per SMB 2. Bundling traditional with new products 3. Increasing SMB engagement 4. Providing DIFM marketing services 5. Providing specialized products & services for particular SMB verticals 6. Providing proof-of-performance reporting to SMBs Our Thesis
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- 23. 28 Data Sample Channel Partners Partnersthat currently have a billing relationship with Vendasta SMBs (Small & Medium-Sized Business) Only those who have purchased 1+ paid product or service Definition Retention An SMB who continuously pays for 1+ product or service
- 24. Experiment #1 Product Sales &SMB Retention 29
- 25. Does the quantityof products an SMB purchases from a single channel partner affect retention? 30
- 26. What do wemean by products? 31
- 27. Total Products Purchased AccountRetention Rate 32 31% 39% 55%
- 28. Total Products Purchased AccountRetention Rate 33 35% 43% 72%
- 29. Total Products Purchased AccountRetention Rate 34 37% 49% 73%
- 30. Total Products Purchased AccountRetention Rate 55% 35 70% 92%
- 31. Total Products Purchased AccountRetention Rate 12 Months 24 Months 35 Months 1 Product 55% 39% 30% 2 Products 72% 44% 35% 3 Products 73% 49% 37% 4+ Products 92% 70% 55% 36
- 32. Insight & Recommendations Solvemultiple customer problems. Be the expert. Instant access. Go-to-market. Broad selection. Tools to sell. 37
- 33. Align Products WithSMB Needs Advertising Listings Reputation Social Marketing Website / In Store CRM / Loyalty Do they know about you? Do they trust you? Will they convert? Will they remain loyal? Can they find you? Do they advocate you? 38
- 34. Experiment #2 Product Bundling &SMB Retention 39
- 35. Product Bundling Works AccountRetention Rate Channel partners who bundled their own offering with a Vendasta product or service saw an overall 49%increased retention SMB rate. 61% 81% 93% 41% 60% 75% Jan 1, 2016 Dec 31, 2018 40
- 36. Insight & Recommendations Bundlenew products with existing offerings to increase SMB retention. 41
- 37. Experiment #3 User Engagement &SMB Retention 42
- 38. Do highly engagedSMB users stay with channel partners longer? 43
- 39. Engagement Frequency Account RetentionRate 31% 39% 66% Jan 1, 2016 Dec 31, 2018 44
- 40. Engagement Frequency Account RetentionRate 31% 41% 72% Jan 1, 2016 Dec 31, 2018 45
- 41. Engagement Frequency Account RetentionRate 37% 55% 80% Jan 1, 2016 Dec 31, 2018 46
- 42. Engagement Frequency Account RetentionRate 78% 88% 95% Jan 1, 2016 Dec 31, 2018 47
- 43. Engagement Frequency Account RetentionRate 12 Months 24 Months 36 Months Rarely Engages 66% 39% 31% Engages Once Per Month 72% 41% 31% Engages Once Per Week 80% 55% 37% Engages Once Per Day 95% 88% 78% 151% Increase in retention rate over 3 years when SMBs are engaged 48
- 44. Insight & Recommendations Provideactionable insights & SMB tools to prompt engagement. 49
- 45. Experiment #4 DIFM Services &SMB Retention 50
- 46. Do SMBs whoreceive marketing services (DIFM) stay with channel partners longer? 51
- 47. What do wemean by DIFM services? ● Social Media Posting ● Website Building & Maintenance ● Review Response ● Managed Advertising ● Online Listing Correction ● SEO Keywords ● Blog Posting 52
- 48. Total Marketing ServicesFulfilled Account Retention Rate 39% 42% 61% Jun 1, 2016 Dec 31, 2018 53
- 49. Account Retention Rate 40% 46% 71% Jun1, 2016 Dec 31, 2018 Total Marketing Services Fulfilled 54
- 50. Account Retention Rate 55% 69% 87% Jun1, 2016 Dec 31, 2018 Total Marketing Services Fulfilled 55
- 51. Account Retention Rate 72%72% 92% Jun1, 2016 Dec 31, 2018 Total Marketing Services Fulfilled 56
- 52. 12 Months 24Months 36 Months 0 Services 61% 42% 39% 1 Service 71% 46% 40% 2 Services 87% 69% 55% 3+ Services 92% 72% 72% Account Retention Rate SMBs with 3+ marketing services fulfilled had a 80%increased retention rate over 3 years. Total Marketing Services Fulfilled 57
