Customer Retention: B2B, B2C, Services, and SaaS
Customer retention is such a fundamental part of digital marketing that it’s almost misleading to call it a strategy in itself.
Instead, customer retention encompasses a variety of strategies, each as diverse as you can imagine.
Every customer profile has specific needs, and certain retention strategies work better to ensure higher chances of repeat purchases or contract renewals.
Even within these two modalities of retention—repeat purchases and renewals—there are strategic differences that must be taken into account.
Today’s article delves deeper into the topic of customer retention. First, we’ll explore the different types of retention and their unique characteristics.
Then, we’ll move on to practical actions tailored to each type of strategy.
Let’s start with the basics:
Types of Customer Retention
Customer retention is a broad topic because there are multiple forms of retention.
And that’s something you don’t often find in articles online. Usually, retention is treated as a universal concept, where “customers” are a faceless gray mass, and “retention” is a vague, unclear term.
That’s not how it works. Each customer is a unique human being who, despite belonging to a demographic, has needs that go beyond numbers and generalized strategies.
The same applies to “retention.” What exactly does retaining customers mean?
This is where your brand’s business objectives and what you define as a sale come into play.
Retail sales, for instance, are quite different from service sales. Even within services, there are daily recurring purchases versus annual ones.
Let’s explore the types of customer retention in more detail. After that, we’ll dive into the second concept you need to consider: recurrence.
Let’s get started!
Customer Retention in Retail
Here, we’re addressing both physical and online retail, though, as our expertise lies in digital marketing, you’ll notice most of our tips and retail definitions are heavily inspired by online strategies.
Regardless, customer retention in retail—digital or otherwise—is still a broad subject, encompassing different approaches.
Here are a few examples to help clarify:
- Recurring purchases (daily, weekly, monthly, etc.);
- Loyalty programs (e.g., buy X, get 1 free);
- Brand preference (choosing your brand consistently for replacement products);
- Preference and recommendation;
And other types specific to your business.
In retail, customer retention primarily revolves around repeat purchases.
All strategies, whether online or offline, will always aim to encourage customers to buy more, preferably with a good recurrence.
People make repeat purchases for various reasons. Your main task in retail is to uncover these reasons and invest in strategies that align with them.
For example, in the case of brand preference, it might be more convenient for customers to buy from another brand, store, or website. However, they choose yours because they trust its quality.
Understanding your customers’ personal preferences will always involve attributes like quality, convenience, and trust.
Your job is to identify what your brand represents and invest in enhancing that perception. Alternatively, if it conveys negative attributes, it’s time to make a change.
Customer Retention in the Service Sector
The service sector features several different types of contracts, which significantly influence customer retention strategies.
Consider, for instance, an air conditioning company specializing in installation and maintenance services.
This company won’t rely on frequent, recurring customer visits. Once installed, the air conditioner only needs maintenance a year later.
Still, the value of that maintenance is quite high. The company must ensure you’ll choose them for future services rather than another brand.
This is just one example of customer retention in the service sector. Others include:
- Contract renewals;
- Service recurrence;
- Preference for your services;
- Selling bundled packages;
- Securing open-ended contracts;
- Signing contracts with longer-than-average terms;
And others specific to your business model.
What we see listed here are business objectives tied to retention, which are unique to each brand but can also be fairly general.
Retention in services is closely linked to recurrence in retail, but here, the contractual term plays a crucial role.
The longer the contract duration, the better your customer retention. Of course, measures must still be taken to avoid cancellations, but a long-term contract already boosts your retention odds.
At the same time, contract renewal becomes an urgent aspect of customer retention in the service sector.
When we dive into the practical section of this article, we’ll address strategies for both short-term services—like the air conditioning example—and long-term partnerships.
SaaS Customer Retention
Let’s also take a moment to discuss customer retention in the SaaS (Software as a Service) sector.
If you’re not a SaaS company, feel free to skip this section!
With that said, SaaS customer retention is quite similar to the service sector: the focus is on maintaining and expanding contracts.
Specific retention goals for the SaaS industry include:
- Consistent use of the software;
- Converting monthly contracts to annual ones;
- Signing annual contracts from the outset;
- Renewing annual plans upon their expiration;
- Upselling additional features of the software;
- Encouraging participation in events hosted by the company;
Among others.
