5 Stats That Show The Power Of Marketing To Your Existing Customers

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As marketers, we’re always out there looking for more.

We want more traffic, more email addresses, more social followers, more podcast downloads, more press and more channels to test. And our intentions are good — we we want more so we can help our businesses grow faster.

Cat Looking For Leads

But often times, the key to growth is right in front of us: marketing to our existing customers.

At Driftt, we call this relationship marketing, and with more businesses making the shift to subscription-based revenue models — which means they need to earn a customer’s business on a recurring basis — relationship marketing is becoming more important than ever before.

Here are four stats that help show the power of marketing to your existing customers.

1. Zappos is trying to increase their support volume. Tweet: Why Zappos wants more customers calling support http://ctt.ec/1O6Xs+ via @drifttHQ

For most companies, support volume is a key metric, and they are looking for it to go down.

Zappos, on the other hand, isn’t most companies. The Las Vegas based online retailer has found that customers who interact with support are 5-6x more valuable. As a result, Zappos is finding ways to get customers interacting with their support team on a more frequent basis.

Is all of the extra effort to talk to customers worth it? You be the judge. With only 2,000 employees, they typically produce in excess of $2 billion in revenues annually.

2. The cost of a renewal is 11% of the cost to acquire a new customer. Tweet: .@bostonvc's survey of 305 SaaS companies http://ctt.ec/3kDbU+ via @DrifttHQ

For four years, David Skok has been running a survey of SaaS companies with Pacific Crest that provides data and key metrics on the growth and operations of this space. This year, they received receieved responses from 305 SaaS companies and some data on the cost of customer acquisition (CAC) vs. upsells vs. renewals.

Skok and Pacific Crest found that compared to CAC, renewals were just $0.13, or 11% of the CAC to acquire each new customer dollar.

It pays to keep your existing customers happy. Customer success can have a significant impact on the cost of customer acquisition.

3. A five percent increase in customer retention can increase a company’s profitability by 75 percent. Tweet: 5% increase in customer retention can increase a company’s profitability by 75% http://ctt.ec/GJd2H+ via @forbes @drifttHQ

According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%.

This stat and the next one really hammer home how important it is for SaaS companies to make sure their customers are successful from day one.

4. Improving retention or monetization has 2-4x the impact of acquisition on growth. Tweet: Improving retention or monetization has 2-4x the impact of acquisition on growth http://ctt.ec/q6x70+ via @priceintel @drifttHQ

In a study of 512 SaaS companies, Patrick Campbell at Price Intelligently found that improving retention had a 6.71% impact on a company’s bottom line — compared to improving acqusition, which had a 3.32% impact.

Too often the only part of growth we care about is acquisition, when in reality, the bigger impact is made further down the funnel.

5. If a typical SaaS business loses about 2 to 3% of their customers each month to churn, the business must grow by at least 27% to 43% annually to maintain the same revenue. Tweet: Why Customer Success Is An Essential Part Of Every SaaS Startup http://ctt.ec/kaUu4+ via @ttunguz @drifttHQ

If you’re losing 2-3% of your customer base each month, then you need to grow by at least 27% to 47% each year just in order to maintain that same revenue.

“Think of it like you are filling the bucket and the bucket isn’t leaking at the bottom.” That’s what Redpoint Ventures VC Tom Tunguz said in this interview. “[Churn] also tells you a lot of other things about the business, like there’s really good product/market fit, the users really value the product, and you’re creating a sustainable and defensible business.”

Too many companies get so focused on hyper-growth that they forget about churn.

They get locked in on the top of the funnel and acquiring new customers — but the reality is that it’s very hard to grow fast if you’re constantly trying to fill a leaky bucket.

How are you marketing to your existing customers?

 

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