There once was a Start-Up with a great platform for growth. Their foundation was in place, the sales and marketing machine was working, and customers seemed happy. Their business model was unique for a Start-Up in that they managed to sign clients to three-year contracts. Read on to learn whether that is really worth celebrating.
Our Start-Up had no real urgency to stay in contact with their seemingly satisfied customers. Everything seemed to be working. Their customers didn’t submit any support issues. As far as the Start-Up was concerned, all was well. And they liked being in that comfort zone-right up until the three-year renewal time.
The fairytale became a nightmare when the Start-Up learned their customers had eXperienced changes in their needs and wants. Their solution wasn’t as effective for their customers anymore.
The negotiation process became painful as problems surfaced in meetings with their soon-to-be-former customers.
And our Start-Up learned the meaning of customer churn in the worst possible way.
Takeaways:
The comfort any company feels with the steady rhythm of a comfort zone could become devastating over time.
In this case, the three-year contract turned out to be the timeframe that customers were biding their time to get out of the agreement. Why? Because the Start-Up had not cultivated the relationship, stayed current with the customer's business changes (including their technology, people, processes, and problems, much less their advocacy for the Start-Up).
Essentially, the Start-Up had lost touch with their customer base. They had no idea where their customers were or what they cared about or why their solution became less valuable over time. They found themselves in the unfortunate position of having to negotiate with a completely different decision-maker.
If you find yourself in that scenario, your new contact may not be your champion. In that case, your customer will most likely churn out and you will lose that opportunity (along with potential conversations for anyone they know in your industry). Note: this is another facet of brand-building–stay relevant with your customers!
It costs more to attract a new customer than to keep one who is already working with you. The best way to grow is to retain existing customers. However, you must nurture the relationship in an ongoing, authentic, and transparent manner.
Do not wait too long to invest in a customer success team that can help support your customers and cultivate relationships during their journey with your Start-Up.
While there is a lot you can automate in terms of efficient processes, you still need to deliver the irreplaceable human element of simply connecting with and caring about your customers.
*Bloopers might be real or fictional
Image credit: Photo by charlesdeluvio on Unsplash
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