Focus on building long-term customer relationships versus one-time sales

28th Nov 2014

New customer wins rightly excite sales teams and boardrooms but is it the best way to grow your revenue.

Looking at the fast-growth technology sector, if the cloud becoming the predominant business model for software and services companies has taught us anything – it’s the focus on recurring revenue and the continuous launching and growing of new revenue streams.

While new customer acquisitions are still important, the most successful cloud businesses today are the ones which are focusing their attention on retaining their existing customers.

A recent study by the Gartner states that a company which is able to retain 20% of its existing customers would be able to secure 80% of its future revenues with a variety of up-sell and cross-sell approaches. With so much riding on retention, it’s no surprise businesses, especially in the B2B space, are willing to invest more on improving customer experience to keep customers ‘sticky’.

Current customer retention strategies generally fall within one of the two following categories; those aimed at reducing voluntary churn and those designed to curb involuntary churn. Voluntary churn, or customer defection, is what we typically think of when considering issues of customer retention. It is strongly correlated with the customer’s actual experience with the vendor, product, service or the support-oriented touch points. It is the area of customer retention where most companies place their greatest focus and resources, whether to strengthen quality or provide more value at the beginning of the customer cycle.

While the focus on voluntary churn is certainly important, to do so at the exclusion of involuntary churn is a mistake many companies make. In contrast to voluntary churn, the source of involuntary turnover is not the customer, but rather a circumstantial occurrence, such as payment authorisation failures found in hard and soft declines, which can be addressed in most cases by infrastructure improvements such as updating the payment processor technology which takes into account various payment systems.

Smart businesses optimise their customer retention processes, mechanisms and tactics regularly. To learn how to maximize customer lifetime value, click here for Avangate whitepaper highlighting some specific customer retention strategies you can incorporate in your own cloud business.

If you would like more information, please read full whitepaper on


Related content

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.