How to Maximize Customer Retention in a B2B Marketplace
Posted: Thu Dec 05, 2024 9:51 am
1. Economies of scale: The acquisition of new customers VS The retention of existing customers.
Acquiring new customers requires a considerable investment in both marketing and advertising. This approach, while necessary, does not always guarantee a return on investment. Retaining an existing customer, on the other hand, is clearly more cost-effective. According to the Harvard Business Review , retaining an existing customer can cost up to 25 times less than acquiring a new one . Therefore, implementing effective strategies to retain existing customers can result in considerable savings for your company.
2. The potential for a long-lasting relationship with your current customers
A loyal customer is likely to buy your products repeatedly, demonstrate israel mobile phone number list confidence in your brand and even become an ambassador by recommending your company to their network of contacts, creating a virtuous circle. Such a customer can therefore be a constant source of income and, at the same time, a free means of promoting your brand, boosting its impact on the market.
3. Customer retention as a lever for economic growth
Recurring revenue from existing customers helps stabilize your business and encourages long-term planning. The longer a customer stays with you, the greater their value over time. Plus, a loyal customer is often more willing to try your new products.
4. Gradual increase in the average basket: the advantages of time
A customer who is loyal to you over the long term tends to spend more over time. They develop a sense of trust and preference for your brand that encourages them to make larger purchases. They become familiar with your products, reach a level of comfort with your brand, and naturally tend to increase the quantity of their orders. As they progress through the customer journey, they also feel more ready to try out your new offerings, which increases their average basket and contributes to sustainable revenue growth.
II. Key customer retention indicators
1. Customer retention rate: measurement and interpretation
Customer retention rate is an essential indicator that allows companies to measure the percentage of customers they have retained over a given period, compared to the number of customers they had at the beginning of that period. It is a measure of customer loyalty and a company's ability to retain customers over the long term .
To calculate the customer retention rate, 3 pieces of data are needed: the number of customers at the beginning of the period (I), the number of customers at the end of the period (F) and the number of new customers acquired during the period (A).
The formula for calculating the customer retention rate is as follows:
((FA)/I) x 100 = Customer retention rate
A good customer retention rate can vary considerably depending on the industry, business model, and type of product offered. However, generally, a customer retention rate of 80% or higher is generally considered good for most industries .
In certain highly competitive industries (subscription services, etc.), a retention rate of around 60% may be considered acceptable, while for more stable and mature industries, a retention rate of 90% or higher would be the goal. For B2B companies, a retention rate of 90% or higher is generally recommended. Note: a 100% retention rate is unrealistic and even undesirable, as it means that a company is not trying to attract new customers and risks stagnating.
To develop an effective loyalty strategy, it is essential to regularly monitor the retention rate and understand the factors that influence it.
2. Dropout rate: an indicator to control and minimize
The churn rate (also known as the "churn rate " ) indicates the percentage of customers who stop purchasing or using your product in a given period . A high churn rate can indicate problems with customer satisfaction. To calculate this rate, divide the number of customers lost during a given period by the total number of customers at the beginning of the period, then multiply by 100 to get a percentage.
Formula: (P/I) x 100 = Churn rate
Where:
- I is the total number of customers at the beginning of the period,
- P is the number of customers lost during the period.
Factors such as customer loss during the onboarding phase ( onboarding churn ), customer loss during the contract renewal phase ( renewal churn ) and customer loss due to dissatisfaction ( satisfaction-driven churn ) can influence this index.
3. Understand and calculate the lifetime value of your customers
Customer Lifetime Value ( CLV ) is a key financial indicator used by companies to estimate the total net revenue they can expect to generate from a customer over the life cycle of the relationship .
The calculation formula is as follows:
CLV = (Average basket value x Purchase frequency per period) x Average duration of the customer's relationship with the company
This is an important indicator because it helps to understand how much a company should be willing to spend to acquire a new customer and how much effort it should make to retain its current customers. A customer with a high lifetime value is very valuable to the company because it is a customer who purchases regularly and contributes significantly to the company's revenue. Therefore, a company should make a real effort to retain these high-value customers and increase the CLV of other customers.
III. Action plan to optimize customer retention
1. Impact: Deliver an exceptional customer experience
From the first contact, it is essential to welcome your customers with an effective onboarding strategy. It is vital to give them all the information they need to understand and make the most of your products.
