Customer Driven Growth in B2B: 4 Strategies for Retention and Expansion [With $ ROI Example]
How much of your B2B business growth comes from long-time clients vs. new logos?
It seems intuitive that more revenue would come from existing accounts considering that they’ve doing business with your brand over a longer period of time.
But, did you know that investing in healthy customer relationships is also more profitable. According to Corporate Visions, existing customers represent 70 to 80% of your B2B company’s revenue and profits.
Despite the financial benefits, most companies still spend only 10% of their sales and marketing budgets on retention and expansion.
At Bevelroom Consulting, we believe a smart B2B growth strategy should commit just as much energy and investment on keeping happy customers as it does to acquiring them – in some cases, even more. It is a key part of a customer-centric approach to business that is a source of significant competitive advantage.
Here, we explore four ways you can invest in customer driven growth, by focusing on maximizing client relationships, and how this produces solid business value. To provide further inspiration, we share an example ROI calculation for one of these strategies.
So, let’s get started!
Why Invest in Existing Customer Relationships?
Customer retention and account expansion goes beyond transactional exchanges. It means adopting a mix of activities across the entire revenue cycle that foster stronger relationships.
It starts with understanding your ideal clients’ needs and journeys.
The more you know about your customers, the better you can attract the right fit customers, deliver awesome experiences and build lasting, profitable relationships. We call this ‘Customer IQ’.
Read more:
Knowing your customers well is just the first part. Relationship strengthening also involves consistent delivery of high-quality services, and continually adding value to keep these clients engaged, across each and every interaction.
Customer retention strategies can create significant business value
Retention offers cost advantages.
It’s widely acknowledged that retaining an existing customer is less costly than acquiring a new one. Some estimates suggest that depending on the industry you are in, acquiring a new customer can cost 5 to 7 times more than retaining an existing one.
Loyal customers have higher LTV.
There’s also a long-term financial boost since loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering., according to a Microsoft study.
Improving retention combats churn.
Just about any company will have to contend with customer turnover. According to CustomerGuage, B2B companies lose 23% of customers a year on average. It makes sense to minimize attrition since it’s financially beneficial compared to acquisition, in general.
Existing customers stabilize revenue streams.
Existing clients can provide a stable, and potentially higher quality revenue stream. This is certainly the case with satisfied accounts.
Cross-sell and up-sell potential.
Established relationships provide opportunities to offer additional services or premium versions of existing ones. During downturns, maximizing revenue from existing clients becomes even more crucial.
Happy customers sell on your behalf.
Satisfied customers can act as advocates, offering word-of-mouth referrals, which can be invaluable, especially when traditional sales efforts might be struggling.
The benefits of customer retention are amplified in a down economy
In a down economy, buyers are more selective, more stringent, have less resources, being asked to do more with less. Even in a good market, it’s hard to do cold outreach. In a down market, it’s even harder to get buyer’s attention. So, acquisition is harder.
Edelman recently published a B2B Thought Leadership Impact Study the latest report found that most B2B companies were entering 2023 expecting an economic downturn and tightening their spending. When the economy is down, decisions go up.
Focusing on retention also offers a better ROI, especially when you and your customers are forced to cut back in economic downturns. In uncertain times, having a base of loyal clients can help mitigate risks associated with revenue fluctuations.
Your B2B customers have high expectations
B2B deals are usually high stakes for your client’s business, with large sums of money on the line. These deals commonly have to compete with other investments, so your clients expect a fair return to compensate for time spent and the risks of change.
Expected returns don’t stop at the value of a contract. B2B services/products can be integral to a client’s operations and often have a direct impact to reputations and bottom lines. Buyers want assurance that they’re making the right decisions for the business and their career by partnering with providers they can trust. Buyers must convince a large group of stakeholders that they’re all making the right decision.
Because of this, buyers are exerting more scrutiny than ever to justify their choices to senior management and boards.
Read more:
It’s Time for a More Customer-Centric Approach in B2B Services
Loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering.
4 Strategies for B2B Customer Retention and Expansion
Now, we dive into four strategies for customer driven growth. All of these are focused on maximizing client relationships, retention, loyalty and expansion. That said, each can be adopted individually, and some businesses may see outsized benefit from some compared to others, depending on current capabilities.
Strategy #1: Launch Value-Added Service Offerings
Beyond the primary service offering, B2B service providers should look for ways to offer additional value. Value-added services refer to additional features, capabilities, or enhancements that enhance the value proposition either as add-ons or without additional fees.
The value-added services strategy not only helps in enhancing the core offering but also deepens the relationship, making it more multifaceted and durable.
Here some of the biggest benefits we see in delivering value-added services:
- Increased customer loyalty: Offering more without significantly raising the cost can make customers feel they’re getting more bang for their buck.
