For brands to achieve their financial goals, they should emphasize initiatives that result in higher net revenue retention.
Throughout the pandemic, most brands struggle to attract new customers. Having less budget or surviving on fumes meant less expenditure and investment in departments that are deemed less important, especially marketing. CMOs struggled to operate in an uncertain dynamic marketing environment with constant changes in customer behaviors while operating on a stringent budget.
The challenges of CMOs and marketing departments highlighted that many brands have failed to satisfy their customers. Instead of focusing on keeping their existing customers happy, they diverted their resources and attention to attracting new customers that were not keen on partnering with a new one. This has led CMOs and their counterparts to focus their efforts on net revenue retention (NRR). This key indicator helped brands to measure revenue realized from existing customers rather than from new businesses. Also, a healthy NRR makes investors more likely to invest and stand by the brand.
As per a Software Equity Group (SEG) recent survey of 50 PE firms and 25 strategic buyers, the majority of the respondents said that net retention revenue had become a critical metric while evaluating a brand. In fact, brands with an NRR rate of 130% or more significantly boast an enterprise value-to-revenue multiple of 21.9x, when compared to 8.8x for the SaaS industry in general. Thus, to succeed in their endeavors, CMOs should be obsessed over NRR. For brands, it means that they should equally care about their satisfaction with their existing customers as they do when acquiring new ones. Here are a few steps they can take to get proactive while investing in customer marketing:
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Reconceive customer marketing
In most brands, customer marketing has been an afterthought. Brands do take steps such as net promoter score (NPS), references, and case studies, but they do not indicate how customers are well adopting their product or ultimately get value from the organization. For marketers, it means they need to ask the customers if NRR is a priority, they should double down on customer marketing, instead of just doing the bare minimum. They should look for data, identify patterns, dissect them and understand the customer journey with the brand. Meaning, they should run their account-based marketing initiatives for their existing customers with the same degree of thought as well as planning for new accounts.
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Structure initiatives that influence customers to keep coming back
To get success from the customer programs, it is important that existing customers adopt, engage and are enthusiastic about them. This will also result in a higher NRR. Brands should focus on heavily investing in customer programs. At the same time, they should ensure to not overlook them extensively and make them undeniably important for people to participate in. Instead of measuring the success of the program based on the number of references they can provide, brands should consider setting goals around customer participation in these programs. This way, they will be able to stay focused on educating, engaging, and delighting their customers throughout their relationship with their organization.
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Align with Customer Success
Driving customer success requires the leaders of marketing and customer success to align their goals. They should start with understanding what use cases for each persona make a customer truly successful. They should identify which KPIs are critical to identifying if a customer is getting value from its products or services. After this, customer success, marketing, and product team should work together to ensure those use cases are being adopted.
To succeed in today’s marketing landscape; brands should focus on net revenue retention. They should increase their efforts into their present customers to keep them engaged and happy.
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