The Hard Truth About Acquisition Costs (and How Your Customers Can Save You)

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Michael Redbord
Michael Redbord

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Trust in businesses is eroding. Customers are impatient. Marketing is getting expensive. Sales is more challenging, and to top it all, the math behind most companies' acquisition strategies is simply unworkable.

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The state of customer acquisition is appalling. So, what's your only point of leverage? An investment in customer service.

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In this post, we'll delve into the hard facts about the difficulties of attracting new customers and how you can leverage your customer service to grow your business despite those challenges.

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Table of Contents


Consumers don't trust businesses anymore.

The way people interact with businesses is changing negatively. The internet's rise three decades ago changed the business landscape more than anyone could have imagined in the 1990s. And now it looks like the internet itself is changing.

The rapid spread of misinformation, spam, and unreliable websites has made people doubt every piece of information they find online.

A study conducted by G2 on 1000+ B2B buyers shows a massive drop in buying sources.

customer acquisition costs - buying sources by company size

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When buying software, buyers' reliance on:

  • The company's website declined by 5%.
  • The company's sales team declined by 4%.
  • Review sites increased by 5%.

One main reason is that consumers don't trust information about the business and software. Every one in two respondents said they couldn't find credible information about the company anywhere.

The content isn't specific to their industry, vendor websites are unreliable, and it's hard to find independent content to support them.

customer acquisition costs — consumers don't find websites reliable

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A bigger problem is that business leaders have no idea. They overestimate how much they're trusted. A PWC study shows a 57% gap between how leaders estimate versus how much consumers really trust them.

customer acquisition costs — consumer vs. companies trust gap

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We used to trust salespeople, seek out company case studies, and ask companies to send us their customer references — but not anymore.

Today, we trust friends, family, colleagues, and look to third-party review sites like Yelp, G2Crowd, and Glassdoor to help us choose the businesses we patronize, the software we buy, and even the places we work.

customer acquisition costs — 85% review websites during the buying process

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The rapid spread of misinformation, concerns over how online businesses collect and use personal data, and a deluge of branded content all contribute to a fundamental shift — we just don't trust businesses anymore.

Consumers are also becoming more impatient, more demanding, and more independent.

According to The State of Customer Service report published by Netomi:

  • 39% of people have less patience now than before the pandemic.
  • 43% of consumers find long wait times frustrating.
  • 3 in 5 people have hung up on an agent at least once out of frustration.
  • Customers will wait 2 minutes for a call with an agent.

Modern consumers are also unafraid to tell the world what they think.

More than half (53%) reported sharing a negative experience with a company's customer service, which isn't entirely their fault because 62% also reported getting ghosted by the agent.

Your customers need you less than they used to. They learn from friends, not salespeople. They trust other customers, not marketers.

Acquisition is getting harder.

The erosion of consumer trust is a complicated issue for companies to grapple with. But as if that wasn't enough, the internet, which has always transformed the traditional go-to-market strategy, is moving the goalposts again.

What do I mean?

Let's break this down into two functions: Marketing and sales.

1. Marketing is more expensive.

We've taught inbound marketing to many companies and built software to help them execute it. Inbound marketing accelerated business growth through a repeatable formula:

  1. Create a website.
  2. Create search-optimized content that points to gated content.
  3. Use prospects' contact information to nurture them to the point of purchase.

This still works, but the market is experiencing five trends that have made it harder for growing businesses to compete with long-established, better-resourced companies.

Trend 1: Google is taking back its real estate.

Much of modern marketing depends on getting found online.

Without the multimillion-dollar brand awareness and advertising budgets of consumer goods titans, a growing business can best compete by creating content specific to its niche and optimizing it to appear on search engines.

For years, driving traffic from search engines like Google was easy.

Not anymore.

Google, the arbiter of online content discoverability with a 93% market share, has made significant changes in the last few years, making it harder for marketers to run this model at scale without a financial investment.

First, Google is reclaiming its traffic through featured snippets and "People Also Ask" boxes. Here's how Google displays the necessary information as a featured snippet to stop users from leaving the platform.

customer acquisition costs — Featured snippets in SERP for the question “What is a cell?”

Then just below it, you see "People also ask" boxes, a different feature snippet permutation. These display questions related to your original search, live on the SERP, and are expandable with a click, like so:

customer acquisition costs — People also ask on SERPs for the question “What is a cell?”

Each time you expand a "People also ask" section, Google adds 2-4 queries to the end of the list.

What's the effect of both?

A study by EngineScout says featured snippets and "People also ask" boxes got 35.1% and 6% of total organic clicks, respectively. Meaning you not only compete for the first position but also for featured snippets.

Second, Google changed its search engine results page (SERP), moving search ads from a sidebar to the top four slots. Organic results fall much further down the page, and many times, they disappear entirely.

customer acquisition costs — paid ads as SERPs listing for “best crm software”

Search results often show YouTube videos — mostly for tutorials or how-to queries.

videos on SERPs

The third and newest of all: Generative AI.

