One of the major challenges facing SaaS/Cloud companies is accepting the reality of the new industry playing field. This contest won’t be won by people who insist on playing by the old rules. When the VC/Investor funding well starts to run dry and the competition kicks in, continued survival and profitability is a function of persistent customer relationships. Yet most players in the on-demand world today still do not have a game plan or even a team designated and accountable for profitably retaining their portfolios of customers. The essential factor of the new era is rapidly becoming insistent: If you aren’t actively interested in your customers, the odds are very good that another company will be.
What’s your SCCORE?
The new game has some key questions that must be answered by a company to establish their competitive standing. How long, by portfolio type, does it take your company to recoup the customer acquisition cost? What are your actual ongoing customer retention costs? What’s the retention rate by type of customer? At what point are the risks of losing the relationship likely to be highest? Do you manage profitability by customer class? Perhaps the two most vital questions of all are these: Who are the members of your varsity customer management team? Is the team captain actually responsible and authentically held accountable for consistently scoring the highest points on the scale? And what’s your game plan for winning?
What You Don’t Know Can Hurt You
It’s what you don’t know about your customer relationships that is most likely to cause you to lose them. The all-too-critical exposure to risk begins simply with the assumption that there must be somebody in your organization that is paying attention to the day to day continuance of those relationships. As The SaaS & Support Project research has revealed, the true answer in most companies is that this assumption is false; there is no one tracking the most important scorecard. Sales is off pursuing suspects and prospects, hoping to turn them into new customers and a claim to a larger market share. Development is designing and building new features that Marketing will publicize to help Sales attract those new customers. The Professional Services team is delivering implementations and customizations on time. And Support is waiting to try to fix things that break. All of these activities are very necessary and valuable. But they won’t win the game for you.
The Way to Win
The path to a winning game begins with getting a clear view of where you stand. What resources can you deploy? What skills and knowledge are already present on your players bench that could be sent in to hold the line while you work out a new strategy? There is a lot of value to be gained just from asking yourself the questions. There is even more in getting feedback on your answers in the form of access to the Briefings and the Report from the Project — and by getting involved with the ongoing work.
–The SaaS Customer Retention QuickStat
Series Table of Contents
- The Reality of SaaS/Cloud Customer Retention
- The Dark Side of the Cloud: Churn Generators and Departure Drivers
- The Metrics of Customer Success Management
- Cloud Profitability and The Burden of Customer Success
- Staffing Levels for Customer Success Management Groups
- SaaS/Cloud Success and the Customerium
- Does Your Company Have a Customer Success Management Group?
- Customer Success Management: Position or Profession?
- The Centricity of Customer Success Management
- SaaS Profitability and The Strategy of Customer Conversations
Revised: January 28, 2013