The essential key to long-term success for a SaaS company is simply stated: No Churn. Get the right customers and keep them. But all too often, Software-as-a-Service companies fall into the bad habits of their traditional-model predecessors by focusing only on acquiring new licensee customers. The resulting unconscious assumption that all customer relationships will automatically persist and/or be profitable is a huge and largely invisible risk for a SaaS company. It’s time to ask some possibly uncomfortable questions, beginning with: What is your company really doing about ensuring customer retention and profitability? What measures are your competitors taking?
A Time for Questions
It’s unfortunate that many SaaS companies don’t accurately track their customer acquisition costs or determine the break-even point after which customer relationships may start to be profitable. But what about tracking and analyzing customer retention costs? Does your company have a designated owner for the ongoing customer relationship? Is there a box on the corporate organizational chart for a Customer Retention Manager? If so, how much of that individual’s time is dedicated to “fire-fighting,” the reactive work to save an at-risk relationship? Some companies have an individual Customer Success manager or a team chartered to address that goal. Is yours one? How about the ongoing costs for Support? Do you know what it actually cost your company to answer the support phone or to handle the incoming emails last month?
How is the performance of the individuals assigned to Support measured? What standards are applied to the group as a whole? In traditional software companies, where everything after the initial sale is a cost against its profit and therefore to be avoided, there are a variety of metrics used to reduce time spent on incidents. Is there a different picture for the Support team of a SaaS company, where the retention of customer relationships ought to be a priority?
Understanding the Answers
A number of SaaS, traditional and “hybrid” companies have participated in The SaaS & Support Project research so far. Click here for more information about the Project. Participants who complete Project surveys will receive a free copy of the Report for the survey. (All individual company data will be kept strictly confidential; only aggregate data will be used in Reports.) To augment the questions of the survey, individual interviews are being conducted to define best practices and lessons learned.
The work of the Project is ongoing as companies struggle to make sense of the profound changes in the industry and in the profession & practice of customer support. For full access to the research findings and materials, please join The HotLine Magazine as a Research Member.
You are welcome to join in the ongoing discussion of these issues and topics in The SaaS & Support Forum on LinkedIn. Here is a link to more information about the Forum.