Google has integrated AI and chat in SERPs that might replace featured snippets and "People also ask" boxes, but the catch is — you can also ask a follow-up question.

If you need more clarity, there is no need to click on the link to read the post; simply ask a follow-up question.

customer acquisition costs — SERPs after generative AI

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Of course, people can still click on links, but clicks are definitely going to go down.

Voice search adds a fourth wrinkle to these shifts — the winner-takes-all market.

As voice search has increased (50% of U.S. audiences use voice search), it's become increasingly important to become the answer, as voice assistants only provide one result when asked a question.

Overall, Google is constantly evolving (making it difficult for companies to drive traffic), and if it's your only acquisition strategy, you need to think twice.

Search won't ever become purely pay-to-play. But in a world where screen real estate is increasingly dominated by sponsored content, marketers need to factor paid tactics into any organic strategy.

If ads are shown before organic listings, bidding for the right keywords may be a better investment.

Trend 2: Social media sites are walled gardens.

A decade ago, social media sites were promotion channels that served as a path between users and the poster's site.

It was straightforward — people would discover content on Facebook, Twitter, and LinkedIn, then click through to content (usually hosted on another site).

Today, social media sites are walled gardens. Algorithms have been rewritten to favor onsite content created specifically for that platform.

The reason? These social media sites want to keep users on their platforms to earn ad income. Your branded content will have a harder time competing with other brands and paid ads.

Does that mean you should give up on social media? No, it won't do you any good because there's a brighter side to it.

Amazon used to be a great starting point for search, but our recent study says differently. 80% of marketers said consumers buy products directly from social media apps more often than brand websites.

customer acquisition cost data;  80% of marketers said consumers buy products directly from social media apps more often than brand websites.

So you don't need to give up on social media but start building your audience by publishing onsite content consistently.

Because as long as social media sites can monetize their traffic, they have no incentive to return to the old passthrough model.

Today, Facebook is a destination. Twitter is a destination. LinkedIn is a destination.

It's no longer enough to create content for your site, then schedule out promotions across channels that point back to that content — it'll only limit your reach, and you'll be stuck wondering why.

Savvy marketers know their ideas must be channel-agnostic and channel-specific.

As Alison Coleman, Zoom's Social media manager, says:

"We're excited to focus more on each social platform with its dedicated strategy, designing content to engage directly with in-feed.

The days of repurposing content are not necessarily over, but tailoring how we tell the same story on different platforms, to different audiences, with a different approach, is something we are excited to prioritize in our content."

Investing in product-related content has been a great help in boosting sales. She continues, "Product tips are a core part of our editorial calendar and what our audiences engage with most — but how we share this differs by platform."

To get the most out of a piece of content, its core concept must perform well across multiple channels, but marketers have to do more upfront work to create separate versions of this content to best suit the channel on which it's appearing.

Trend 3: It's getting more expensive to do marketing.

Search and social media titans have moved their goalposts to create a more competitive content discovery landscape. At the same time, barriers to entry on these platforms are getting higher in two ways:

1. Organic acquisition costs are rising.

SimplicityDX's recent study shows a 222% increase in customer acquisition costs in the last eight years in the ecommerce industry.

customer acquisition cost in 2014 $9. customer acquisition cost in 2022 $29.

Why is this happening?

Ishaan Shakunt, founder of Spear Growth, shares it's not because of one or two reasons. Many things are happening in the background. He says, "It's difficult to understand why it's happening because calculating blended CAC isn't easy."

You can't measure organic and paid CAC combined (blended CAC), as evaluating both at a specific timeframe is difficult.

  • Paid is simple — it stops working the moment you stop ads.
  • Organic results are compounded, but they take considerable time.

So you can't estimate organic from when it started working or which campaigns brought results and compare it against paid. According to Ishaan, calculating paid CAC is easier — so let's go with this one.

He points out three main reasons why paid CAC is increasing, which also support our claims from above:

  • Organic isn't performing well. A decade ago, organic used to work well. Brands could drive high traffic by placing a few keywords here and there — not anymore. Today, algorithms are intelligent, SEO is difficult, competition is higher, and SERPs have less space.
  • Major social media platforms don't work anymore. Every five or ten years, we see this trend, a new marketing channel appears, it suddenly becomes all the rage, and when it's reached its height — saturated with many competitors — it stops working. Examples are Snapchat, Instagram, and TikTok.
  • Market share is diversifying. Earlier, most market shareholders were top brands from industries. Small brands weren't considered. For example, Adobe Photoshop for photo editing. Today, the market share is evenly spread across multiple competitors — Adobe has many competitors, such as Canva, GIMP, and PicMonkey. The same is true for other industries.

