While it’s always great to win a new customer, delivering additional value beyond the initial business need is one of the greatest challenges facing SaaS providers. It’s clear that customer retention costs less than winning new customers but SaaS providers sometimes neglect to include the dollar value of second-order revenue that comes from customer recommendations, references and the relationships that can be reignited when product fans move to a different company – in other words, how to keep existing customers happy.
Success in SaaS is about the lifetime value of a customer, so steps that can be taken to build the relationship beyond the first deal are vital. A Harvard Business Review demonstrated the value of customer retention by reporting that a five per cent raise in retention rates will increase profits by 25 per cent to 95 per cent for an average business.
Much of this value is not immediately apparent in the simple terms of deal values on a balance sheet and only reveals itself when the relationship matures and grows. Healthy customers usually add features or expand their user base year over year, so it’s clear they can have a massive impact on annual recurring revenue (ARR). With customers holding such multifaceted power over the ways in which we grow, it’s critical to have both the visibility into their experience, and the ability to respond to issues on a moment’s notice in order to ensure the overall health of the business.
In other words, we need insight into engagement with the product – individually and in the context of other customers – if there’s any hope of finding out how to keep existing customers happy and renewing. To that end, day-to-day operations at a SaaS company must be literally wrapped with intelligence – empower employees with information informing them how systems are performing and with the authority to do whatever it takes to ensure customers realise value each and every day.
From sales and marketing to onboarding and lifetime support, I would argue that immersion, empathy and engagement are a few hallmarks of healthy customer relationships. This takes holistic and continual service evaluation with visibility across a number of different KPIs. For example, automated notices can alert you when customers might be ready for an upgrade, or aggregated dashboard views that compile usage and adoption data across customers help us to anticipate needs before customers become aware of them.
Ultimately, everyone in an organisation should have an optic over the various states of customer health: the reds, yellows and greens of your customer-obsessed existence. This should naturally drive organisational action, prompting discussions among staff around solving problems and increasing happiness and loyalty. With this insight, you start to realise what the customer tells you is important to them now and in the future. Taking their thoughts on board is crucial if you’re planning to keep existing customers happy.
Armed with this data, you become more informed and empowered to deal with the issues right in front of you. Best of all, this degree of visibility allows you to act on an issue before it becomes so prevalent that a majority of your customer base goes sour– remember, you want to keep existing customers happy.
Over the course of a relationship, companies come to know and understand customers. We engage with them on how to get the most value from our solution, ensuring they have a good experience from the very beginning, and most importantly we stick with them for the long haul, making sure they’re getting maximum value. For example, it’s important to make customers’ lives easy. In the world of technology, it’s easy to think the problem is not ours when a customer has a problem.
Maybe the customer’s network has a glitch, maybe bandwidth is insufficient, maybe there’s a faulty cable causing a problem that has nothing to do with our product. Regardless, the fact remains that the customer is having an issue. And to make the customer’s life easier, support teams should be aware that there is no such thing as “their problem”. All problems are our problem and you need to do what you can, within the realm of possibility, to help customers solve these problems.
Within the context of revenue, it’s easy to see how single percentage points of retention can lead to exponential millions down the line and it’s the lifetime value of customers that provides big wins in a SaaS based world (I’d argue in any world where there are customers honestly – SaaS or not). General wisdom is that if you grow your business to focus on a long term strategy of putting customers first and realising that the first sale is just the beginning of your relationship with them, the stratosphere is inevitable.
Amy Downs is chief customer success and happiness officer at Lifesize
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