“Dear customer, we’re absolutely delighted you’re onboard. We couldn’t be happier. You’ll hear from us a lot for the next few weeks. And then… you won’t hear anything until a few months before your contract’s up for renewal.”
So goes the typical customer marketing experience in B2B. I exaggerate a little, perhaps, but not wholly – customer lifecycle marketing has played second fiddle to acquisition in B2B for a long time. What focus there is on customers comes in bursts of activity at the very start and very end of the customer lifecycle.
There are signs, though, that this is changing. Recent research from Bain & Company suggests that one of the distinguishing factors in the most successful marketers currently is they put more emphasis on customer marketing.
We’ve recently seen a noticeable shift in many of our clients, to put more emphasis on customer growth and retention. The continued growth of consumption-based models in pretty much every field of technology – and beyond – is also driving a much stronger focus on adoption. We’re seeing many more campaigns now focused on increasing consumption of cloud-based services, for example.
An acquisition message is most successful if it disrupts the status quo bias… But retention and expansion messages both work better if they reinforce it.
This feels a natural fall-out of the pandemic, during which many B2B brands dropped the hard sell in favour of a supportive partnership mentality. As the recession has narrowed our options for growth, building long-term partnerships with existing customers that benefit both parties will remain a focus.
Rather than communicate with customers at the start and end of their relationship, the smart marketers in B2B will adopt a lifecycle approach, with different approaches designed to grow adoption and consumption, to cross and up-sell or to retain and renew.
But there are three hurdles B2B marketers must overcome if they want to get ahead.
1. Customer marketing has a different psychology
Many marketers may start by lifting acquisition content and adapting it for renewal or upsell scenarios. But this won’t be effective. In their book, The Expansion Sale, Erik Peterson and Tim Riesterer argue that renewal, retention and upsell messages are all more effective if they are structured differently from acquisition messages.
Central to their argument is the different psychology a play. In particular, they focus on ‘status quo bias’ – the instinctive preference not to rock the boat and risk significant change. An acquisition message is most successful if it disrupts the status quo bias. Which makes sense – you’ve got to make change feel like the best option. But retention and expansion messages both work better if they reinforce status quo bias, each in subtly different ways.
This somewhat goes against the marketer’s instincts. We tend to rush to the new. Many’s the bid I’ve worked on where the focus is on creating excitement about what’s next – even as the incumbent; perhaps especially so. But Peterson and Riesterer point out that this isn’t in your interests as the incumbent. Rather, you should draw attention to the investments already made in building the relationship to this point and to the risk of change. Reinforce the status quo bias before building the vision of the future and you’ll get better results.
2. Making the case for a flatter curve
A lifecycle approach is effective because, in the parlance of our times, you ‘flatten the curve’. Rather than intensive investment at the start and end of a contract, you spread investment more evenly throughout, maintain higher satisfaction and have strong renewal and customer growth. So the theory goes.
But that’s not an easy argument to make in quarterly-driven businesses facing short-term pressures. One client I spoke to recently has been advocating a lifecycle approach in their business for over a decade and still passionately believes in its efficacy. But they don’t believe it will ever be fully invested in because of the long pay off and the pressure of quarterly targets.
This is a thorny problem. A new lead with a new logo will always have an immediacy that a long-term communication plan to grow a customer over two or three years won’t. But perhaps analytics can help here. If regression analysis can show, for example, higher levels of engagement throughout the lifecycle, or more consistent NPS scores and higher customer lifetime value, then all we need to demonstrate is that we can positively influence the leading indicators and trust we will reap the rewards for many quarters to come.
3. Overcoming diffuse ownership
Co-ordinating messages at each stage of the lifecycle isn’t straightforward, particularly in larger B2B firms. Ownership tends to be spread across numerous teams. Whereas acquisition is more straightforwardly a sales and marketing problem, customer communications tend to move through different teams at different stages, often without any being aware of the full customer journey.
One way we’ve recently overcome these challenges is to run a short sharp design sprint week, including all the different stakeholder teams in an intensive development process that breaks through what can otherwise be time-consuming inertia.
It’s our belief that those B2B marketers that tackle these challenges now and develop a lifecycle approach to customer communications will steal a march, and reap the benefits of better retention and growing customers.
David van Schaick is CMO of The Marketing Practice.