2. Get noticed by optimizing your presence in the marketplace
Offer fast, quality support
Responsive, even proactive, customer service is essential if you want to retain your customers. Respond quickly to their queries and try to resolve their problems as satisfactorily as possible.
Personalize your interactions
Thanks to the data available through the marketplace, you can personalize your communications and capture the attention of your most active customers. That's why you can use the marketplace to carry out highly targeted email campaigns . These types of digital marketing tools can help you maintain regular contact with your customers and provide them with relevant information that meets their needs.
Increase referrals
SEO optimization will attract more customers and improve your visibility in the marketplace. Learn how to juggle SEO tools .
Take care of your product sheets
Clear and detailed product sheets can make the purchasing decision easier for your customers.
Reassure and build trust
Free shipping, fast delivery, free returns, 24-hour support, money-back guarantee and customer reviews are all elements that reassure customers and encourage loyalty.
Build loyalty through your pricing policy
Adequate, competitive and transparent prices are a key factor in retaining customers.
Offer a seamless and secure payment experience
Simple and secure payment solutions offered by well-established B2B marketplaces build customer confidence and are essential to customer retention.
Encourage next purchase
Offer special offers, promotions or complementary products to encourage your customer to make a new purchase.
3. Be proactive: detect any risk of churn as early as possible.
It is essential to closely monitor your customers' feedback and learn from their complaints. Create educational content to help your customers make better use of your products and services, and remove any disincentives to purchase.
CRM specialist Paul Greenberg has brilliantly illustrated the importance of customer retention by stating that “the cost of acquiring a new customer is five to ten times higher than the cost of retaining an existing customer” (source: CRM at the Speed of Light ). Maximizing customer retention is therefore a strategic approach that encompasses a multitude of elements related to the customer experience, from the quality of your products to the effectiveness of your follow-up. It requires constant attention, regular questions and, above all, a genuine willingness to put the customer at the center of your concerns .
Maximizing customer retention on a B2B marketplace is not only an effective strategy to increase your profits, but also a philosophy that values your customers and reinforces the strength and integrity of your organization. It is an expression of your company’s commitment to service, quality, and above all, to the exceptional experience you are determined to offer every customer every time.
If you want to retain your B2B customers and increase your online revenue, don't hesitate to discover VirtualExpo Group , the expert in specialized B2B marketplaces. Our mission is to offer you top-quality advice.
Acquiring new customers requires a considerable investment in both marketing and advertising. This approach, while necessary, does not always guarantee a return on investment. Retaining an existing customer, on the other hand, is clearly more cost-effective. According to the Harvard Business Review , retaining an existing customer can cost up to 25 times less than acquiring a new one . Therefore, implementing effective strategies to retain existing customers can result in considerable savings for your company.
2. The potential for a long-lasting relationship with your current customers
A loyal customer is likely to buy your products repeatedly, demonstrate israel mobile phone number list confidence in your brand and even become an ambassador by recommending your company to their network of contacts, creating a virtuous circle. Such a customer can therefore be a constant source of income and, at the same time, a free means of promoting your brand, boosting its impact on the market.
3. Customer retention as a lever for economic growth
Recurring revenue from existing customers helps stabilize your business and encourages long-term planning. The longer a customer stays with you, the greater their value over time. Plus, a loyal customer is often more willing to try your new products.
4. Gradual increase in the average basket: the advantages of time
A customer who is loyal to you over the long term tends to spend more over time. They develop a sense of trust and preference for your brand that encourages them to make larger purchases. They become familiar with your products, reach a level of comfort with your brand, and naturally tend to increase the quantity of their orders. As they progress through the customer journey, they also feel more ready to try out your new offerings, which increases their average basket and contributes to sustainable revenue growth.
II. Key customer retention indicators
1. Customer retention rate: measurement and interpretation
Customer retention rate is an essential indicator that allows companies to measure the percentage of customers they have retained over a given period, compared to the number of customers they had at the beginning of that period. It is a measure of customer loyalty and a company's ability to retain customers over the long term .
To calculate the customer retention rate, 3 pieces of data are needed: the number of customers at the beginning of the period (I), the number of customers at the end of the period (F) and the number of new customers acquired during the period (A).
The formula for calculating the customer retention rate is as follows:
((FA)/I) x 100 = Customer retention rate
A good customer retention rate can vary considerably depending on the industry, business model, and type of product offered. However, generally, a customer retention rate of 80% or higher is generally considered good for most industries .
