You’ve probably heard horror stories of SaaS businesses paying too little attention to their customers. Issues like poor onboarding experiences creating confusion for subscribers and making them think twice about renewing or upgrading their subscription or providing a referral, product teams who let their features become obsolete as user needs evolve, and growing misalignments between departments who get out of tune and start following separate agendas to the detriment of the customer.
As these examples illustrate, it’s vital for SaaS companies to focus on the customer at each step of the customer journey in order to keep churn rates low, strengthen recurrent revenues, and build a community of advocates. However, organizations often lack sufficient understanding of retention, expansion, and advocacy strategies and instead rely predominantly on old-style selling and acquisition techniques — though it’s five to 25 times more expensive to acquire new customers than retaining existing accounts. If that metric alone doesn’t convince you, here are a few more reasons why nurturing your customers is more important than ever:
Retention and expansion strategies are critical to customer growth
It’s disheartening for paying customers not to feel as valued as they were when they were leads. After all, they’re now spending money using a company’s services, so why wouldn’t they be the priority? But what do they actually expect from SaaS applications at this stage?
To start, they require an exceptional onboarding experience that minimizes time-to-value and encourages product adoption — they want to make the best out of what they were promised. Any misstep could seriously harm your credibility and compromise opportunities to upsell or garner a referral for your solutions in the future. But if users are happy with this initial product contact, they will be far more likely to try new features and ultimately spend more with you.
In fact, successfully implementing retention strategies can have a significant impact on the bottom line. A 5% increase in customer retention rate can lead to exponential profit growth between 25% and 95%. And this number is conservative bearing in mind that the fixed costs of SaaS businesses remain somewhat constant as their operations and revenue streams scale.
For SaaS businesses, customers are just a click away from your competitors
Customers typically do not sign long-term contracts for using SaaS services. They want to avoid lock-in and enjoy the possibility of canceling their subscriptions or switching to competitors should the experience they get from your product not be on a par with their expectations.
This means you can never afford to take your customers for granted. You must always be responsive to their needs and build strong business relationships with them since the closer you get, the more you can learn about their requirements — in turn allowing you to introduce superior functionality based on actionable insights.
Protip: Use a scalable customer intelligence solution to help you make sense of a growing user base without spending additional time in the process. You must be able to keep an eye on the big picture and overall customer health, as well as monitor their in-app behaviors and interactions such as login activity and feature usage. Also, it should be easy for you to drill down and uncover different segments and their unique characteristics to fine-tune your engagement strategy and find the right balance between high-touch and high-tech interactions.
Unifying the sales funnel and customer journey is the next frontier
There are now more companies putting in the same level of effort on both customer acquisition and retention (45%) than ones focusing on acquisition alone (40%). What’s more, your existing customers are an excellent source of high-quality referrals once you start nurturing them. In fact, 8 out of 10 decision makers take part in the buying process through a referral as they consider them more trustworthy than regular marketing channels.
That’s a great opportunity for sales and customer success teams to work in tandem and leverage the synergies between the sales funnel (aka the buyer journey) and the customer journey. For example, sales managers can take part in the first few steps of the onboarding process to ensure there’s a smooth transition for buyers becoming customers and that their priorities are met. Meanwhile, customer success managers can redirect referrals to account managers who then are far more likely to close a deal than when speaking to standard leads.
Putting your customers first is more important than ever for SaaS businesses who want to minimize their churn rate and boost revenue opportunities. It can help you expand the value of existing accounts and attract new customers through referrals at a fraction of the cost of traditional sales acquisition techniques.
Want to find out how you can nurture your customers by enhancing the collaboration between customer success and product management teams? Download the 2017 Benchmarking Report: Customer Success + Product Management Alignment to see the trends we uncovered and get actionable steps to help improve their partnership.