To compensate for these changes, more companies are moving towards paid ads. They're now competing for paid rankings by bidding on keywords — resulting in paid CAC increasing.

2. Content marketers are commanding higher salaries.

It's not only harder to get value from content, but it's also getting more expensive to create it. Superpath examined the rise of content marketers' salaries by year — median salary has grown steadily.

customer acquisition costs — content marketers salary growth

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In fact, senior marketing managers saw an average salary increase of 15.4% before inflation — changes in the content marketing profession partly explain this rise.

Google's changing algorithm requires more specialized knowledge than ever.

Not only are there specific optimization best practices to win featured snippets, but Google's current algorithmic model also favors sites architected using the topic cluster model.

Depending on the size of your site, this can be a massive undertaking — at HubSpot, it took us over six months to fully organize our blog content by this model.

Stand out in the market. Savvy marketers know that with AI, the quantity of content may increase, but the quality will decrease.

They're ready to increase their content marketing budget to produce human-generated, original content to stand out.

Trend 4: GDPR

The following is not legal advice for your company to use in complying with EU data privacy laws like the GDPR. Instead, it provides background information to help you better understand the GDPR. This legal information is not the same as legal advice, where an attorney applies the law to your specific circumstances, so we insist you consult an attorney if you'd like advice on your interpretation of this information or its accuracy). In a nutshell, you may not rely on this as legal advice or a recommendation of any particular legal understanding.

Eroding trust in businesses has much to do with how they used to collect their customers' personal information. 76% of consumers reported having no idea what companies do with their data.

It's not that consumers aren't aware of this — a whopping 79% believe it's essential for a company to protect customers' data to gain their trust.

customer acquisition costs — customers want companies to protect data

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That's why the General Data Protection Regulation (GDPR) passed by the European Union (EU) imposed new regulations on how businesses are allowed to obtain, store, manage, or process the personal data of EU citizens.

Businesses now need to state transparently what data they're collecting and why. And consumers can request businesses to delete their data at any time.

Did it have adverse effects? HubSpot CMO, Kipp Bodnar, doesn't think so; he says, "A privacy-first approach won't hurt your customer relationships. It'll transform them."

Want proof? Using HubSpot and Google's integration for a better privacy-first approach, Zoe Financial saw a 200% increase in revenue — it only enhanced customers' trust in the company.

Trend 5: It's difficult for customers to try the product.

The B2B industry needs much improvement because buyers don't have a frictionless experience when buying software. Let me share the insights from ChiliPiper's B2B Buyer Journey report.

Only 11% of companies have a calendar scheduler on their website. For most companies, their buyers don't have a direct way to book a meeting with sales teams.

customer acquisition costs — 11% of companies use calendar schedulersImage source

Almost every B2B deal is made after one or more meetings with the company sales team, and by not having a meeting scheduler, these companies are elongating the sales cycle.

Only 17% of companies use interactive product demos on their website — which is one of the primary reasons why buyers hesitate to buy.

customer acquisition costs — 11% of companies use calendar schedulers

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Buyers want to try the product on their own before buying it. They don't want to wait two days to hear back from the sales team to give them a product demo.

To back it up — a TrustRadius report shows product demos are the most helpful when making a purchase decision.

customer acquisition costs — product demos are most impactful when making a decision

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Companies need to find a way to make the buying experience seamless.

  • They must show pricing on their website so buyers can understand their budget.
  • They must include interactive product demos so buyers can try the product.
  • They must include a calendar scheduler so buyers can book a meeting immediately.
  • They must reduce the response time so buyers don't feel they're waiting forever.

In combination, these five trends mean that:

  • It's harder to stand out on a crowded internet.
  • It's more expensive to find talent and produce content.
  • Algorithmic changes will force investment in a multichannel marketing strategy.
  • Your website isn't doing a great job attracting and helping customers.

So it's getting harder to get prospects to your site, and when some do get on your site — you don't make it easy to move forward.

But for those few who do get in the door and schedule calls, closing them should be a standard operating procedure, right? Not quite.

2. Sales is more challenging.

Every year, HubSpot surveys thousands of marketers and salespeople to identify the primary trends and challenges they face. And year after year, salespeople report that their jobs are becoming more difficult.

HubSpot's study states that standing out from the competition is the top challenge for most salespeople.

Competition is fiercer than ever, and if you don't have unique features/values, it's difficult to keep prospects engaged throughout the sales process.

customer acquisition costs — salespeople struggle to stand out

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It's not entirely the salespeople's fault, though — the market is saturated more than ever. With new companies launching daily and features getting replicated, it's difficult for salespeople to stand out, and they struggle to get attention.

Prospecting is the most challenging part of the sales process. Salespeople reported spending 12+ months researching a prospect to understand their pain points better.

customer acquisition costs — prospecting is the most challenging

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Another problem is the contact method salespeople are using. Prospects don't want to be cold-called out-of-the-blue; they want their sales agents to build relationships with them.

