Jumping on one of my favourite topics here again – the “old” vs “new” way of looking at the sales funnel. In its classic form it finishes with the “Deal” (or a similar equivalent) stage. We made a deal, we can get paid, happy days! Where the new school of looking at the sales funnel includes a crucial “Loyalty” stage, highlighting that the sales process has not ended yet. If anything, it just began.
Unfortunately, in the world of sales and marketing, much emphasis is placed on the early stages of the customer journey – attracting attention, generating leads, and converting prospects into paying customers. This focus typically aligns with the traditional sales funnel model, which guides businesses through these initial steps but forgets about the importance of looking after your hard-won customers.
First of all, think about the length of your sales cycle. How long does it take for a prospect to even realise that they have a challenge (that your product or service can resolve) to the point you get that desired signature on the contract? For the sake of the argument, let’s say it’s 10 months if you operate in the B2B sector. Now think about how much sales and marketing effort went into pushing that prospect through every stage of the buyer journey. Think about the associated cost of that - your customer acquisition cost. Some of that cost is obvious, such as labour or advertising, whereas others are less obvious, such as your systems or other running costs of the business. You will not automatically associate your customer acquisition costs with your energy bill, but you can hopefully see how one links with the other. So it takes you approximately 10 months and thousands of pounds to convert a lead from Awareness to that glowing Deal stage. Phew, expensive but done and dusted!
At that point, you take your foot off the gas and switch your focus to the next shiny prospect. But here comes that customer’s yearly renewal. They have not heard from you in a year, except for occasional marketing upselling emails or occasional support interactions. And let’s say the marketing emails were well-written and the support team very friendly. Let’s also say that the customer was okay with a product or service received. Did they receive a great customer experience that year? No, mediocre at best. However, in today's saturated marketplace, where consumers have abundant choices, offering superior products or services alone may not be enough to stand out. This is where the importance of a great customer experience plays out. How much would it have cost you to elevate that experience, considering that you would not have to push them through the whole buyer journey again? The answer is - a fracture of the customer acquisition cost. Yet, that contributes to your recurring revenue. Think about the difference in cost of sale for both new and existing customers. On top of that, 86% of buyers are willing to pay more for a great customer experience, increasing your chances for higher recurring revenue.
Now imagine that customer with a mediocre experience reviews their options again, which in reality would happen at least every time their contract with you is up for renewal. What if your competitor offers a similar solution to their challenge but can top it up with a great experience? What if instead, you could cultivate their loyalty by providing them with not only a worth-paying-for product but also make them feel special and well-looked after? How would the chances of them moving to your competitor would change? According to PwC, 1 in 3 customers will leave a brand they love after just one bad experience, while 92% would completely abandon a company after two or three negative interactions. Companies that excel in growing customer loyalty gain a competitive edge by differentiating themselves based on the quality of their relationships and the level of personalised attention they provide. In an age where customer experience reigns supreme, prioritising loyalty can set you far apart from your competitors. On average, companies that put in the work to improve the customer experience see a 42% improvement in customer retention, a 33% improvement in customer satisfaction, and a 32% increase in cross-selling and up-selling.
Now imagine that you cracked that Loyalty stage with amazing customer experience enhancement strategies. How many more people would hear about one customer’s great experience with you? The answer is 6, on average. That is 6 more potential customers for you from one happy customer. Think about your revenue streams coming from referrals, how high is the percentage? Imagine you could triple that (let’s say your overall conversion from Interest to Deal is roughly 50%) and what impact that would have on your revenue? Now imagine you can grow that revenue every year, with every new customer won. Loyal customers are not only more likely to make repeat purchases with you, but they also tend to spend more over time. By upselling and cross-selling relevant products or services to existing customers, you can increase your average order value and drive incremental revenue without incurring additional sales and marketing costs that would occur for new customer acquisition. Furthermore, loyal customers are less price-sensitive and more willing to pay a premium for products or services they trust.
Last but not least, customers who are loyal and invested in your brand are more likely to help you grow by sharing their feedback and insights that can inform product development, service enhancements, and overall business strategies. By listening to your loyal customers or even brand advocates, you can better and quicker identify areas for improvement, address pain points, and innovate to better meet your customer needs. This continuous feedback loop fosters a culture of customer-centricity and ensures that your brand remains relevant and responsive in today’s ever-evolving and highly competitive market. I love this stat from Accenture: companies that view customer service as a value centre — as opposed to a cost centre — see 3.5x revenue growth. Yummy!
So just to recap, here are the reasons you should pay much more attention to the Loyalty stage:
1. Reliable recurring revenue
2. Higher growth
3. Better brand advocacy
4. Competitive advantage
5. Innovative culture.
Give your customers love, both they and you deserve it.