- 53. Insight & Recommendations ProvideDIFM marketing services and make it a key part of your customer success strategy. Build relationships. Become the trusted advisor. 58
- 54. Experiment #5 Vertical Specialization &SMB Retention 59
- 55. Do channel partnerswho focus on specific verticals see an increase in SMB retention? 60
- 56. Vertical vs. HorizontalChannel Partners Account Retention Rate Jan 1, 2016 39% 52% 67% 29% 38% 60% 34% Increase in retention rate after 3 years for channel partners who specialize in specific verticals Dec 31, 2018 61
- 57. 70% 55% 39% 20% 150% Increase in retentionrate after 3 years for SMBs within a channel partner’s key vertical. Vertical Partner Selling Outside Vertical Account Retention Rate Jan 1, 2016 Dec 31, 2018 62
- 58. Insight & Recommendations Focuson key verticals to deeply understand the SMB’s needs and offer relevant solutions. Find a niche and dominate. 63
- 59. Which SMB verticalshave the highest retention? 64
- 60. Bottom 5 Verticals AccountRetention Rate After 3 years, the following verticals saw the lowest SMB retention rate: ● Beauty ● Event Services ● Shopping ● Finance ● Restaurants Jan 1, 2016 Dec 31, 2018 36 Months Beauty 18% Event Services 14% Shopping 20% Finance 20% Restaurants 18% 65
- 61. Top 5 Verticals AccountRetention Rate Jan 1, 2016 Dec 31, 2018 After 3 years, the following verticals saw the highest SMB retention rate: ● Education ● Auto ● Health ● Hotels ● Professional Services36 Months Education 35% Auto 30% Health 32% Hotel 39% Pro. Services 43% 66
- 62. Top & BottomTaxonomy Averages Account Retention Rate Taking an average of the best and worst industries, we see that the best industries have a 100%increased retention rate after 3 years. 65% 46% 51% 37% 28% 18% Jan 1, 2016 Dec 31, 2018 67
- 63. Insight & Recommendations Chooseyour vertical carefully. Consider both market size, retention rate, and competition. 68
- 64. Experiment #6 Proof-of-Performance & SMBRetention 69
- 65. Do SMBs whoreceive proof-of-performance reporting stay with channel partners longer? 70
- 66. SMBs who weresent a proof of performance report for at least half of their lifetime had a 38%increased retention rate after 3 years. Proof-of-Performance Frequency Account Retention Rate Jan 1, 2016 Dec 31, 2018 80% 64% 52% 36% 40% 29% 71
- 67. “Google My Business”Authentication Account Retention Rate Getting SMBs set up with Google My Business and authenticating their GMB in the Vendasta platform showed a 51%increased retention rate after 2 years. 78% 56% 59% 39% Jan 1, 2017 Dec 31, 2018 72
- 68. Google My Businessin Executive Report 73
- 69. Google My Businessin Executive Report Account Retention Rate Dec 1, 2017 Dec 31, 2018 90% 73% 86% 58% SMBs who received a report with their GMB insights for at least half of their lifetime saw a 47%increased retention rate after 1 year compared to those who received a report without GMB insights. 74
- 70. Insight & Recommendations Provideproof-of-performance & associate your brand with Google. Authenticate Google My Business & include in your reporting. 75
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- 72. Title uberall.com email Name phone Our offices Berlin Hussitenstraße 32-33 13355Berlin Germany Paris 54 rue de Londres 75008 Paris France Cape Town 128 Saint Georges Str Simon's Town 7995 South Africa London 1 St Katharine’s Way London E1W 1UN UK San Francisco 600 California St San Francisco, CA 94108 USA Amsterdam Weteringschans 109 1017SB Amsterdam The Netherlands Brendan King CEO and Co-Founder bking@vendasta.com Lex ten Veen EVP Partnerships lex@uberall.com Neil Crist VP Partnerships neilc@moz.com