New LinkedIn research suggests warm calling is one of the best ways to engage with buyers. As a result, salespeople (75%) spend more time researching prospects.

But keeping tabs on different prospects can become challenging when you're doing it on a scale, especially when you're not using a CRM to track everything.

customer acquisition costs — salespeople spend months to nurture leadsImage source

The key is to strike a balance. Peter Mollins, CMO of SetSail, says:

"Cracking into having a meaningful conversation with your prospect when the market is blaring at them is incredibly difficult.

And that's why it's so vital to engage prospects on their terms: reaching them when they're ready, in terms they care about, that are impactful, clear, and concise."

It keeps getting worse for salespeople.

Why?

Because decision-makers of companies keep changing frequently. A G2 report reveals that 68% of salespeople experienced decision-makers changing multiple times during the software buying process.

The amount of time, effort, and research salespeople put into building a healthy relationship with a prospect becomes vain just because decision-makers change.

Now, they must start from scratch, which elongates the sales cycle.

customer acquisition costs — decision-makers in companies changing

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The same study shows that people want salespeople to show more involvement in the research phase, but they show up only in the buying phase.

Somehow, salespeople fail to understand where their prospects need their help. And since the help isn't provided correctly, buyers rely on self-research, influencer recommendation, and their networks for an opinion.

But, it's not salespeople only — it's also consumers. People are more impatient than ever, as if they don't want to take their sales agent seriously.

Salespeople reported having 10-15% of sales calls where people weren't interested.

Diana Stepanova, the Operations Director from Monitask, shares:

"A small percentage of prospects exhibit impatience or rudeness. It's not uncommon for prospects to become frustrated if they're short on time or their needs are not being met promptly."

Salespeople must remain patient while dealing with prospects.

Diana continues, "A sales expert needs to maintain professionalism and apply empathy to understand the underlying cause of this behavior. Often, these prospects have dealt with poor customer service in the past or are under significant pressure, leading to an emotional reaction."

The inherent distrust of the profession is diluting salespeople's influence in the purchasing process and making your acquisition strategy less and less reliable.

It's scary, but there's a bright side. Within the pain of change lies opportunity, and your business boasts a huge, overlooked source of growth you probably haven't invested in — your customers.

Your customers are your best growth opportunity.

When you're growing a business, two numbers matter more than anything else:

  1. How much it costs to acquire a new customer (or CAC)
  2. That customer's lifetime value — how much they'll spend with you over their lifetime (or LTV)

For many years, businesses focused on lowering CAC. Inbound marketing made this relatively easy, but the new rules of the internet mean this is getting harder.

As Google and social channels tighten their grips on content, the big opportunity for today's companies is raising LTV.

If your customers are unhappy, you might be in trouble. But if you've invested in their experience, you're well-poised to grow from their success.

When you have a base of successful customers who are willing and able to spread the good word about your business, you create a virtuous cycle.

Happy customers transform your business from a funnel-based go-to-market strategy into a flywheel. Through promoting your brand, they're supplementing your in-house acquisition efforts.

This creates a flywheel where post-sale investments like customer service feed "top of the funnel" activities.

The flywheel explains how you gain momentum from delivering a remarkable customer experience that produces happy customers who send you referrals and repeat sales.

customer acquisition costs — marketing strategy flywheel

Buyers trust people over brands. Do you know how much? A MarketingChart report says 1 in 4 people buy based on influencer recommendations.

customer acquisition costs — 1 in 4 people buy based on influencer recommendation, people buy based on other customers' recommendation

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And brands are getting crowded out of their traditional spaces, so why throw more money at the same go-to-market strategy when you could activate a group of people who already know and trust you?

Isn't it easier to turn customers into your brand's advocates?

Think about it this way — by your customers promoting your brand, you're doing free marketing without appearing salesy or pushy. It's a win-win.

Customers are a source of growth you already own and a more natural and trusted way for prospects to learn about your business.

The happier your customers, the more willing they are to promote your brand, the faster your flywheel spins, and the faster your business grows. Not only is this right for your customers, but it's also a financially smart thing to do for your business.

At some point, your acquisition math will break.

Businesses are moving to a recurring-revenue or subscription-based model. It means customers pay a monthly fee for membership or access to products.

The recurring revenue model makes it easy to project expected revenue over a set time. Understanding how money moves in and out of business makes headcount planning, expansion planning, and R&D efforts easier.

But it doesn't matter if your company is subscription-based; a recurring revenue model contains lessons that apply to all businesses. Before we dive in, there are three core assumptions this model relies on.

assumptions in recurring revenue model

First, every business has a defined total addressable market, or TAM. Your TAM is the maximum potential of your market. It can be bound by geography, profession, age, or other factors, but generally, every product serves a finite market.

