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Looking after existing customers pays off, because you have already convinced them. Upselling and cross-selling often cost you less than acquiring new customers. But what can you do to build long-term customer relationships that last? In this article we show how to calculate customer loyalty in B2B and which measures help.
The retention rate as a key metric
It often takes a long time for a new lead to become a customer, especially in B2B. Sales cycles are longer and products need more explanation. With new contacts, you do not yet benefit from accumulated trust or the experience of successful collaboration. That makes winning new customers much harder. It is easier to retain customers who are already convinced and turn them into regular customers. After all, they already know your offer.
The decisive term is customer retention. The aim of this approach is to improve customer satisfaction with a range of methods. That way you prevent once-satisfied customers from leaving and undermining the success of your marketing strategies.
How to calculate B2B customer loyalty
You do not determine customer loyalty, or customer retention, by gut feeling. At least not if you really want to know where you stand and whether your measures are bearing fruit.
The customer retention rate shows you how many existing customers you keep in the long term, in direct relation to new customers.
Customer loyalty can be calculated with the following formula:
Retention rate = ((CE − CN) / CS) × 100
Here CE stands for the customers remaining at the end of the period, CN for new customers and CS for the number of all customers at the start of the period.
Let us assume you had 230 active customers at the start of the year. At the end of the year there are 240, of which 50 joined as new customers during the period.
((240 − 50) / 230) × 100 = 82.6
In this specific example, you would have kept 82.6 per cent of your customers. For context: in a realistic scenario this value would be excellent. What matters most is that the loss of existing customers is offset by new customers at the same time. In line with your growth goals, you should always work on increasing the total number of customers.
How can customer loyalty be improved?
If your retention rate turns out lower than hoped, you can counter it with various measures. Even though you should of course not lose sight of new customer acquisition: the more customers you retain in the long term, the less you depend on new customers who are hard to win.
These reasons speak for better management of existing customers:
- You have data on every customer and therefore know their needs and interests
- Trust thanks to past purchases
- Greater willingness to rely on recommendations
- Word of mouth is one of the most important sources of new customers, so delight your customers so they recommend you
- Looking after customers usually costs less than acquiring new ones
- Only with a stable customer base do you grow revenue in the long term
Together with your marketing team, pay close attention to why former customers do not order from you again.
These measures protect you against regular customers leaving and increase B2B customer loyalty:
- Customer feedback
- Good customer service
- An education programme
- Building trust through loyalty programmes
- Visionary inspiration
- Personalisation
- Community building
Customer feedback
You cannot improve something if you do not know it needs improving. So it is important to know what your customers think of your service or product. Ask them for feedback specifically. The most efficient way is to set up a process for collecting customer feedback and passing it on to the right place.
There are various ways to collect customer feedback, for example surveys or user tests.
Good customer service
Good customer service is essential for B2B companies, especially because products often need explaining and the investments are not small.
With competent customer service you give your B2B customers security and win their trust by taking their problems seriously and helping them.
Make sure your B2B customers can reach you both by email and by phone.
Education programme
The more customers know about your industry, the better they can judge what you deliver. With an education programme you give your customers relevant content from your industry. A blog and video tutorials are ideal for this. Customers can then learn at their own level. Your advantage? You position yourself as an industry expert and win your contacts' trust.
Building trust through loyalty programmes
You do not win your customers' trust through high-quality content alone. Surprises such as extra discounts, limited offers or bonus programmes also help with customer loyalty. Your customers feel valued and special, and are happy to recommend you.
Visionary inspiration
Whatever you think of Elon Musk, one thing cannot be denied: he has visions. Whether more environmentally friendly self-driving cars or life on Mars, one gets the impression that radically changing the status quo matters more to him than financial success.
Of course, you do not need a vision of changing the world with your offer. But do communicate your overarching goal. Environmental topics in particular have grown strongly in recent years. It is not only B2C customers who focus on the altruistic and ecological effects of their investments.
Personalisation
Customers want to be addressed personally, not as an arbitrary number. If you collect the right data and keep it up to date, marketing automation lets you implement personalisation fairly easily and efficiently. How far this can go is covered in our article on hyper-personalisation in B2B marketing.
Community building
An active community offers your customers great value. They can exchange ideas and help each other with problems. Whether you do this through your own forum on your website or, for example, a LinkedIn group is secondary. A community also has a big advantage for you: you know exactly where the shoe pinches, what the most common questions are and what moves your customers. You can use that and turn it straight into valuable content.
Conclusion: it is not (only) about the number of new customers
New customers are important for your business to grow. But you should not neglect your existing customers, because they offer great potential: you have already convinced them of your offer. You can use this head start in trust and turn them into regular customers. In the customer's eyes, that makes you a much better partner whose products can always be relied upon. How marketing automation supports this is shown in marketing automation for lead generation and existing customers.
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