The SaaS customer journey is unique in that it doesn’t end with the purchase like it does for other business models.
For SaaS-based digital goods and services businesses, the purchase is just the beginning of the customer relationship. And regardless of the offering, you need to be able to maintain your product or service and foster customer loyalty in order to earn a renewal at the end of the contract. If your customers aren’t renewing, you need to quickly find out why and lower your churn rate before your business suffers irreparable harm.
Fortunately, many SaaS businesses have come before you and have provided some key lessons of how best to create the customer loyalty necessary to increase renewals and reduce churn. They’re distilled below in the following three SaaS renewal strategies.
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Account Management
Managing subscriber accounts is more complex than making certain the software works or that subscribers are paying their bills. Instead, what you should be focusing on is whether your customers are using your software or service, and, if so, are they maximizing all the capabilities and features.
Yotpo CFO Rotum Landa told Business Insider that one of the first actions he takes when starting at a new company is to look over credit card statements. Why? He states, “Here you’ll find software subscriptions on auto-renew that no one uses anymore….” Once found, those subscriptions get cut. In other words, if your customers aren’t using the software, they are unlikely to renew it.
Account management tools that track software updates, customer queries, and other subscriber activities allow you to better understand how customers are using your software. For instance, account management tools can point to changes in customer behavior and flag unused accounts that haven’t been recently accessed. Similarly, update notices provide an opportunity to follow up with customers, gather experiential data and provide improved services. This kind of attention to detail and follow-up keeps users engaged in the service and increases usability, both of which increase renewal rates.
Provide the Right Tools
Along the same lines, providing customers with self-service control over their services translates into greater usage and engagement. The truth is that given the choice and tools, most customers would prefer to solve their problems themselves than spend time on the phone or a chat with support.
IBM’s Senior Vice President of Sales and Distribution, Bruno Di Leo, told Entrepreneur that there is a shift in expectations coming from decision makers. He said, “They want us to know them and understand their preferences, and get value from our expertise in new ways and on their own terms…In other words, digital is central — not secondary.”
Limit the amount of handholding customers need by providing them with self-service tools they can easily use.. By making it clear where to find answers and whom to contact for more information, you can help them solve solve their own problems, on their own time and schedules. A customer who is confused by your product and has no convenient way to learn what they need to know is one that is certain not to renew.
Focus on Customer Success
According to OpenView Labs, software businesses need to understand the difference between customer service and customer success — and focus on the latter. While of course there will always be issues that need to be fixed, which is where customer service comes in, a focus on customer success is proactive rather than reactive and helps customers take full advantage of your solution and gain real value from it, increasing the likelihood of renewal.
Consider creating a customer success team whose goal it is to “look at the entire customer process and lifecycle in order to resolve universal adoption issues and other common bottlenecks that prevent customers from achieving their goals.” This should involve coordination across the enterprise, on both an individual account level and a systemic level.
On the individual level, account managers should take proactive steps to identify customers who may need extra engagement in order to renew, such as those who aren’t using the software that frequently or fully, and work with customers to identify their goals and help them gain real value from their subscriptions. On a systemic level, the customer success team should look at common customer issues and what changes could be made to the product, user interface, marketing materials, or anything else that might fix those issues and provide subscribers a smoother experience.
Solid customer support to resolve issues is obviously crucial to keeping churn low, but OpenView makes the case that “customer satisfaction” isn’t enough. Rather, a focus on customer success and the value customers are gaining from your products or services will create an enthusiastic clientele that not only renews, but also buys more over time and refers others to you.
Digital commerce requires flexible, digital solutions. By understanding that customers expect a proactive role in the SaaS relationship, providing customers with ways to easily engage with your solution, and focusing on their goals and success, you’ll develop and nurture the kinds of relationships that increase renewal rates.
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