The email above is not a message sent to a prospect that’s actively evaluating a tool. It’s a message that a competitor sent directly to one of our current customers in an attempt to steal them from under our noses.
Did they succeed? Nope.
Did that stop them from trying again another four times? Also, nope.
Competitors are attacking you from every direction, all day long. The threat doesn’t end once you close a deal.
You may have won the battle of bringing in a new customer, but the war has just begun.
Competitive intelligence isn’t just meant for one team at one point in time – it’s meant for the entire organization. In fact, results from the 2021 Competitive Enablement Report indicate that there’s some big misalignments on WHAT competitive teams should prioritize and WHO they should support.
There is a huge opportunity seen by executives and the rest of the company to drive strategic value to your competitive program this year. The secret ingredient that they want for 2021?
Enabling customer retention.
Customer retention is a critical revenue driver
During Gainsight’s most recent webinar breaking down the current state of customer success, Byron Deeter, Partner at Bessemer Venture Partners, said:
“Renewal rate is the single most powerful lever of all the financial levers and business and operational metrics for creating long-term value.”
Supporting sales teams with the necessary competitive intel they need to win new clients rightly gets prioritized by decision-makers. But retention can be equally as competitive, and shouldn’t take a back seat.
Customer retention is one of the most critical revenue drivers for businesses, particularly for those that are experiencing high-growth in competitive industries. Let’s look at a quick example of its financial impact on your company’s revenue.
Two companies are both entering 2021 with $6 million in Annual Recurring Revenue (ARR). Over the next five years, they both maintain 100% growth of new revenue.
The only difference? Company A has a Net Retention Revenue (NRR) of 95%, while Company B has an NRR of 120%. Here’s how their financial picture fares over five years:
Company B will outperform Company A by 83%. That equates to $140 million. Retention plays a huge role in determining the long-term growth of a company
And now preventing customer churn has become an increasingly important part of business strategy in the ‘new normal’. Adam Houghton, VP of Customer Success at Klue, said:
“In competitive spaces, retention becomes even more critical. The barrier for customers to leave in SaaS is pretty low; a critical part of retaining these customers is by better enabling CS teams.”
The customer mindset has shifted – budget constraints limit what they’ll buy and brings a lot more scrutiny when deciding on renewing a product or subscription. The fight to build loyal customers and stave off competitors has become even more difficult.
“If you've spent all of this money to acquire new business, then you have to keep them as a customer for one to three years. You should be investing just as much, if not more, on the retention side, because 80 to 90 percent of the revenue you're going to get from the lifetime of any customer is after the first purchase.”
Bringing in new customers provides a short-term financial spike. Retaining and growing them reaps long-term rewards.
And a critical part of retention is actively defending against the competition. If a customer churns then they are either switching to a competitor or they aren’t seeing value in your product – in both of these cases the CS leader of the future has to have active control over ensuring that the customer prefers you over the alternative options.
First and foremost, CS leaders are always trying to deliver value to their clients and ensuring that they’re satisfied. But they also need to keep the competition out of the conversation entirely.
The best customer success teams do this by providing value AND by being enabled to effectively handle any of the dreaded FUD (fear, uncertainty, and doubt) that a competitor spouts.
Teams aren’t aligned on how competitive enablement should support the business
The results from the 2021 Competitive Enablement Report show that stakeholders, and the C-Suite, agree on the importance of enabling all revenue teams with competitive insights.
When asked what the primary benefit a comprehensive competitive enablement program should bring to the business, all stakeholders noted that improved sales performance and increased customer retention were the first and third most important expected benefits respectively:
Well, how about the C-Suite? You know, the decision-makers that drive the company’s strategic direction…
They rated improving customer retention as the most important benefit that their investment in competitive intelligence should bring:
The rest of the organization doesn’t care nearly as much about serving the C-Suite with strategic insights. In case you’re craving a little bit of irony, the C-Suite themselves only rated it fifth most important. They also want to see revenue teams enabled with competitive intelligence.
Competitive teams have an opportunity to provide an even bigger impact on the business. Serving the executive team with high-level strategic support is just table stakes; the real value of your competitive enablement program is when it impacts revenue.
It’s also easier to measure the success of a competitive program that supports revenue teams. For example, looking at the lift in performance of your sales reps and customer success teams that use the competitive content provided versus those that don’t in competitive deals or renewals is an indicator that can clearly demonstrate your competitive program’s impact on ROI.
Customer success teams are ready to be enabled
Investing in the soft skills for your customer success teams isn’t enough anymore, and executives are recognizing this. Just like in a pre-sales environment, customer success managers are having to handle those same types of objections.
Their customers are being called by competitors all day long. They need to be armed with the information to pick up on trigger words quickly and shut down any competitor claims. They’re dealing with competitive renewals every day of the year.
Top-performing businesses already know the importance of retaining customers to the financial growth of the company – but the ‘new normal’ shined an even brighter light on its significance. While competitive programs are rightly focused on enabling sales to acquire new customers, they can also be used to enable the teams that are dedicated to keeping and growing these clients.
To learn more about Competitive Intelligence, please visit: https://go.klue.com/2021-competitive-enablement-report