Most B2B SaaS organizations experience two periods of intense activity in a customer lifecycle – when onboarding the customer, and just before the account’s annual renewal date. That approach is proving to be unsuccessful now with several businesses finding their churn rates increasing year over year.
According to Bessemer Venture Partners, “The most important part of Software-as-a-Service isn’t ‘software’, it’s ‘service!’”1 With easy access to information and competition from all quarters, businesses must do more today than ever before to retain their customers.
Here are three ways to maximize your renewals and retain your customers:
Establish a Process of Feedback to Reinforce Your Product Development
Make a great product and people will buy it. While that is true in part, a great product needs to remain so. The fierceness of today’s competitive marketplace guarantees that any product that is put into market will have cheaper and better imitations within a few weeks. Very rarely does an exclusive product feature remain so.
What businesses must do to remain ahead of the curve at the product level is this: they must have a system of attentiveness and an ear-to-the-ground approach that keeps them in tune with, and helps them anticipate, customer needs. Businesses today must walk in the customer’s shoes. The best way to do that is to analyze how customers are using your product, see whether the product meets their needs and if there are aspects of the problem that remain unresolved.
An oft-repeated saying in the SaaS community is that initial purchases are based on hope, while renewal decisions are based on experience1. Customers need to know that the company they are doing business with is invested in and knowledgeable about their business and that they are in it for the long run.
Create a System of Success for Your Customer
Value creation. That’s a term that is commonly associated with SaaS success. If your customer does not derive continued value, there is little hope for a long-term relationship. Value creation is a broad term and encapsulates every aspect of the customer-vendor relationship. For example, Hubspot retained 33% of previously unhappy customers by making some changes to its on-boarding process and ensuring that new customers were given additional support2.
While the tendency is to think that the job is done once the customer is up and running, it rarely ends there. Often, customers need to change their processes before they can realize the full benefit of their investment in SaaS. There is also the need for continuous engagement in the spirit of a true partnership that will help customers reap the rewards of their investment over a long period. Salesforce is often credited with coining the term ‘customer success ’. They set out to have an in-depth understanding of their customer’s business and desired outcomes which, over time, made them a leader in the CRM space2.
Customer success is not the responsibility of just one department. It must be the DNA of the organization and must permeate every interaction and conversation it has with its customers.
Develop a Structure of Engagement
For years, data was the only currency when it came to SaaS. Companies like Salesforce and Workday were deeply entrenched in a customer’s ecosystem because they were a system of record where large amounts of data -- transactional, core and other -- resided. But newer, fast-growing SaaS companies, like Slack, haven’t even tried to become systems of record. They seamlessly integrate to existing systems and facilitate engagement. They have become the tools that employees use to get their work done.
Engagement occurs at multiple levels – brand values, sales and marketing collateral, product design and roadmap, onboarding, ongoing customer interactions and more. Again, it is a DNA thing. Customers need SaaS companies to think beyond the immediate sale and into the mindset of their employees. Becoming a ‘tool of choice’ with that set of stakeholders almost always guarantees success all around.
There are no shortcuts when it comes to renewals. The only way to reduce churn and increase customer satisfaction requires a dedication to seeing your customer succeed and doing whatever it takes to get them there. It requires partnership for the long haul.
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