Second, every company aims to create repeat customers — not just subscription-based ones. Below are examples of businesses that benefit from recurring revenue, even if it's not formalized through contracts or subscription fees:

  • A beauty products store where customers typically purchase refills once every three months.
  • A hotel chain that becomes the default choice for a frequent traveler.
  • A neighborhood restaurant that's cornered the market on Saturday date nights.

Third, the key to growth is to retain your customers while expanding into the portion of your TAM that you haven't won yet.

acquisition math doesn't work

Let's understand why a subscription-based model is valuable using an example. Suppose there's a company called Minilytics, Inc.

Minilytics starts with a customer base of 10 people and a churn rate of 30% — meaning three of their customers will not buy from them again. Each of Minilytics' salespeople can sell five new customers per month.

Because of Minilytics' small customer base, they only need to hire one salesperson to grow.

Fast forward several months, and Minilytics now has 50 customers, 15 of whom churn. To grow, Minilytics' CEO has to bring on three more salespeople, meaning they have to pay additional salaries.

You can see where this is going. At 100 or 1,000 customers, Minilytics' CEO cannot hire enough salespeople to grow. The cost of paying staff to maintain a business losing 30% of its customers will shutter most businesses.

But there's more. While Minlytics struggles to plug the leaks in its business, something else is happening that will tank the company — even with an army of salespeople.

Remember TAM? While Minilytics' CEO was hiring salespeople to replace churned customers, the company was also rapidly burning through its TAM.

Generally, customers that churn do not return because it's hard enough to gain a consumer's trust. To break trust through a poor experience, then try to rebuild it is nearly impossible.

Even if Minilytics can afford an expanding sales team, it's been rapidly churning through its TAM. Eventually, Minilytics will run through its entire total addressable market, and there will be no room to grow.

Luckily, Minilytics is just an imaginary company. Let's rewind to that first month and explore what they could have done differently.

Building a good customer experience is the foundation of growth.

Growing a sustainable company is all about leverage.

If you can identify the parts of your business model that require lots of effort but provide little reward, then re-engineer them to cost you less effort or provide more reward, you've identified a point of leverage.

Most companies hunt for leverage in their go-to-market strategy, which usually involves pouring money into marketing or sales efforts.

Customer service, customer success, customer support — or whatever you call it (at HubSpot, we have a separate team dedicated to each function, but we're the exception) — has traditionally been viewed as a cost center, not a profit center.

And it's not hard to understand why. The ROI of sales and marketing investment is immediately tangible, while investment in customer service is a long game.

But most companies mistakenly try to optimize for fewer customer interactions, so issues are left unaddressed. Because they're thinking short-term, it costs them in the long term.

Too many businesses think once a sale is made and the check's cleared, it's on to acquire the next new customer.

That doesn't work anymore. The hardest part of the customer lifecycle isn't attracting their attention or closing the deal — it's the journey that begins post-sale.

A Gladly report on customer expectations states that 40% of buyers would stop buying from a brand after two bad customer experiences.

customers leaving brands after bad customer service

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The same report says that 59% of customers would recommend a brand to their friends because of its customer service.

Once your customers are out in the wild with your product, they're free to do, say, and share whatever they want about it.

Coincidentally, that's when many companies drop the ball, providing little guidance and bare-bones or difficult-to-navigate customer support. This approach, quite frankly, makes no sense.

Think about it this way:

  • You control every part of your marketing and sales experience.
  • Your marketing team carefully crafts campaigns to reach the right audiences.
  • Your sales team follows a playbook when prospecting, qualifying, and closing customers.

Those processes are needed — because they're a set of repeatable, teachable activities you know lead to consistent acquisition outcomes.

Once a customer has your product in their hands, one of two things will happen: They will succeed or not.

If they're a new customer or first-time user, they might need help understanding how to use it. They would want to learn from others who have used your product or want recommendations on how best to use it.

Regardless of what roadblocks they encounter, one thing is sure: There's no guarantee they'll achieve what they want — this is a gaping hole in your business.

  • No one is better positioned to teach your customers about your product than you.
  • No one has more data on what makes your customers successful than you.
  • And no one loses more from getting the customer experience wrong than you.

Let me say that again: Nobody has more skin in this game than you.

40% of respondents said they'd stop buying from a company because of a poor customer experience. If your customers are dissatisfied, they can — and will — switch to another provider.

Few businesses today have no competitors. Once you lose a customer, you'll not get them back. If you fail to make your customers successful, you'll fail too.

But if you help them achieve their goals with exceptional customer service, they'll recommend you to their friends. They'll get you more customers.

Not convinced? Hear it straight from buyers.

