Customer retention rate: formula, definition, and tactics to boost it
Are repeat customers the backbone of your business? Find out how to measure customer retention rate, why it's important, and which strategies can improve it.
Account management is all about fostering a strong relationship between customers and your brand. It’s often the difference between losing business and maintaining long-lasting, revenue-driving relationships with your customers.
If account management isn’t executed well, especially inside B2B businesses, it’ll disengage or put off your customers. In other words, it can do the exact opposite of what it was designed to do. But here’s the good news: You can avoid those negative outcomes by exploring a few different account management approaches, best practices, and potential challenges.
Read on to keep learning.
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Account management is the process of managing and nurturing relationships with customers to ensure satisfaction, retention, and growth. It's a critical aspect of business success because it focuses on building strong customer relationships that lead to loyalty, advocacy, and, ultimately, long-term revenue.
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An account manager (AM) — or in some cases, a customer success manager (CSM) — is the primary point of contact between a customer and your brand. They oversee the post-sales processes, uncover the inner workings of operations, and ensure your products or services are meeting each customer’s expectations. Unlike account executives, their focus is on customer retention, not net-new logo acquisition.
A few common account management responsibilities include overseeing schedules and budgets, taking care of quality control, handling and resolving issues, noticing upsell and cross-sell opportunities, recommending improvements, and offering solutions accordingly.
AMs understand customers and their needs better than anyone else, and typically companies hire someone to oversee a team or territory of AMs. This way, AMs have a leader they can consistently consult with for big account decisions business and revenue growth opportunities.
As a recap, a good AM should master the following skills:
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Essentially, an AM acts as an advisor, directing business decisions based on what customers want while always having the company's best interest at heart.
By enhancing the customer experience, AMs do things like:
Looking at the bigger picture, strategic account management enables you to solidify your strategy via true key account relationships and keep customers loyal to your business.
This is critical if you think of each customer as a coveted, constant lead for your competitors; you don't want to risk losing them. If you do, you could try to steal away customers from your competition, but we’ve known for a decade now that generating leads and converting them into sales costs 5-25x more money than keeping existing customers satisfied.
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To create a truly effective account management process, you need to choose the right type for your budget and business goals. Here are the four main approaches businesses take:
Sales account management is the most basic option that caters to a large portion of the customer base. With this type, the account managers communicate regularly with customers and respond to any routine inquiries. The revenue growth here isn't great, which is why they divide their efforts over a large audience.
Key account management (KAM), unlike sales account management, is more tunnel-visioned, as it focuses primarily on the most important customers. Their importance may be based on revenue, exposure, publicity, or potential expansion opportunities.
Sometimes interchangeable with key account management, strategic management is crucial to customer retention and long-term loyalty. The difference between the two is that strategic account management focuses more actively on the success and operations of your business as well, not just your customers’ businesses.
Some companies sort their customers by industry and assign a dedicated AM (or team of AMs) who have experience in those areas. Here are a few examples of successful account management across different industries:
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Think your account management function could use a bit of a revamp? To hit the ground running, here are eight best practices for more impactful account management.
Effective communication, which requires a high level of emotional intelligence, is at the heart of account management. Communicating well with customers means AMs pick up on cues and flags to learn how to accommodate their book of business better. To understand your customers’ evolving needs and stay in consistent communication, we recommend scheduling regular catch-up calls or in-person meetings to listen to their issues, validate their concerns, and solve their problems.
“Solve their problems” is, of course, easier said than done. But great AMs will discuss their customers’ goals (and obstacles to those goals) with their internal teammates and stakeholders to find a solution and become a trusted link between customers and the people internally who will end up solving their problems.
Capable AMs build healthy relationships with customers and stay on great terms with them.
By gaining insights into a customer’s goals, they build tailored solutions by collaborating with internal team members. For instance, they might reach out to a customer to recommend a new book released in their favorite genre based on a conversation from a few months ago. These thoughtful gestures make customers feel valued and heard.
Another way to show appreciation is by keeping the strategic account management program, well, strategic, or exclusive. It shouldn't be for just anyone. Fixate on fewer accounts, particularly customer accounts that bring in a high annual recurring revenue (ARR) or have the potential to do so.
AMs should always be looking for ways to refine their skills and become more confident in their abilities with experience. As a business leader, you can support their growth by giving them access to training opportunities, courses, publications, webinars, trade shows, sales events, and conferences in your industry.
This way, they're the best account managers they can be and are up to date with industry trends, developments, practices, and regulations.
Want to know one of the best ways to know how satisfied your customers are with your product or service? Host quarterly or semi-annual executive business reviews (EBRs). In these meetings, AMs give an overview of overall customer health, product usage, new market trends, and upcoming offerings.
But it’s not just AMs doing all of the talking. Great EBRs are collaborative and help customers establish concrete goals for the next quarter or year based on their AM’s advice and recommendations. They also give AMs the chance to gather some qualitative feedback on how things are going and what can improve in the coming months.
The “M” in “SMART goal” stands for “measurable” for a reason. Your AMs should be measured consistently using standard metrics that all AMs are measured on across the team. This way, everyone has the same benchmarks for success to see how impactful their account management work is.
Often account management leaders will track the number of upsells and cross-sells, customer satisfaction (CSAT) and the net promoter score (NPS) across an AM’s book of business, and even things like their average customer lifetime value (CLV) and average order value (AOV).
An AM becomes a trusted advisor with top customers, advocating for their wishes and making recommendations to help them make the most out of your company's services or products. If customers find their AM to be both cooperative and reliable, they'll come to them with complaints and issues.
An AM keeps track of insights, including a customer’s past purchases and upsell opportunities, via consistent reports. It's this dedication to customer satisfaction for top accounts that'll drive meaningful revenue.
Find an account manager who does more than respond to questions. Instead, look for people who are naturally proactive and able to anticipate customer needs.
For example, let's say your company's offerings aren't enough for a customer’s upcoming project. A great AM should think about finding them supplemental help to ensure the project still succeeds. Prioritizing customer relationships this way builds trust, which subsequently fuels customer loyalty.
Still, how is it possible to foresee the needs of customers? Let's go over a few ways:
Customer data collection and analysis sounds like a good idea — until you realize how demanding and time-consuming it is. Some account management tasks are quite repetitive, so it just makes sense to automate them via new technologies.
For instance, using Streak, our productivity and pipeline tool, you can track leads, projects, and tasks and maintain every customer relationship from Gmail. It captures data from your contacts and emails automatically and sends you timely notifications when it’s time to take action in accounts.
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A huge part of account management is anticipating and proactively combatting challenges, so here's what you need to consider.
First, competing demands can undermine your account growth efforts. You might work with customers who have long-term goals but also want results immediately. You might want to satisfy customers, but other internal departments just can’t meet their demands fast enough. This conflict in demands necessitates effective internal and external communication to find a middle ground.
Another challenge is that account management is based on information, so it's hard to increase retention with a lack of information. AMs should be able to supply their customer base with information about the direction of your company, and in return, AMs should receive critical customer details from their points of contact to best meet their needs. If you’re an AM leader, see to it that all AMs have access to the information they need.
Lastly, be equipped for resource limitations. You may not have enough account managers, or they may not have enough time for the number of accounts they're managing. In that case, rethink which customer accounts get extra care and which don't.
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The first step in maintaining healthy relationships with customers is using a CRM like Streak. Here are a few reasons Streak specifically is a great choice for account management teams:
Team collaboration features: Streak allows you to share notes, emails, and call logs with your team, ensuring everyone stays on the same page with all accounts.