Unveiling the formula for acquisition and retention success

I have always wanted to be an entrepreneur. In 2011, after the birth of my baby girl, I realized I would never sleep again. So, with all this extra time, I decided to start a business.

During this time, I learned two crucial aspects of running a business: acquiring customers and turning them into promoters. However, I soon realized I couldn't scale this business. As my daughter grew, so did my interest in business issues.

Fast forward to 2016, and I became a boy mom. With even less sleep, I decided to start a new business, this time aiming for more freedom. I looked at successful entrepreneurs and thought they had the best lives – working when they wanted and enjoying flexibility. So, I started an agency, hoping for more flexibility.

In this new business, I had to master customer acquisition again but also learn about customer retention. As I ran this business, I realized I was spending too much time with my customers, so I wrote one of the first books on implementing HubSpot. This way, clients who didn't want to hire my services could buy my book on Amazon instead of calling me in the middle of the night.

As I worked with numerous customers, both startups and scale-ups, I noticed a common problem: they struggled with retention strategies. Intrigued by HubSpot's concepts, I wanted to know more.

So, instead of starting another business, I sold my agency and joined HubSpot. My goal was to help them scale their services to partners, focusing on customer retention strategies.

In this article, I'll share the key strategies, including:

Building effective acquisition funnels,
Customer retention strategies, and
Implementing measures of success

By mastering these areas, you'll be well on your way to achieving both acquisition and retention success. Let's dive in!

Building effective acquisition funnels

Let's first look at building effective acquisition funnels.

We know that the best companies at building acquisition strategies are B2C companies. Let's take our favorite frenemy, Amazon, as an example. We love them for their convenience, but we might hate them because we don’t own stock. However, let's focus on how Amazon gets us to purchase from them every single time, specifically through their product, Audible.

I don't know about you, but I love reading books. However, between my responsibilities with my four kids, I often don’t have the time to read a book at night. So, I choose to listen to books during my commute or while doing chores. This brings me to the question: why did I subscribe to Amazon Audible? What made me make that purchase?

Amazon's acquisition strategy

One notable thing about Amazon's subscription model is that they rarely use direct ads like "Buy Amazon Audible." Instead, they leverage influencers.

Do you follow Oprah's Book Club? When Oprah recommends a book, like "Build the Life You Want," many of us rush to Amazon Audible to get that book. Amazon uses influencers, which in our B2B world are partners, to motivate purchases. This is one of their famous acquisition funnels.

Amazon retains customers through a well-crafted process, which I’ll explain further by breaking down their ultimate conversion path:

Understanding pain points and creating urgency: They identify your pain point, such as wanting to read Oprah's latest book but not having the time to do so.
Leveraging influencers: By using Oprah to spark your interest in the book, they effectively draw you in.
Using lead magnets: When you visit Audible, they offer a free 30-day trial and a free book. This lead magnet allows you to read the book you want for free.
Providing incentives: If you stay beyond the trial period, they offer a free book every month. The $14.99 you pay seems worth it because of the continuous value you receive.

Through these steps, Amazon has given you a magnet and an incentive without even showing you a direct ad. They effectively use influence to guide you to the point of purchase.

Applying B2C strategies to B2B

How can we, as B2B customers, build similar strategies? We need to consider the entire process of B2B2C. Let’s delve deeper into this by taking HubSpot as an example.

HubSpot also utilizes influencers, or partners, to attract customers. They understand the pain points of their target audience and create content or tools to address these issues.

HubSpot offers free trials and valuable resources as lead magnets, ensuring potential customers experience the value of their services before committing financially. They then provide continuous value to retain these customers.

By adopting similar strategies, we can build effective acquisition funnels that attract and retain customers. Understanding and addressing pain points, leveraging influencers, using lead magnets, and providing ongoing incentives are key to a successful acquisition strategy in both B2C and B2B contexts.

The HubSpot strategy: Leveraging partnerships and free CRM tools

HubSpot is a company that effectively uses partnerships to drive customer acquisition and retention.

