In the competitive landscape of B2B marketplaces, obtaining new customers often represents a significant cost for manufacturers and distributors. However, this initial investment in customer acquisition is only the first step. As every seller strives to increase its customer base, an effective strategy for retaining existing customers can quickly prove to be a major competitive advantage.
Knowing how to maximize customer retention is not only fundamental, but it is also emerging as a genuine economic growth lever for all professionals operating on B2B marketplaces. A recent study by Harvard Business Review reveals that increasing customer retention by just 5% can boost a company's profits by 25-95%. So it is definitely something worth taking an interest in!
Having trouble keeping your customers? Transform your strategy!
Table of Contents
- I. The challenges of customer retention on a B2B marketplace
- II. Key customer retention indicators
- III. Action plan for optimized customer retention
I. The challenges of customer retention on a B2B marketplace
1. Economies of scale: Acquisition of new customers vs. retention of existing customers
Winning new customers requires a substantial investment in both marketing and advertising. This approach, while necessary, does not always guarantee a return on investment. Retaining an existing customer, on the other hand, is demonstrably more profitable. According to the Harvard Business Review, retaining an existing customer can cost up to 25 times less than acquiring a new one. Therefore, implementing effective strategies to retain your existing customers can result in significant savings for your company.
2. The potential for a lasting relationship with your existing customers
A loyal customer is likely to buy your products repeatedly, demonstrate trust in your brand, and may even become an ambassador by recommending your company to their network, creating a virtuous circle. Such a customer can therefore be a constant source of income and, at the same time, a free means of promoting your brand, boosting your impact on the market.
3. Customer retention as a lever for economic growth
Recurring income from existing customers helps stabilize your business and encourages long-term planning. The longer a customer stays with you, the higher their value becomes over time. What's more, a loyal customer is often more inclined to try out your new products.
4. Gradual increase in the “average cart”: the advantage of time
A customer who remains loyal to you over the long term tends to spend more over time. They develop a sense of trust and a preference for your brand that encourages them to make larger purchases. They become familiar with your products, get comfortable with your brand, and naturally tend to increase the size of their orders. As they progress through the customer journey, they are also more inclined to try your new offers, increasing the average amount of their purchases in their cart and contributing to sustainable revenue growth.
II. Key customer retention indicators
1. Customer retention rate: measurement and interpretation
Customer retention rate is an essential indicator that enables companies to measure the percentage of customers they have retained over a given period, compared with the number of customers they had at the start of that period. It is a measure of customer loyalty and a company's ability to retain customers over the long term.
To calculate your customer retention rate, you'll need three pieces of data: the number of customers at the start of the period (S), the number of customers at the end of the period (E), and the number of new customers acquired during the period (A).
The formula for calculating the customer retention rate is as follows:
((E-A)/S) x 100 = Customer retention rate
A good customer retention rate can vary considerably depending on the industry, the business model, and the type of product offered. However, as a general rule, a customer retention rate of 80% or more is generally considered good for most sectors.
In certain highly competitive industries (subscription services, etc.), a retention rate of around 60% may be considered acceptable, while for more stable and mature sectors, a retention rate of 90% or more would be the target. For B2B companies, a retention rate of 90% or more is generally recommended. Note that a retention rate of 100% is rather unrealistic and even undesirable, as it would mean that a company is not looking to attract new customers and is likely to stagnate.
Regularly monitoring your retention rate and understanding the factors influencing it are crucial to developing an effective loyalty strategy.
2. Attrition rate: an indicator to monitor and minimize
The attrition rate (also known as "churn rate") indicates the percentage of customers who stop buying or using your product over a given period. A high attrition rate may indicate customer satisfaction problems. To calculate this rate, divide the number of customers lost during a given period by the total number of customers at the start of the period, then multiply by 100 to obtain a percentage.
Formula: (L/S) x 100 = Attrition rate
Where:
- S is the total number of customers at the start of the period,
- L is the number of customers lost over the period.
Factors such as onboarding churn (customers lost during the integration phase), renewal churn (customers lost during the contract renewal phase) and satisfaction-driven churn (customers lost through dissatisfaction) can influence this rate.
3. Understand and calculate your customers' lifetime value
Customer Lifetime Value (CLV) is a key financial indicator used by companies to estimate the total net income they can expect to generate from a customer over the lifetime of the relationship.
The calculation formula is as follows:
CLV = (Average cart value x Frequency of purchase per period) x Average length of customer relationship with the company
This is an important indicator as it helps to understand how much a company should be prepared to spend to acquire a new customer, and how much effort it should make to retain its existing customers. A customer with a high lifetime value is very valuable to the company, as it is a customer who buys regularly and contributes significantly to the company's revenues. Therefore, a company should make a real effort to retain these high-value customers and to increase the CLV of other customers.
III. Action plan for optimized customer retention
1. Make an impact: Offer an exceptional customer experience
From the very first contact, it's essential to welcome your customers with an effective onboarding strategy. It's vital to give them all the information they need to understand and take full advantage of your products.
2. Get noticed by optimizing your presence on the marketplace
- Offer fast, high-quality support
Reactive, even proactive, customer support is essential to retaining your customers. Respond quickly to their queries and try to resolve their problems in the most satisfactory way possible. - Personalize your interactions
Thanks to the data available via the marketplace, you can personalize your communications and capture the attention of your most active customers. This is the purpose of ultra-targeted emailing campaigns you can implement via the marketplace. Digital marketing tools such as these can help you maintain regular contact with your customers and provide them with relevant information that meets their needs. - Rely heavily on SEO
Optimized SEO will attract more customers and improve your visibility on the marketplace. Know how to juggle SEO tools. - Take care of your product pages
Clear, detailed product pages can make your customer's buying decision easier. - Reassure and build trust
Free delivery, fast delivery, free returns, 24-hour assistance, a money-back guarantee, and customer reviews are all elements that reassure customers and encourage retention. - Build loyalty through your pricing policy
Adapted, competitive, and transparent pricing is a key factor in customer retention. - Offer a smooth, secure payment experience
Simple, secure payment solutions offered by well-established B2B marketplaces build customer confidence and are essential for retention. - Trigger the next purchase
Propose special offers, promotions, or complementary products to encourage your customer to make a new purchase.
3. Be proactive: Detect any risk of attrition as early as possible
It's crucial to carefully monitor your customers' feedback and learn from their complaints. Create educational content to help your customers make better use of your products and services, and remove any disincentives to purchase.
CRM specialist Paul Greenberg brilliantly illustrates the importance of customer retention when he states, "The cost of acquiring a new customer is five to ten times greater than the cost of retaining an existing one" (source: CRM at the Speed of Light). Maximizing customer retention is therefore a strategic approach that encompasses a multitude of elements linked to the customer experience, from the quality of your products to the effectiveness of your customer follow-up. It requires constant attention, regular questioning, and, above all, a genuine desire to put the customer at the heart of your concerns.
Maximizing customer retention on a B2B marketplace is not only an effective strategy for increasing your profits, but it's also a philosophy that values your customers and reinforces the strength and integrity of your organization. It's an expression of your company's commitment to service, quality, and, above all, to the exceptional experience you're determined to deliver to every customer, every time.
To increase your B2B customer loyalty and boost your online revenues, don't hesitate to discover VirtualExpo Group, the expert in specialized B2B marketplaces. Our mission is to offer you the highest quality advice.
