Revenue Retention and the Role of Marketing

In last week’s blog “How to Set Goals for a Customer Acquisition Strategy“, I explain how high-performing marketers quantify their contribution to revenue growth. This week, we’re looking at how growth marketing contributes to revenue goals through customer retention.

Revenue Retention and Customer Service

Earlier this year, HubSpot put out a comprehensive resource report that outlines the importance of focusing on current customers. Over the last five years, the cost of new customer acquisition has increased more than 50% according to the report, “The Hard Truth about Acquisition Costs (and How Customers Can Save You)”.

We’ve all heard that it costs less to generate revenue from an existing customer base than from new customer acquisition – but how does one go about that, and what’s Marketing’s role in it?

The ultimate goal is to maximize Customer Lifetime Value (CLV), through re-orders, cross-selling, and add-on products and services. Marketing typically contributes 10 – 20% of existing customer revenue, but it varies by industry, market maturity and other factors, according to the Sales Benchmark Index (SBI). Marketing’s contribution to this revenue stream might be lower because Sales, Customer Service and/or Customer Success may play a bigger role in actively discussing customer needs and cultivating the relationship at regular touchpoints throughout the year.

But that doesn’t mean that Marketing has no role in or responsibility for customer expansion. In fact, the department plays a very big part.

Marketing should be keeping a close eye on customer engagement:

• What content are customers consuming? Are customers reading ‘How To’ and ‘New Product Guides’?
• Are they responding to loyalty and cross-sell offers?
• How often are they contacting Customer Service? Are there ways to create content that helps address frequently asked questions and pain points?

Revenue Retention and Account Based Marketing

Marketing can also partner with Sales to collaborate on Account Based Marketing (ABM)/Account Based Sales (ABS) programs targeting key accounts.

In this customer-centric strategy, sales and marketing collaborate on developing and deepening relationships with accounts that have been identified as the most critical. Bigger B2B firms focused on large deals with long-term sales cycles are increasingly adding ABM strategies to their marketing plans.

ABM brings sales and marketing teams even closer together – harnessing both teams’ strengths to land the company’s hottest prospects and cross-sell or expand the relationship with the highest potential customers.

In ABM, marketers align their strategies and work with the sales team – which is why it can yield big results. Instead of producing content to reach as many prospects as possible, marketers use content to build stronger and deeper relationships with specific target accounts and qualify new leads by targeting “lookalike” companies that have many of the same attributes as your sales team’s target accounts.

Reoccurring Strategies and Revenue Retention

Many businesses track a separate revenue stream for their predictable, recurring revenue – including annual maintenance fees, contract renewals and subscriptions. Often referred to as MRR (Monthly Recurring Revenue), it is considered “easy” revenue, because as long as the customer is happy, they don’t think about canceling. Think about the Netflix/Hulu model. As acquisition costs increase across all industries, more companies want to increase the percent of revenue from MRR to improve predictability of projections (Interested in learning more about MRR? Visit the SaaSMetrics site.).

What role can Marketing play in driving revenue retention? It’s another opportunity for marketers to reconsider their role in revenue growth – it’s not always about client retention.

As MRR becomes more critical to companies, leading marketers are focusing more on the role they can play in customer satisfaction. Often overlooked once a new customer is secured, focusing on and optimizing every customer touchpoint engages clients and keeps them satisfied throughout the year. Those areas can include:

• Customer nurture programs
• Contract auto-renewal process
• Special offers
• Last chance/sorry to see you go notices

Often these touchpoints are managed by someone, but fulfillment or operations don’t think about the implications on the customer experience. Start by finding the owner of these touchpoints and offer to audit/measure their impact.

If you’re not already doing it, measure renewal rates based on engagement with those touchpoints. When clients are unresponsive and possibly in danger of churning, use your marketing automation software (or manual processes) to notify Sales and/or Customer Service.

Marketing’s Contribution to Revenue Retention

Over the last year, we’ve met with many executives at organizations across the board who are losing patience with marketing teams that are not contributing to revenue growth. When you add up customer acquisition, expansion and recurring revenue, Marketing could be bringing in more than 50% of the annual revenue goal. If you want to learn more about the role marketing plays in reaching your organization’s most important goals, check out our other resources on how growth marketing can transform your business:

Information Source:
SaaS Metrics: Monthly Recurring Revenue MRR – What is it? How to Calculate it?