Diana Stepanova from Monitask shares her positive experience with a customer service team of a SaaS product she purchased:

"I would undoubtedly recommend this onboarding team to my friends and colleagues, as their exemplary service made a massive difference in my overall experience. In fact, I would be more than happy to share my positive encounter with others as frequently as the opportunity arises."

Still not convinced? Let's take back our example and understand how to best allocate money between marketing, sales, and customer service.

Consider Minilytics and Biglytics (competitor) with a CAC of $10 and a budget of $100.

the importance of investing in customer experience

Minilytics hasn't invested in a well-trained customer service team, so their churn rate is 30%. Three customers churn, so they spend $30 replacing them. The remaining $70 is spent on acquisition, ending with 17 customers.

At Biglytics, things are different. Customer service isn't the biggest part of the budget, but the team is paid, trained, and knowledgeable enough to coach customers who need help.

Because Biglytics has proactively spent $10 of its budget on customer service, its churn rate is much lower, at 10% (a churn rate of 10% is actually terrible — we just chose it to keep numbers simple).

Biglytics replaces their single churned customer for $10 and spends the remaining $80 on eight new customers, netting out at 18 customers.

A one-customer difference doesn't seem significant. But that $10 Biglytics invested in their customer service team has been working in the background.

Customers they brought on last year succeeded with the product because of excellent customer service. These happy advocates kept talking about Biglytics to their friends, family, and colleagues.

Through referrals and recommendations, Biglytics brings on five more customers without extra work from the sales team.

This means Biglytics has brought on six more customers than Minilytics in the same period and reduced their average CAC to $7.14.

Which company would you rather bet on? I'm guessing it's Biglytics.

That's why investing in customer service is so powerful. When you see the whole picture, you discover more opportunities to grow. You'll find it costs 5 to 25 times more to acquire a new customer than to retain an existing one.

Prioritizing short-term growth at the expense of customer happiness is a surefire way to ensure you'll be pouring money into the business just to stay in maintenance mode.

The 4 Points of Leverage in the Customer Experience

A good customer experience goes beyond hiring support staff — it starts pre-sale. The four points of leverage are where you can start working today.

4 points of leverage in the customer lifecycle

1. Pre-sale: Understand customer goals.

People buy products to fix a problem or improve their lives — to get closer to an ideal state from their current state. Your job is to help them get there.

Depending on what you sell, much of the work required to make your customers successful might not be done until post-sale through coaching and customer support.

But if you understand your customers' common goals, you can reverse-engineer your acquisition strategy.

Emily Haahr, head of support and professional services at Plaid, explains how this works:

"Your best customers stay with you because they get value from your products. Dissect your most successful customers and trace back to how they found you in the first place.

What marketing brought them to your site? What free tool or piece of content converted them to a lead? What type of onboarding did they receive, and with whom? What steps did they take in onboarding? And so on…

Once you have this information, you can identify and target the best fits for your product earlier, then proactively guide your customers down a path of success instead of trying to save them once they've reached the point of no return."

2. Pre-sale: Make it easier for your customers to buy.

Determine if your sales process could be easier to navigate. Today, buyers don't want to talk to a salesperson or pay money before they know how well a product works. You should empower them to do so.

Can you give away part of your product or service so prospects can try it before they buy? This way, they'll qualify themselves and learn how to use your product before you ever have to raise a finger.

Anecdotally, HubSpot has seen the most rapid growth in our acquisition through self-service purchases.

Also, evaluate what parts of your marketing and sales process can be automated. Can you add a calendar scheduler to make it easier for buyers to book product demos when they want?

The more you can take off your marketers' and salespeople's plates, the better you'll give your buyers more control over their purchases.

This change is already happening. Think about Netflix, Spotify, and Uber. All three companies disrupted industries with difficulty built into their go-to-market.

Netflix, Uber, and Spotify fulfilling a need in their industry

  • People wanted to watch movies but didn't want to pay late fees. Hello, Netflix.
  • People wanted to listen to music but didn't want to pay for individual songs or albums. Hello, Spotify.
  • People wanted to be driven between Point A and B but didn't want to wait for cabs in the rain. Hello, Uber.

Today's biggest disruptors got to where they are by disrupting inconvenience. Hurdles are the enemy — remove as many as you can.

3. Post-sale: Invest in your customers' success.

At HubSpot, we believe in earning success by investing in customers' success. That's how we've helped Shore and thousands of other businesses achieve incredible results.

I scaled the HubSpot customer service team to over 250 employees, and we've found a few things that help us make our customers happier. I'm sharing them here so you can too:

Gather feedback — NPS® or otherwise.

As early as possible, start surveying your customer base to understand how likely they are to recommend your product to a friend. You can also send post-case surveys to customers whose issues your team has helped resolve.

At HubSpot, we track Net Promoter Score (NPS) maniacally — a company-level metric we all work toward improving. It helps us:

  • Identify holes in our customer service early.
  • Track customer sentiment over time (the trend of NPS is more valuable than one raw number).
  • Quantify the value of customer happiness — when we changed a customer from a detractor to a promoter, the LTV increased by 10-15%.