Let me share a bit about my own experience. I used to be a HubSpot partner. Interestingly, HubSpot never approached me to become a partner. Instead, I was running an agency, helping customers build their marketing strategies.

Despite the great work we were doing in generating leads, my customers often complained, "Risa, we see the leads you're bringing in, but we don't see how these leads are converting into sales. We don’t see the revenue impact."

Integrating marketing and sales efforts

To address this, I needed to find a way to connect marketing efforts with sales outcomes. This led me to HubSpot, where I used their CRM system to bridge the gap between marketing and sales. HubSpot provided a free CRM, which meant my customers didn't have to make an initial purchase. They could sign up and start using the CRM immediately.

As I integrated HubSpot into my services, I realized the value it added for my clients. I saw the potential for even more support and resources, so I officially became a HubSpot partner. This partnership allowed me to offer more to my customers and incentivized them to further engage with HubSpot’s products.

Leveraging influencers and partners

This experience highlights two key strategies that B2B companies need to understand and appreciate:

Using influencers and partners: Just as Amazon uses influencers like Oprah to promote Audible, B2B companies can leverage partners to create demand. HubSpot didn’t directly market to me; instead, I discovered the value of their product through my own needs and experiences, becoming an advocate for their services.
Providing free tools as lead magnets: HubSpot's free CRM acted as a lead magnet, drawing in potential customers without requiring an upfront purchase. This strategy lowered the entry barrier and allowed customers to experience the product's value firsthand.

Tracking and retaining ideal customers

For B2B companies, it's crucial to move beyond traditional advertising methods like LinkedIn and Facebook ads. Instead, focus on building relationships with influencers and partners who can authentically advocate for your product.

Additionally, ensure you are attracting your ideal customers. These are the customers who will see the most value in your product and are more likely to stay with you long-term.

When you successfully attract your ideal customers, you open up opportunities for extended retention. By using effective acquisition strategies, leveraging partnerships, and providing valuable lead magnets, you can build a solid foundation for both acquiring and retaining customers.

Keeping ideal customers: Strategies for long-term retention

So, now that we have our ideal customers, how do we keep them? We don’t want them opting out of our services next year. How can we retain these ideal customers for more than one year? Here are some strategies I recommend.

Implementing a mandatory onboarding strategy

The first recommendation is to implement a mandatory onboarding strategy. Unlike Amazon, which doesn't need an onboarding strategy due to their low price points and minimal risk, B2B companies face a different scenario.

When selling a product or service to another company, any mistake or improper implementation can be costly and detrimental to that company.

Many SaaS companies have recognized this and implemented mandatory onboarding strategies to ensure proper usage and integration of their services. However, there is a common mistake that most SaaS companies make – they rely too heavily on internal teams to execute these onboarding strategies.

Strategic use of internal teams

Let me clarify: I’m not saying you shouldn’t build internal teams. What I’m recommending is a strategic use of those teams.

Your internal teams should primarily service your high-end customers. For the rest of your customers, you should leverage your partner network. These partners can handle the bulk of the onboarding and support work.

Why? Because, realistically, services are often a loss leader. The only companies making money selling time are giants like Accenture, the Big Four, or high-end law firms.

For most SaaS companies, the services business isn’t profitable; it’s the product that drives profit. Therefore, you want to offload the service component to partners who can maintain the service level you would provide but at a lower cost.

Building an effective partner network

Building an effective partner network is crucial. Think of developing your partner programs like raising a child. The best time to train a child is when they are young, not when they are a teenager glued to their phone.

Similarly, you should start building your partner network as early as possible in your SaaS business. Within three to five years, these partners should be trained to deliver the onboarding services that your internal teams currently handle. This approach will help you scale, reach more customers, and save money, reducing the burden on your internal teams.

Measures of success

Now, you might wonder, "How do I control those partners?" Unlike internal teams, you can't directly monitor them day-to-day. This leads to my third recommendation: build measures of success into your product.