In certain highly competitive industries (subscription services, etc.), a retention rate of around 60% may be considered acceptable, while for more stable and mature industries, a retention rate of 90% or higher would be the goal. For B2B companies, a retention rate of 90% or higher is generally recommended. Note: a 100% retention rate is unrealistic and even undesirable, as it means that a company is not trying to attract new customers and risks stagnating.
To develop an effective loyalty strategy, it is essential to regularly monitor the retention rate and understand the factors that influence it.
2. Dropout rate: an indicator to control and minimize
The churn rate (also known as the "churn rate " ) indicates the percentage of customers who stop purchasing or using your product in a given period . A high churn rate can indicate problems with customer satisfaction. To calculate this rate, divide the number of customers lost during a given period by the total number of customers at the beginning of the period, then multiply by 100 to get a percentage.
Formula: (P/I) x 100 = Churn rate
Where:
- I is the total number of customers at the beginning of the period,
- P is the number of customers lost during the period.
Factors such as customer loss during the onboarding phase ( onboarding churn ), customer loss during the contract renewal phase ( renewal churn ) and customer loss due to dissatisfaction ( satisfaction-driven churn ) can influence this index.
3. Understand and calculate the lifetime value of your customers
Customer Lifetime Value ( CLV ) is a key financial indicator used by companies to estimate the total net revenue they can expect to generate from a customer over the life cycle of the relationship .
The calculation formula is as follows:
CLV = (Average basket value x Purchase frequency per period) x Average duration of the customer's relationship with the company
This is an important indicator because it helps to understand how much a company should be willing to spend to acquire a new customer and how much effort it should make to retain its current customers. A customer with a high lifetime value is very valuable to the company because it is a customer who purchases regularly and contributes significantly to the company's revenue. Therefore, a company should make a real effort to retain these high-value customers and increase the CLV of other customers.
III. Action plan to optimize customer retention
1. Impact: Deliver an exceptional customer experience
From the first contact, it is essential to welcome your customers with an effective onboarding strategy. It is vital to give them all the information they need to understand and make the most of your products.
2. Get noticed by optimizing your presence in the marketplace
Offer fast, quality support
Responsive, even proactive, customer service is essential if you want to retain your customers. Respond quickly to their queries and try to resolve their problems as satisfactorily as possible.
Personalize your interactions
Thanks to the data available through the marketplace, you can personalize your communications and capture the attention of your most active customers. That's why you can use the marketplace to carry out highly targeted email campaigns . These types of digital marketing tools can help you maintain regular contact with your customers and provide them with relevant information that meets their needs.
Increase referrals
SEO optimization will attract more customers and improve your visibility in the marketplace. Learn how to juggle SEO tools .
Take care of your product sheets
Clear and detailed product sheets can make the purchasing decision easier for your customers.
Reassure and build trust
Free shipping, fast delivery, free returns, 24-hour support, money-back guarantee and customer reviews are all elements that reassure customers and encourage loyalty.
Build loyalty through your pricing policy
Adequate, competitive and transparent prices are a key factor in retaining customers.
Offer a seamless and secure payment experience
Simple and secure payment solutions offered by well-established B2B marketplaces build customer confidence and are essential to customer retention.
Encourage next purchase
Offer special offers, promotions or complementary products to encourage your customer to make a new purchase.
3. Be proactive: detect any risk of churn as early as possible.
It is essential to closely monitor your customers' feedback and learn from their complaints. Create educational content to help your customers make better use of your products and services, and remove any disincentives to purchase.
CRM specialist Paul Greenberg has brilliantly illustrated the importance of customer retention by stating that “the cost of acquiring a new customer is five to ten times higher than the cost of retaining an existing customer” (source: CRM at the Speed of Light ). Maximizing customer retention is therefore a strategic approach that encompasses a multitude of elements related to the customer experience, from the quality of your products to the effectiveness of your follow-up. It requires constant attention, regular questions and, above all, a genuine willingness to put the customer at the center of your concerns .
Maximizing customer retention on a B2B marketplace is not only an effective strategy to increase your profits, but also a philosophy that values your customers and reinforces the strength and integrity of your organization. It is an expression of your company’s commitment to service, quality, and above all, to the exceptional experience you are determined to offer every customer every time.
If you want to retain your B2B customers and increase your online revenue, don't hesitate to discover VirtualExpo Group , the expert in specialized B2B marketplaces. Our mission is to offer you top-quality advice.