That last point is particularly interesting. It pertains to integrating your customer with your brand overall—something distinct from daily tool usage but equally vital for customer retention.
There are also some differences in retention strategies between B2B and B2C sectors, which we’ll address before diving into practical tips.
The Difference Between B2B and B2C Customer Retention
You might be eager to dive into the actionable section of this article, but understanding this theoretical foundation is also a practical step.
Truly: grasping the nuances between B2B and B2C retention strategies provides a clear roadmap for your approach.
In fact, you might even arrive at several conclusions on your own, some of which we’ll discuss later in the article.
But to wrap it up, we still need to discuss some differences in B2B and B2C customer retention.
We won’t address business objectives just yet. Instead, we’ll focus on what’s easy and what’s challenging in retaining customers in these two models.
Both have very specific characteristics that cannot be overlooked. Once understood, many things start to make more sense.
Let’s dive quickly into these two topics now. After that, we’ll jump straight into the practical steps.
Come with me:
Retaining B2B Customers
The B2B sector poses significant challenges. It demands constant engagement with client companies to ensure optimal retention.
This sector is marked by complex marketing efforts, particularly in lead generation and client acquisition.
👀 What is B2B Marketing? See How to Build a Funnel Today!
However, retaining B2B customers isn’t as complicated. In fact, these clients often prefer not to switch services.
B2B retention benefits from this preference. Besides pricing, numerous other factors—some unrelated to the product—affect retention.
Consider a SaaS tool, for instance.
Migrating from one system to another can take weeks—or even months. This process is an effort most companies prefer to avoid.
It also requires training operators, checking for duplications, having supervisors look for common errors, and potentially halting operations during the transition period.
Due to this, the B2B sector is naturally inclined toward retention. Of course, strategies are still necessary to keep the contract active, but they tend to be simpler and less costly to maintain.
Typically, simply fulfilling the contract as established is enough to maintain customer retention at a good level.
Customer Retention in B2C
B2C is a very different case from B2B. Here, there are direct factors working against customer retention that are very hard to resolve.
At the same time, customer acquisition strategies in B2C tend to be simpler than those in B2B, especially at the Bottom of the Funnel.
All around, there are offers made to grab your customer’s attention and drive them to the competition. The switch from one brand to another, or even from one product to another, is not as difficult as it is in B2B.
Even in the SaaS universe: switching from one app to another has no costs, it’s simple, you don’t need to learn much, and it doesn’t take long. In just five minutes, you could lose your user to the competition.
In retail, it’s the same, both online and offline. For every weakness in your brand, there are at least ten other brands that offer it as a differentiator.
Some factors that make customer retention harder in the B2C model are:
- Price competition
- Ease of use of the product
- Ease of purchasing the product or hiring the service
- Well-executed delivery or service
- Good customer service
- Loyalty programs
- Special payment conditions
And other factors. B2C has far more obstacles to customer retention than advantages for loyalty.
A single unsatisfactory customer service experience can be enough for your customer to start purchasing from your competitor.
If you’re in the B2B sector, this article is extremely important. Move on to the next topic without wasting time!
How to Retain Customers — B2B, B2C, Retail, Services, and SaaS
Now, we’ve reached the practical part of the article!
As you must have understood by now, customer retention has particularities that depend a lot on the business model you operate under.
Moreover, it depends on who you sell to and how you sell.
These distinctions must be made because customers are different from one another. And we could go even further — each demographic, each target audience, and each persona will have very specific retention needs.
However, you probably already know these other points, or at least you can figure them out. They are closely related to the company’s experience, which should never be ignored.
This is the main problem with articles that talk about customers in general. You know your customers’ needs, likes, and dislikes much better than I do.
And these needs make up a huge part of customer retention work. I would even say that feeling — backed by data, mind you — is at least half of customer retention work.
Unfortunately, we can’t discuss that feeling because it involves issues that we don’t have access to. Only you do.
But with the more general information we’ll provide, it becomes much easier to organize what you already know and feel and structure real strategies.
This structure is what we offer here throughout this topic.
Let’s now talk about general actions, without direct item-by-item separation. In each action, we will bring recommendations for application by business model, commerce type, etc.
Loyalty Program
This is the most common action in B2C and retail in general, where sales are made product by product.
