As a SaaS vendor, reducing churn is one of the key metrics that you use to evaluate the health of your business. We know that renewing customers are happy customers - they’re getting value from your products and services so they renew. But, it also means that your products and services are aligned with key trends occurring within the industry and/or market sector. But there’s a lot more to customer retention than that.
Did you know: it costs up to 7x more to acquire a new customer than to retain an old one?These are critical stats for why you should optimize your business and go-to-market strategies around customer retention and expansion as well as acquisition and why a subscription management platform is so important for your business.
Unfortunately, 44% of companies have a greater focus on new customer acquisition versus retention and that for most industries, the average customer retention rate is below 20%. This is one of the primary reasons why so many companies end up going out of business or fail to break out of their initial market niche. Although most companies agree that it is cheaper to retain existing customers, many of them are still focused on acquisition rather than retention.
Did you know: increasing customer retention by just 5% can increase your profits by 25-95%?
To optimize your SaaS renewal rate, take a proactive approach. Use customer success software to identify opportunities for improvement, and improve the product or service. Make sure your customers know that you're constantly improving your product or service. A predictable communication cadence such as blog posts, newsletters, or monthly email announcements will help you stay top of mind among your customer base and remind them of the value you provide. This will eliminate any doubt in their minds as to whether they should renew at the end of their contract period.
You can also use the data you collect from servicing them to identify and quantify specific issues most likely leading to churn and proactively fix them. By examining these metrics closely, you can identify which customers may be ready to churn and target them proactively. By making your customers feel important, you can encourage them to share their feedback and experiences publicly and in turn, help you attract more customers.
Not all customers are worth retaining however, and it’s critical to know the difference between them. Those customers that pay low license and support fees but have high support needs - always calling the support engineer, constant complaints, and lack of follow-through on recommendations can be a huge drain on resources and morale. In those situations it’s often best to let those customers go. Having the ability to really understand each customers’ profile, cost, and ultimately their value to the company is critical for adapting a successful customer retention strategy.
FInally, it’s critical to have an automated and up-to-date subscription management system in place. Enabling you to fully automate your billing, add or subtract new products and services as needed, and adjusting for different terms depending on the customer preference. Moreover, these systems also include an auto-renew capability that can automatically apply an industry standard increase of the contract rate when it goes into effect. This not only helps to keep the customers engaged with you, but leaves no gaps in service and ensures you get paid what you’re entitled to under the terms of the new contract. These systems help keep the financial side of the relationship smooth and prevent mis-billings, while providing the customer with a hassle free renewal experience.
Kugamon has a full-featured Subscription Management and Billing solution - designed to help you ensure a positive user experience while maintaining your financial targets for renewals. If customer retention is important to your business - and based on the stats it certainly should be, then don’t you owe it to yourself and your customers to trial the best subscription management and billing system available in the market? Try subscription management - the Kugamon way!