From conversations with our network, we know a lot of UK IT solutions businesses are finding the market more competitive than ever right now.
There are several reasons for this. Many businesses in our space have similar propositions, which makes it harder for them to stand out from the crowd.
What’s more, challenging economic conditions are driving companies across multiple industries to cut costs, with much of this business heading overseas. Over the next two years, one-third of UK businesses predict they’ll outsource more of their IT services.
These, and countless other factors, add up to one thing: customer churn.
Churn – also known as customer attrition, customer turnover, and customer defection – is a major issue for any business, because it costs five times more to attract a new customer than to retain an existing one.
So what can UK IT solutions businesses do to retain more of their customers?
Identify New Opportunities Within Existing Accounts
“Upselling” is often a synonym for “squeezing every last penny from your customers”.
But it shouldn’t be about making as much money as possible from your accounts before they cancel. Instead, it should be about identifying new opportunities within those accounts; opportunities that will genuinely benefit and add value for your customers.
Sure, one advantage of doing this is increasing your average revenue per user. But more importantly, it’s one of the most effective retention tactics you can employ, because the more of your products or services a customer uses, the “stickier” (i.e. harder to cancel) you become.
It’s the same reason your broadband provider is desperate for you to get your landline and television service from them, too. It’s pretty simple to move to a new broadband deal; it’s a lot trickier when you have to untangle your phone and TV package at the same time.
The numbers are striking. Selling one product to a small or medium-sized business has a retention rate of just 30% after two years. Add a second product and the retention rate increases by nearly 20%. Sell four products and the retention rate climbs to 80%.
When it comes to finding upsell opportunities, it pays to start early. In fact, upselling has the biggest impact on customer lifetime value when it happens three months after an account first comes onboard. Strikingly, 62% of clients that aren’t upsold within those first three months go on to churn within two years.
ECS Resource Group are here to help you maximise the value of your existing accounts. Our Resource-as-a-Service solution is designed to unlock the untapped potential within your end user accounts. We work with you to identify those opportunities, support your bid, mitigate risk and manage the talent you need to fulfil the project.
Keep Customers Engaged With Your Brand
Everyone wants more customers who are fully engaged with their brand. Two-thirds of marketers believe customer engagement correlates with:
- More customer renewals
- More repeat business
- Higher retention
It stands to reason that if your customers feel compelled to keep coming back to you and understand the day-to-day value of the work that you do – perhaps to the extent that they make you a key part of their workflow – then they’re less likely to leave.
So how do you do it?
A good starting point is to create a library of content that describes the specific benefits of your service. Additionally, you should aim to keep customers updated on developments within your business, such as announcing new deals or additional services you’ve introduced.
Ideally, you should utilise a range of communication channels for customer engagement. Research suggests that email marketing is the most efficient way for B2B companies to reach and engage existing customers, but testing multiple platforms and approaches will help you find what works best.
Educate Customers On What You Actually Do
You’re the IT experts; that’s why you have customers in the first place. But counterintuitively, that expertise could actually be a barrier to retaining customers.
If your customers are lacking in technical knowledge – especially at board level – then it becomes all too easy for them to dismiss or devalue the important work you carry out.
Creating high-quality educational and supporting content can help you combat this issue. Experiment with a range of tactics – free training, video tutorials, webinars – to help you understand the best ways to keep customers informed about your services and skills.
And don’t just front-load your customer education activities. Of course, it’s important that new accounts are given all the information they need about what you do and how you do it. But that doesn’t mean you can afford to ignore your existing customers. Even your longest-standing accounts will benefit from the occasional refresher about the value you provide.
Identify High-Risk Accounts
However good you are at what you do, you will always have a group of accounts that are more likely to leave than others.
Clearly, it’s in your best interests to identify those accounts. In fact, it’s one of the most popular tactics that B2B companies use to combat churn.
Any number of factors could indicate that an account is at risk of churning, and the specifics may vary from business to business. But in general, common indicators include:
- A very low level of contact
- An unusually high level of contact
- Regularly questioning your approach
- Asking for a quote or price list
- A change of contact
- New personnel at board level
- An approaching contract renewal date
To gain a better understanding of what really matters to your customers, get into the habit of seeking feedback from accounts that cancel.
Once you know the specific actions – or inactions – that persuaded previous customers to churn, you’ll be in a better position to predict if a current account is heading in the same direction. Hopefully, next time you’ll be able to do something about it.
Incentivise At-Risk Accounts
Following on from the last point, when you understand which of your accounts are at greatest risk of churning, you may want to consider giving them an incentive to stay with you.
Evidence suggests that testing a variety of discount offers at the point of cancellation can benefit B2B retention, with 51% of businesses citing it is an effective tactic.
However, this approach has its own risks attached. There’s a fine line between a retention package that suits both parties, and one that leaves the service provider struggling to break even. If you’re already finding it tough to meet the expectations of a challenging customer, reducing your margins won’t make things any easier. And if that customer is still unhappy, slashing their fees won’t persuade them to stick around forever.
In other words: don’t waste valuable resource on customers who aren’t likely to bring in substantial revenue over an extended period. Sometimes, it’s better to cut the cord and move on.
At ECS Resource Group, we specialise in helping IT solutions businesses unlock the untapped potential within their existing accounts, generating greater revenue and building loyalty among end users. Get in touch to see how we can help you.