A loyalty program is so basic that it almost begs to be repeated three times: basic, basic, basic.
This means that if you work in retail where repurchase is strongly encouraged — for example, supermarkets or, in the online world, clothing and accessories — offering a loyalty program is almost mandatory.
This is mainly due to the popularity of the action. If you open any article on the internet that talks about customer retention, a loyalty program is one of the first examples mentioned.
Because it’s so popular, you can be sure that other people are applying the strategy right now.
Find a way to create a loyalty program that makes sense for your brand. Examples include:
- Progressive discounts
- Buy X, get 1 free
- Cashback
- Offering miles on the card
- Referral benefits
- Points for discounts on specific items
- Direct discounts on items that other customers don’t get
And others. Don’t ignore the power of the loyalty program. It also gives you closer contact with your customer, who can be approached via WhatsApp and email marketing if they leave their contact information.
Follow-up, Presentations, and Reports
For companies offering continuous services, especially in B2B, one of the best ways to work on customer retention is through presenting reports and follow-ups.
It’s quite common in B2B for other activities to interfere with what you had planned.
For example, in our segment, digital marketing, it’s quite common to see clients hire agencies and leave them working almost entirely alone.
This is normal, but not presenting progress reports on the activities performed is a significant enemy of customer retention.
Usually, these companies leave the follow-up to the person responsible for the contract or project managers along with Customer Success agents.
Here’s how it works: project managers ask the production team for reports every month or create them themselves.
Then, the person in charge of talking to the client schedules a meeting and presents the results.
There isn’t much to say about this because the entire process depends on what you’re offering to the client. But anyway, in B2B, there’s no avoiding the need to create reports.
Referral Benefits
Another great way to work on customer retention is through referral benefits.
The setup is simple: every time someone refers your company, that person gets something in return.
For instance, at Leadster, we offer a commission to agencies that refer our platform to their clients.
Similarly, we offer this commission in the form of a discount for the referred client.
These referrals are great for keeping your customers engaged, and they are even more important in SaaS tools.
These tools require constant interaction between the user and the Customer Success team. But we’ll discuss that further below.
Customer Success Plan
SaaS companies in general have a lot to teach us about customer retention. This is a very important subject for them because churn rate, or contract cancellation rate, is a very valuable metric in the sector.
These companies have a whole plan based on scripts and the expertise of their implementation and customer success teams. This plan starts when the contract is signed and can last for months, even more.
For example, RD Station does a very interesting job with its clients. There are free courses that only partner agencies have access to, periodic meetings to understand the client’s marketing results, and even VIP access at the Summit.
It’s worth mentioning that these follow-up meetings aren’t just about talking about the tool or the product itself. They are related to the client’s performance using the product.
In other words, for RD, customer success is real success. They need you to have good results in order to keep using the platform.
This is very important for SaaS companies, and this is not an exclusive practice of RD Station. Here at Leadster, we offer a very similar approach.
Offer this type of support to your clients and watch retention go through the roof.
Cheapest Annual Plan (and Much Cheaper)
One of the most common strategies in service companies is to sell an annual plan that is cheaper than a monthly plan.
For example: paying monthly, the price is R$ 200 per month. But paying annually, all at once, the price drops to R$ 150 per month.
One way to increase customer retention while also gaining an extra injection of funds is to offer an annual plan that is much cheaper than the regular monthly price.
In other words, instead of charging R$ 150 per month, you could charge R$ 100 per month for customers who pay for a full year of subscriptions, but at the R$ 200 price.
This way, you increase your chances of contract renewal, which is still more secure than monthly payments, boosting your LTV.
⛵ Explore: Lifetime Value (LTV) — Learn How to Calculate This Metric Correctly
So, what do you think of our customer retention plan? In fact, of the plans: we’ve brought several ideas and actions throughout the article, and all of them are very valid.
Just keep an eye on one thing: whether the specific action aligns with your practices and business objectives.
We’ve talked a lot about SaaS strategies and how we apply some of them here at Leadster. But there’s one thing we missed: the result.
And you can now follow that.
At the end of 2023, we launched our first Open Benchmark. In it, we analyzed all the results we achieved throughout the year, also detailing the actions we took to achieve them.
Download it now by clicking on the banner below. Thank you for reading! See you in the next article.