As you scale and invest in your product, ensure that part of your development focuses on tracking the success of onboarding. This way, you can monitor the effectiveness of your partners and maintain high service standards.

By implementing these strategies, you can retain your ideal customers for the long term. Mandatory onboarding ensures they start off on the right foot. Strategic use of internal teams and partners allows you to scale efficiently.

Finally, integrating measures of success into your product provides the oversight needed to maintain quality. These steps will help you build a robust customer retention strategy and secure the ongoing success of your business.

Measuring success: Key metrics for customer retention

To effectively retain your ideal customers, it’s essential to implement measures of success within your product. These metrics will help you monitor the effectiveness of your onboarding process and the ongoing value your customers derive from your product.

Here are three critical types of success measures to consider:

1. Activation

The first measure is activation. During the onboarding phase, you need to check how much of your product your customers are using. This will help you understand how effective your partners are at onboarding your customers.

When customers use your product extensively in the first 30 to 90 days, it indicates a higher likelihood of retention because they are finding value in the product. Tracking activation metrics allows you to gauge the immediate impact of the onboarding process.

2. Usage

The second measure of success is usage. After the onboarding phase, it’s crucial to ensure that customers are continuously using your product. Monitoring usage metrics monthly – especially after months six and seven – helps you determine if the customers are engaging with key features of your product.

While partners might not be involved post-onboarding, their effectiveness can be inferred from consistent product usage. High usage rates indicate that the onboarding process was thorough and successful, leading to sustained customer engagement.

3. Renewals and growth

The final measure is around renewals and growth. Are your customers renewing their subscriptions after the initial period ends? Are they expanding their engagement by adding new features or products to their current suite?

These metrics are crucial as they indicate long-term customer satisfaction and growth potential. Tracking renewals and growth helps you understand if your customers are not just staying with you but also increasing their investment in your product.

Implementing and monitoring success measures

Implementing these three measures of success will help you assess the effectiveness of your partner network and the overall customer retention strategy. However, it’s important to start these practices early in your company’s lifecycle. Waiting too long to implement these processes can lead to friction and resistance, especially if your partners or company have established routines.

Activating, monitoring usage, and tracking renewals and growth are essential metrics for understanding and improving customer retention. By focusing on these areas, you can ensure that your onboarding process is effective, your customers continue to find value in your product, and your business experiences sustainable growth.

Key takeaways for improving customer acquisition and retention

As we wrap up, I want to leave you with a few key takeaways.

1. Invest in building your partner network

Building your partner network is crucial for improving your bottom line. However, before you can leverage this network effectively, you must invest in strategies to acquire your ideal customers.

Instead of spreading your budget thin on Facebook or LinkedIn ads, advise your marketing team to consolidate those funds and identify one or two key influencers or partners who can reach your target audience. Investing in these relationships will help you reach your ideal customers more efficiently.

2. Implement a compulsory onboarding process

If you aren’t already doing this, ensure that your onboarding process is compulsory in your sales process. Never let your customers start using your product without showing them how to get the most value out of it in the shortest period of time.

A mandatory onboarding process ensures that your customers are properly introduced to your product, increasing the likelihood of long-term engagement and satisfaction.

3. Implement measures of success

Finally, make sure you are implementing measures of success within your product. Continuously monitor customer engagement, ensuring they are not just using your product initially but are also engaging with it over time.

Additionally, track renewals and revenue retention growth. These metrics will help you understand how well your onboarding process and ongoing customer engagement strategies are working.

Final thoughts

By focusing on these three key areas – building a robust partner network, implementing a compulsory onboarding process, and continuously monitoring measures of success – you can significantly improve your customer acquisition and retention strategies.

These steps will help ensure that your customers not only start using your product but also continue to find value in it, leading to sustained growth and profitability for your business.

This article is based on a presentation given by Resa at our Customer Success Festival in London 2023.

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The formula for acquisition and retention success