- Competitive differentiation: In a saturated market, value-added services can set a brand apart.
- Revenue boost: While some value-added services can be complimentary, others can open new revenue streams.
- Longer customer life-cycle: Enhanced services can prolong the client’s engagement, leading to prolonged contracts or repeated business.
Implementation of value-added services requires a balanced approach in terms of cost and scalability but can have a profound impact on customer retention and satisfaction.
What a value-added service might look like in your business
You can probably envision a wide range of value-added offerings relevant to your business model and what your clients would appreciate. Here are some examples to get started.
- Training and workshops: In addition to self-serve help resources, you might consider offering complimentary educational resources to boost adoption and give customers new ideas to benefit their business more broadly. Organize webinars and workshops to train clients on best practices or underutilized features.
- Dedicated client service / support: Providing a dedicated account manager or support agent can expedite problem-solving and enhance the customer experience. Some businesses might consider offering this as part of a premium tier service.
- Advanced analytics and reporting: Offering in-depth, custom analytics can give clients better insight into their own operations. Tailor reports to individual client needs, highlighting metrics crucial to their business.
- Integration capabilities: Offering easy integration with other tools or platforms can save client time and resources during setup and ongoing use.
- Early access to new features: Allow clients to test new features or products, giving them a sense of exclusivity.
- Convenience features. These might include virtual and in-person meeting and communication options, convenient locations and travel, free shipping and reimbursement assistance.
- Continual feedback and satisfaction measurement. Most clients appreciate having the option to provide feedback. Project closeouts and satisfaction surveys not only provides valuable data but also makes customers feel involved and valued. And you’ll likely uncover areas for improvement and growth opportunities that benefit all customers.
- Personalized, customized delivery. Offering a tailored service experience is always advantageous if feasible given your business model. Start by looking for easy ways to personalize ‘moments of truth’ in the sales process. You can find these by talking to customers and understanding their journeys.
Strategy #2: Continually Demonstrate Value
It should be no surprise that in B2B services, sales cycles are long and deal values can vary widely. Because of this, repeat business is hard to predict. One way to make your revenue streams more reliable is by delivering continuous value throughout the entire engagement and client lifecycle.
For instance, the entire commercial team should be asking themselves these questions;
- What can we do to deepen this relationship?
- Do we know all we can to understand the client’s business?
- How can we make the client more successful?
- How can we remove risk for them and us?
Read more:
A Customer-Centric Approach to Building an Ideal Customer Profile (ICP)
B2B client retention in the face of high expectations requires a systematic, proactive, and transparent approach to asking these questions, and then acting on the answers. By making value demonstration a core tenet of the relationship, B2B service providers can not only retain but also strengthen their client relationships over time.
Here are some examples of continual value delivery.
Value Affirmation: Help buyers affirm the value for themselves.
Sometimes, the value that you convey isn’t fully realized by customers because of adoption roadblocks, regulations or other factors. While these value inhibitors are largely out of your control, you can help the client affirm continuous value delivered.
Ultimately, you want clients to have undoubted confidence in their purchase and choice of your offering, in context of their situation and challenges. So, always have value affirmation proof points ready to communicate in progress reports. Document results using relevant KPIs to highlight points of progress. Hold regular relationship reviews and conclude them with clear action points and timelines to address any issues. Review prior decision points to validate the merits of their decision to choose you.
A few other recommendations:
- Automated reporting: Utilize tools that automate and customize reporting for added client convenience and adoption.
- Visual representation: Use charts, graphs, and infographics for easy comprehension and to make a greater impact.
- Performance metrics and KPIs: Work with clients to select the most relevant KPIs that demonstrate the tangible value you’re delivering.
- Benchmarking: Compare performance against industry standards or competitors to highlight the relative value you provide.
- Transparent communication: Keeping an open channel ensures that clients are continuously informed and can voice concerns or needs promptly.
- Feedback and issue management: There will always be issues and mistakes in work delivery and account relations. The key is to take action on issues as soon as they happen for swift damage control. Over time, analyzing feedback trends helps to spotlight areas for improvement.
Strategy #3: Use CRM to Strengthen Relationships
CRM isn’t just a tool for collecting leads and managing customer information.
CRM really should be thought of a business strategy; a combined strategic commitment, process and tools used to maximize the profitability and positive experience of your client relationships across their entire journey and sales process.
Thought of in this way, CRM can be used to significantly boost your ability to deliver continuous value. Here are some ways to do this.
Continually gather customer intelligence
One of the best ways to strengthen relationships is to assume that you’re still trying to win their business. In other words, treat existing clients as if they are prospects. CRM systems makes it a lot easier to do this since they are full of data gathered from touchpoints and transactions such as sales calls, emails, website usage, and chat sessions, and buying patterns. This vast intelligence is rarely used to its full potential.
