Imagine you are planning on making a significant purchase that reoccurs. Something like insurance for a small business you own. The communication from the company is excellent until the sale closes. Then, silence. When it comes time to buy again, how likely are you to renew through the original company? It’s been many months since you last heard anything from them, and a friend of yours recently purchased the same thing you have but got more coverage for the same price. Chances are not likely.
Like this example, the likelihood of most people exploring other options at renewal is high. And it stems from a lack of communication. According to E&Y and Collinson, “only 46% of respondents hear from their insurance provider regularly.” This means that after they purchase the product, most insureds experience radio silence. Until, of course, it’s time to renew. But as we just showed, it's too little, too late. So what can your company do differently?
It Just Doesn’t Scale
It is not realistic to expect your team to have multiple one-on-one touchpoints every year with every customer. Especially as your company (and revenue) scales, maintaining those individualized interactions becomes increasingly difficult. At a certain point, which for many companies is around the 10th employee/ $10M in revenue mark, you will need to find new ways of providing personalized service for every account.
It’s not an easy feat to keep your customers engaged and engaging with you.
It’s not an easy feat to keep your customers engaged and engaging with you. To limit churn, both are equally important. If your customers do not come to you first to get their questions answered, then they already have a foot out the door. But how can you know what each customer wants to hear, and when they want to hear it when you are no longer speaking to them individually? That’s where marketing automation comes in.
When the Rubber Hits the Road
Proper marketing automation starts with segmentation. Qualtrics, a leading survey tool, describes this as “the practice of dividing your target market into approachable groups.” Market segmentation creates subsets of a market based on demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better understand the target audience. By understanding your market segments, you can leverage this targeting in sales and retention strategies (e.g., homeowners vs. renters or single income vs. multiple income households).
If you are not sure where to start, the first step is to divide your customers into the products they currently purchase. After this, experiment with your customer segments and see what works for your business. If you want to start strongly, there are software tools that you can use to automatically segment your customers - just run a Google search on ‘marketing segmentation software’.
Putting the Plan into Action
Once you have successfully segmented your customers, you can build out automatic email campaigns that are crafted for each group. When using marketing automation, the channel is just important as the message. If a text message is the best way to communicate to a segment, invest in that capability. Reaching out using the wrong channel is just as detrimental for renewals as not reaching out at all.
To start, you will want to set up two different campaigns: account rounding and retention. These are the most important to your business’s long-term success, so starting here lays a firm foundation to build on with future marketing efforts. A major misconception about marketing automation is that it is a onetime, set it and forget it task. It is not.
To be successful with marketing automation, companies need to view it as an ongoing investment in its long-term success. Let’s dive into how to use marketing automation for account rounding and retention.
When targeting account rounding with automated marketing campaigns, you want to offer products and services that you know customers in that segmented group will be interested in. The first approach you can use is direct sales, where a link is included that lets the customer purchase that product on the spot. The second approach that also is effective is when you offer a specific item for their consideration and then include a link for them to speak with you about it. As you collect data, you can make the offers more targeted, which will cause better uptake.
Retention is important throughout the lifecycle of the customer, not just on the renewal/expiration date. Companies encourage retention through touchpoints that ask the customer how their experience is, through the net-promoter scores, or by proactively offering a meeting to reach out.
Even if your customer doesn't respond to marketing, that they are seeing it makes them more likely to purchase more products and keep them when the expirations date nears. Ultimately, though, for retention marketing campaigns to be successful, you need to have insight into how likely that account is to renew. With that information, you can start early and significantly decrease the likelihood for churn.
You can spend quite a bit of money getting started, especially if that plan includes buying software. To get the highest return on your investment, set goals you want to achieve, and then track your progress along the way. Marketing automation will not solve all your sales and retention issues, but it’ll get you a lot closer to where you want to be.