LAST MONTH, GUY NIRPAZ presented a talk at TechWeek New York on “The End of the One-Night Stand: How Startups Can Build Long-Term Customer Relationships." He explained that in the current economy – where services are sold as cloud and subscription-based models – companies around the world are realizing the necessity of long-term client engagement, otherwise known as customer success management. Leading enterprises like Optimizely, Okta and Box employ full customer success departments, and the Customer Success Forum on LinkedIn boasts membership exceeding 7,000 – a number that climbs by the hundreds every week.

Traditionally, many product-based businesses invested heavily on customer acquisition. In contrast, online subscription contracts focus on events after signing to prevent noncommittal and short-lived transactions. Healthy, mutual and long-lasting relationships are the goal because both parties in subscription models have made significant investments – the vendor in acquiring the customer, and the customer in learning and adopting new software. Neither benefits unless both are committed for the long term.

In order to build an effective customer success program, and to end the “one-night stand” of customer relationships, companies should keep the following in mind:

Keep promises to your customers. In the online service business, only 5 percent to 30 percent of revenue derives from the initial sales deal. The remaining 70 percent to 95 percent of your income comes afterward from renewals and upsell, which, unsurprisingly, are great indicators of a happy customer base. Your best leads come from happy existing clients, so it follows that your top priority should be driving renewals and upsell through the delivery of rich, continual value.

Think of any new customer relationship as a roadmap with two points, A and R: acquisition and renewal. What are you doing during the in-between? Show little commitment and attention – or worse, do nothing – and you put the relationship in jeopardy, never quite reaching renewal. But if you jumpstart the relationship by actively making good on what you had promised in the initial sales pitch and contract, the customer is more likely to stick around, through the renewal stage and beyond.

Strive to improve product engagement at all levels. Best-in-class companies focus on creating value for every user, no matter their job title. Customer success and loyalty is driven not from the top but by end users. Whether they’re a top executive, middle-level or frontline manager, the quality of engagement with your product or service needs to be a priority.

According to Totango data, 90 percent of churn is the result of poor product usage, and that applies not just to all types of accounts but also to all levels within an account. Leading companies recognize that customer relationships extend beyond just the top level decision makers and that value needs to be delivered to all end users, whose loyalty to your product is most important in preventing churn.

Leverage data to determine and anticipate customer health. A data-driven approach is advantageous in today’s highly competitive "software as service" market. Comprehensive data collected in real time should motivate all business decisions. In a study by the Aberdeen Group, companies that built a centralized customer intelligence database to inform their customer-facing actions were able to increase their retention rates 3.5-fold and customer lifetime value by 20 percent.

Thanks to real-time engagement monitoring software, the days of guesswork are gone. Customers can no longer play “hard to get.” With modern technology, you can accurately gauge each customer’s happiness based on his or her individual actions. Data-driven facts – not opinions or anecdotes – provide the most useful, comprehensive understanding of customer behavior that enable you to take the highest value actions that mutually benefit both sides of the company-customer relationship.

Create smart, proactive customer interactions. Customers maintain high standards. They expect you to engage with them, proactively and intelligently.

An Oracle report found that 70 percent of consumers have stopped buying from a company after a poor customer experience, and 64 percent have jumped ship in favor of a competitor after an unsatisfactory customer service interaction. In addition, 81 percent of consumers are willing to pay more for a better customer experience.

To deliver top-of-the-line experiences to customers and prevent them from taking business to a competitor, contact clients at the right moment and with intelligent messages that align with their current, most salient needs. Such interactions help educate current customers, encourage use of your product and address issues as soon as – or even before – they arise. By prioritizing smart customer interactions, you’re more likely to deliver reliable experiences that are consistent both within and across accounts.

Strive for continual transformation to catch up and then stay ahead in customer engagement. It will go a long way toward improving your product to meet customer needs and preventing you from getting dumped.

Originally published at: https://www.usnews.com/opinion/economic-intelligence/2014/11/25/startup-businesses-can-become-successful-through-customer-loyalty