Start small with a post-support case NPS to determine if immediate issues were resolved. From there, you can build up a quarterly or monthly NPS survey of your customer base that focuses on their general experience with the product.

Build up a lightweight knowledge base.

Self-service is the name of the game. Identify your most commonly asked customer questions or encountered issues, then write up the answers into a simple FAQ page or the beginnings of a searchable knowledge base.

This enables your customers to search for their solutions instead of waiting on hold to get human support. It takes work off your team's plate as a bonus.

Over the years, HubSpot built a vast library of self-service resources that helped customers and helped us retain them longer.

4. Post-success: Activate happy customers into advocates.

Once you have happy and successful customers, it's time to put them to work for you.

buyers' first step after identifying a need, buyers' after identifying a need rely on self service methods to find solutions

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Buyers report they check review sites when making a purchase decision. They're listening to your customers, not you.

Use your customers as a source of referrals and social proof for your business through testimonials, case studies, references, and brand amplification.

The key to successful customer advocacy is not asking for anything too early. Don't try to extract value from your customers until you've provided value — asking for five referrals a week after they've signed a contract is inappropriate.

Your primary goal should always be to make your customers successful. After you've done that, you can ask for something in return.

Putting It All together: The Inbound Service Framework

At HubSpot, we've made many mistakes but learned even more about how to build a repeatable playbook for leading your customers to success and eventually turning them into promoters.

We call it the inbound service framework.

the inbound service framework: customers become promoters by engaging, guiding, and growing

Step 1: Engage

Good customer service is the foundation — that's why "Engage" is the first part of this framework. At this stage, your only concern is understanding and resolving the customers' questions.

Cast a wide net when you're just getting started. Engage with any customer, wherever, about whatever they want. Be on all channels, solve all problems that come your way, and help anyone who needs it.

Above all, make sure you're easy to interact with.

At HubSpot, we found that customers who submitted at least one support ticket a month retained at a rate around 10% higher than customers who didn't and were 9-10 times more likely to renew with HubSpot year after year.

Not getting support tickets does not mean your product has no issues — every product does. It just means your customers are suffering silently.

With time, you'll refine your approach, but this initial operating system helps you gather lots of data rapidly. At this stage, your objective is to learn as much as possible about the following:

  • FAQs requiring customized guidance
  • FAQs that can be addressed with a canned response
  • Most confusing parts of your product/service
  • When support issues arise, do people require implementation help or encounter issues three months after purchase?
  • Commonalities of customers who need the most help
  • Your customers' preferred support channels

This data will enable you to identify leverage points in your customer service motion.

For example, if you find that 30% of customer queries have quick, one-and-done answers ("How do I change my password?", "How do I track my order?", "What is your return policy?"), stand up a simple FAQ page to direct customers to.

Boom — you've freed up 30% of your team's time to work on more complicated, specific issues.

Empower your customer team to make noise about the problems they see, early and often, and turn their insights into action.

Are your sales and marketing teams overpromising? Your customer team will hear these complaints first. Trace the points of confusion back to their origin, and change your sales and marketing messages to reflect reality.

Is there something about your product that causes mass confusion? Your customer team will know which parts of your product/service are most difficult to navigate and why. Use this information to improve your product/service, eliminating these problems at the source.

Do certain types of customers run into issues frequently? Do they usually churn or require extra love to get over the hump?

  • If it's the former, build an "anti-persona" your sales and marketing teams should avoid marketing and selling to.
  • If it's the latter, dive into that cohort of customers to understand whether their lifetime value justifies the extra help they need.

As you learn more about your customers, you'll find new ways to refine your process.

Identify your team's most effective support channels and create an excellent experience for those, then establish a single queue to manage all inquiries.

In this stage, measure success by how fast you solve problems and post-case customer satisfaction. You can do the latter through a post-case NPS survey, which gives instant feedback on your customer team's effectiveness.

Step 2: Guide

In the "Guide" stage, focus on turning your customer relationship from a reactive, transactional model into a proactive partnership.

It's time to transform your customer team from a supportive function into a customer success-driven organization.

(The reactive part of your customer service organization will never go away. But as you grow, it should become part of a multifunctional group.)

What does it mean to be proactive?

First, it means anticipating common issues and challenges and building resources to prevent them. This includes a knowledge base or FAQ and re-engineering parts of your offering to be more user-friendly and intuitive.

Second, it means partnering with your customers to help them get to their stated goals. Guide them through critical milestones, provide tasks to keep them on track, and connect them with peers so they can crowdsource answers if necessary.

Create frameworks and tutorials where you can.