With this data readily available in a dashboard and downloadable reports, it becomes easy to analyze all of these moments for patterns that lead to everything from pipeline forecasting to next best actions and offers for upsell, to heading off issues that put accounts at risk.
Use these features found in most leading CRM tools today:
- Real-time data visualization: Highlight trends and quickly answer questions about pipeline, territories and account health.
- Predictive analytics: Forecast intent, pipelines, market opportunities, and proactively address potential issues.
- Sales interaction tracking: Keep a log of important details and enhance accountability with a transparent record.
- Automated follow-ups: Automated reminders help the account team with follow up at appropriate intervals to keep deals and work moving, while making clients feel more attended to.
- Feedback collection and analysis: Integrate feedback tools within the CRM to collect, store, and analyze feedback all in one place.
Read more:
A Guide to CRM + Marketing Automation for B2B Small Business
Tailored client experiences
When most businesses think of personalization, email marketing typically come to mind. While it may not be feasible to customize your solutions to individual accounts, there are plenty of opportunities to inject personalization into the sales process and service experience. Personalized relationship management acknowledges the customer’s context, including previous interactions and issues, and factors in the varying priorities of a set of decision makers in the buying process.
For instance, consider using CRM powered personalization to enhance business reviews. With a little extra pre-work, you can present data, interaction histories, and more to collaboratively discuss the relationship’s trajectory and better affirm value delivery. This approach also ensures that conversations are more relevant and grounded in real data, leading to more objective and productive next steps.
Another tool that helps here are digital sales rooms. Integrated with your CRM, digital sales rooms help deliver continually personalized solution content, decision aids and incentives tailored to each buying stage and individuals in each client team. Seamless integration with CRM functionality connects experiences with workflows so users can tap into these features from within the CRM interface.
Strategy #4: Focus on Generating More Referrals
Referral programs are our favorite customer growth strategy because it really hits on everything else. First, referred business is a natural result of happy clients, so they serve as evidence of a healthy client base.
Second, the cost associated with a referral program (like incentives or rewards) is often lower than the cost of acquiring similar business through standard methods. Additionally, referrals often close faster and result in higher value deals.
Third, referrals can boost retention rates. When clients refer others, they are psychologically reinforcing their own decision to use and continue with your client’s services.
Despite all of these benefits, many businesses don’t invest enough in making referrals a key component of their growth strategy. This presents an opportunity: since most of your competitors aren’t pursuing referrals with intent, you will have a unique advantage when you do.
Your competitors might avoid referrals because they don’t want to ask clients, or don’t want to pay for referrals. However, neither of these actions are required to generate referrals. Instead, focus on delivering higher than expected value for clients so they feel naturally motivated on their own to serve as references and feed your pipeline with all the referrals you’ll need.
The seeds for referral are planted long before the referral actually happens, — before a customer becomes a customer. They are fueled by trust and the perception of value received, all of which starts with the earliest interactions with your brand and services.
Referrals require a level of trust since they are recommended by someone the potential new client already knows. This trust translates to some of your highest value deals because:
- References from trusted business connections close faster and with more likelihood.
- Referrals cost less to acquire since they don’t need the usual promotions – the customer is selling them for you.
- Referred customers often have a higher lifetime value and tend to be more loyal, especially in B2B settings. This is because they’ve come onboard with a positive predisposition towards the service.
- Recognizing and rewarding customers who refer can further deepen their commitment and loyalty to your business.
Key elements of a B2B referral strategy
Of course, referrals don’t just magically start filling your pipeline. They require some planning and integration with marketing and sales, and other business processes.
A good place to start might be to simply ask clients about whether they would support a referral program. You might even gain insight from select clients about their own referral strategies.
In addition, consider the following actions:
- Incorporate referrals into the entire customer journey: From the first interaction and all the way through post-sales communications, weave in opportunities and nudges for referrals.
- Design them strategically: Rather than waiting for referrals, prioritize actions, set targets, and maybe try some experiments to see what works best. Decide whether incentives and other value-adds should be part of the approach.
- Reciprocate if possible: If you gain from a referral, make it a two-way street by sending your clients referrals as well.
- Leverage client and partner networks: If a client or partner invests heavily in your services, and are willing to support it, they can serve as excellent referral feeders. Tap into their networks. Discuss ways to incentive their referrals.
- Acknowledge and appreciate: Regular gestures of appreciation go a long way. It could be a simple thank you. You may also opt for a formal incentive such as discounts or bonuses.
Read more:
7 Building Blocks for a Customer-Centric B2B Advantage
Checklist: 10 Steps to Customer-Centric Demand Generation
Get the accompanying checklist for developing a modern demand generation strategy and system that is customer-centric, insight-driven and digitally enabled, so you can work smarter and build the business of your dreams more confidently.
