It costs five times more to acquire a new customer compared to retaining and upselling an existing one.
Your existing customer base is your best path toward driving more efficient revenue growth.
While CFOs aren’t in the trenches every day with customers, they can work with the revenue team to set revenue goals and budgets that reflect the importance of existing customers.
The Benefits of Strong Customer Relationships
Here are a few areas where strong customer relationships lead to measurable results — and how you can push your teams to strive for those goals.
Strong Brand Identity and Word-of-Mouth
Top-line benefit: Companies with strong word-of-mouth networks have 71% higher conversion rates.
The best form of marketing or selling is what your customers say about you. Buyers are much more likely to trust a recommendation from a peer than a traditional campaign.
How it’s done: CFOs need to strive for an organizational culture that prioritizes the needs of the customer. The companies with the strongest brand identities and referral programs give their customers exactly what they want. They listen to their needs and even anticipate them.
Top-line benefit: Existing customers are 50% more likely to buy more products/services.
The best target for your products and services? Accounts that are already seeing value from you. Happy customers buy more stuff. The more your GTM motion seeks out upsell and cross-sell opportunities, the more profit you’ll drive. You’re 70% more likely to close a cross-sell opportunity than win a new deal.
How it’s done: CFOs should encourage aggressive goals for upselling and cross-selling. Your company’s sales pipeline should reflect the reality that it’s much easier — and more cost effective — to sell to your customers than acquire new ones. Push your teams to identify these opportunities and close them.
Less Churn and More Lifetime Value
Top-line benefit: A 5% increase in customer retention leads to 25% more earnings.
Maybe the biggest benefit of keeping customers happy is that it directly correlates to revenue. The happier you keep them, the more likely they are to stay customers and become recurring revenue sources. Finding an opportunity to decrease churn even a small amount can have an outsize effect on your targets.
How it’s done: Challenge your GTM teams to treat existing customers like prospects. Give them that winning personalized experience that’ll keep them happy and coming back. Benchmark your churn rate against industry averages — and shoot for lower targets.
If you’re looking for ways to maximize revenue growth while managing a lean budget, customer retention and customer upsells are a powerful tool. Work with your marketing, customer success, and sales teams to emphasize this opportunity and put benchmarks in place.
Many of your customers may be able to benefit from additional services you offer, and you can use your trusted relationship to earn more business. Some customers may be underutilizing the services they’re already paying for. By increasing the value they get from the tools, your customer success team can drive retention and, in some cases, license growth.
Both strategies will enhance customer lifetime value, help build annual recurring revenue, and set the stage for sustained growth.