It's better to be proactive than reactive for a few reasons:

  1. It saves time, and time is money. Imagine the time you'll save your support team if you can get repetitive queries off their plates, which can be spent on complex, higher-level issues revealing even larger leverage points in your business.
  2. It makes your customers happier. Even if you can resolve issues at a 100% success rate with 100% satisfaction, you've still built an experience filled with roadblocks. Aim to build a world where you've anticipated and solved your customers' challenges at their source.
  3. It builds a trusting relationship. Buyers are more likely to trust a company that rarely lets them down over a brand constantly scrambling to fix the next issue.
  4. It's a competitive advantage. Proactive guidance makes you extremely knowledgeable about your customer's weakest pain points which can be used as a core part of what you're selling, even if it's positioned as customer service.

As you move from reactive support into proactive guidance, you become a teacher, not a vendor. Other companies might be able to build a product as good as yours, but it'll be hard to replicate the trust you have with your customers.

Guidance is an iterative process. As in the early days of your customer organization, collect as much data as possible on the customer lifecycle and continuously update your guidance to reflect current best practices.

Pay attention to the best formats and channels, which issues have the highest impact on your customers once solved, and update your process accordingly.

Step 3: Grow

Happy customers want to support the businesses they love. They refer their favorite brands to friends and purchase again from the same brand.

Your happy buyers want to help you. That's what the "Grow" stage is all about — turning that desire into action.

"There are three ways to activate your customer base into promoters," says Laurie Aquilante, HubSpot's director of customer marketing: "Social proof, brand amplification, and referrals." Let's review each play.

1. Social Proof

Buyers are more likely to trust and do business with companies their networks trust. The following are all different ways your customers can create social proof for your product:

  • Sharing positive experiences on social media or review sites
  • Providing referrals (more on this later)
  • Testimonials/case studies
  • Customer references in the sales process

"Activating social proof is all about keeping a close watch on your customers. It's also not a pick-one-and-done kind of thing," Aquilante says. "For example, case studies and customer references are helpful at different points in your sales motion."

While you could use the same customer for both, having customers who can speak to diverse experiences is more beneficial.

Encourage social proof by proactively reaching out to your most satisfied customers. You can also provide incentives for sharing content or writing online reviews.

2. Brand Amplification

When someone shares your content on social media, helps contribute content for a campaign, or interacts with it, they amplify your brand.

"To make this happen, you must provide a 'what's in it for me?'" Aquilante says.

"Either create such engaging content and be so remarkable that your customers can't help but amplify your message, or provide an incentive, like points toward future rewards or something more transactional, like getting a gift card for sharing content a certain amount of times."

3. Referrals

Referrals have the most immediate monetary value for your business. B2C companies are masters at the referral game, awarding the referrer credit to their account or even monetary rewards.

B2B referrals are trickier. B2B purchases tend to be more expensive than B2C, involving multiple stakeholders and a longer sales process.

So your customer likely has to do some selling upfront to feel comfortable sending a contact's information to you.

It's not impossible to get this right, but offering your customer something valuable enough to incentivize them to do this work on your behalf is crucial.

"Get in your customer's head, figure out what matters to them, and make sure that you've got a good exchange of value," Aquilante says. "They're offering you something of very high value if they're referring your business, and you've got to offer something in return."

4. Upsells and Cross-sells

A note from our lawyers: These results contain estimates by HubSpot and are intended for informational purposes only. As past performance does not guarantee future results, the estimates provided in this report may have no bearing on, and may not be indicative of, any returns that may be realized through participation in HubSpot's offerings.

Aside from promoting your brand and bringing you business, your customers are also a source of net new revenue if you have multiple products or services. Your customer team is your not-so-secret weapon in unlocking this revenue.

In late 2017, HubSpot piloted the "Support-Qualified Leads" concept at HubSpot.

Our sales team owns selling new business and upselling/cross-selling those accounts.

But our support team is the one speaking with customers daily, so it's just intuitive that they have a better understanding of when customers reach a point where their needs grow past the products they currently have.

When a customer has a new business need and has the budget to expand their offerings with HubSpot, a customer success representative passes the lead to the appropriate salesperson, who takes over the sales conversation.

The Support-Qualified Lead model is powerful because it closes the communication loop between sales and support.

In its first month, the pilot generated almost $20,000 in annual recurring revenue from cross-sells and upsells. Since we've rolled this out, we've generated over $470,000 in annual recurring revenue from this model — nothing to sneeze at.

Start Optimizing Your Customers' Experience Today

Growth has always been challenging. If you're just starting, it's hard to imagine ever competing with the top companies in your industry.

Customer service is the key to this equation.

If you provide an excellent customer experience and can create a community of people willing to promote your business on your behalf, you're laying the groundwork for sustainable, long-term growth.

And in a world where acquisition is getting more complicated, who wouldn't want that?

This post was originally published in May 2018 and has been updated for comprehensiveness.

Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

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