Now, see what the business value of a referral strategy might look like, as compared to acquiring a standard new customer.
We’ll start by defining some hypothetical inputs:
Inputs for referred customers:
- Number of referrals: 50
- Average deal size: $500,000
- % of referred deals that close: 70%
- Time to close referred deals: 3 months
- Cost to acquire referred customer: $10,000
- Lifetime value (LTV) of a referred customer: $2,000,000
Inputs for non-referred customers:
- Number of new prospects: 100 (assuming we’re comparing equal efforts)
- Average deal size: $500,000
- % of deals that close: 50%
- Time to close deals: 5 months
- Cost to acquire new customer: $20,000
- LTV of a new customer: $1,500,000
Financial calculation for referral strategy:
Potential revenue from referrals: = Number of referrals × Average deal size × % of referred deals that close = 50 × $500,000 × 0.70 = $17,500,000
Cost to acquire referred customers: = Number of referrals × Cost to acquire referred customer = 50 × $10,000 = $500,000
Net revenue from referrals (before considering LTV): = Potential revenue – Cost to acquire = $17,500,000 – $500,000 = $17,000,000
Total LTV from referrals: = Number of referrals that close × LTV of a referred customer = 35 (70% of 50) × $2,000,000 = $70,000,000
Financial calculation for non-referred new customer strategy:
Potential revenue from new customers: = Number of new prospects × Average deal size × % of deals that close = 100 × $500,000 × 0.50 = $25,000,000
Cost to acquire new customers: = Number of new prospects × Cost to acquire new customer = 100 × $20,000 = $2,000,000
Net revenue from new customers (before considering LTV): = Potential revenue – Cost to acquire = $25,000,000 – $2,000,000 = $23,000,000
Total LTV from new customers: = Number of new deals closed × LTV of a new customer = 50 × $1,500,000 = $75,000,000
ROI Calculation for Referral Strategy:
Net Revenue (Profit) from referrals = $17,000,000 (as calculated previously)
Cost of Acquisition for referrals = $500,000
ROI = 3300%
Comparison between referrals and non-referrals:
Net Revenue: Referrals bring in $17,000,000 in the short term, while standard new customers bring $23,000,000.
LTV: Referred customers have a combined LTV of $70,000,000, while non-referred customers have a combined LTV of $75,000,000.
Time to Close: Referred deals close in 3 months, while standard deals take 5 months.
Acquisition Cost: The referral strategy is cheaper, costing $500,000 to acquire customers, while the standard method costs $2,000,000.
ROI Calculation for Standard New Customer:
Net Revenue (Profit) from new customers = $23,000,000
Cost of Acquisition for new customers = $2,000,000
ROI = 1050%
Comparison:
Referral Strategy ROI: 3300%
Standard Customer Acquisition ROI: 1050%
So, because of a far lower cost and bigger LTV benefits, the referral strategy offers a ROI that is 3.1x that of the non-referral strategy.
Final Thoughts
For B2B service providers, customer retention isn’t just about keeping a client on the books, but about building a partnership grounded in trust, mutual growth, and consistent value addition. In industries like IT services or public relations, where the landscape is constantly evolving, being a steady, reliable, and innovative partner can make all the difference in ensuring long-term client loyalty.
When pursuing referrals, it pays to be proactive.
Instead of waiting for issues to arise, a services business should anticipate potential challenges and address them proactively. Also, strive for clear and consistent communication. Regular check-ins, updates, and feedback sessions ensure both parties are aligned, and any concerns are promptly addressed.
Deliver thought leadership, not just requested solutions.
Finally, focus on building long-term relationships, and positioning your business as a trusted, expert advisor and partner. Regularly publish content and speak at events that showcase your expertise. Look for ways to build a community that connects your clients to each other.
This doesn’t just happen pre-sale in marketing channels. Treat every delivery interaction as an opportunity to add value through providing helpful insight to support client decisions. This is especially beneficial when it introduces them to an un-anticipated need or issue.
All of these are focused on maximizing client relationships, retention, loyalty and expansion. That said, each can be adopted individually, and some businesses may see outsized benefit from some compared to others, depending on current capabilities.
By choosing the right mix of retention and expansion strategies, your business can achieve some pretty amazing returns. Keep the focus on strengthening relationships and continuously delivering value, and your customers will reward you for it.
Ready for Customer Driven Growth?
At Bevelroom Consulting, we believe in an approach that works for the business and the customer. Our approach to demand generation brings in a healthy dose of design thinking that optimizes for both the customer experience and business outcomes.
We help B2B businesses who:
- Are unsure where to start in marketing their business
- Don’t know how well their marketing is doing
- Want to be more customer-centric and data-informed
- Need to prioritize limited resources for the biggest return
If you’re looking to grow in a more customer-centric way, we’d love to speak with you.
