To change our approach to retention in SaaS, we have to be able to paint a different picture. This picture must be able to demonstrate the following: Efficiency gains Highly predictable retention & growth Cross-company engagement and success How much reactive focus can you handle before everything breaks? We accept more than we should, and our customers are unwillingly participating in this reality. The move from reactive to proactive is a massive step in the maturity of our practice. Our roots in reactive execution go back to our company's founding. From our first customers, we can find ourselves quickly behind the ball even though our company chose CS as one of its first hires. As our company grows, we realize it doesn’t grow fairly. Not all departments get what they need, and CS can be among the top. Our resource request is the can that continuously gets kicked down the road. I was consulting with a company that was in its eighth year. During these eight years, it had many moments of success, followed by periods when things didn’t work out as planned. The CS function suffered, at times, severely when expectations weren’t met. The team dramatically changed in leaders, number of team members, and skillsets needed as the company navigated its path. With each cut, we never really recovered. Customers were left hanging without a contact at the company, and eventually, this bit them hard when a key member who had sacrificed themselves for years chose to move on. At this moment, simply notifying customers of a change in CS assignment resulted in a month's loss of 10 customers. Why? The company forgot them, so they forgot about the subscription and canceled once reminded. It's hard to fault them. It's hard to fault the CS resource, which was always understaffed and could not reach all accounts in their portfolio. When things break, it takes significant effort to recover from them. It's easy to avoid years of neglect until you experience a loss like that.
Tim C.’s Post
More Relevant Posts
-
Why just focusing on MRR will kill your SaaS. (and what other metrics you should look at) Just to get it out of the way I am not saying growing MRR is not at the core of a healthy SaaS business. But let’s imagine this: - You get a new customer - They grow rapidly in their first 3 months - They suddenly churn and blame your pricing Sounds familiar? Just looking at their MRR trajectory, you may think this was a healthy customer. Truth is, they weren’t. They tried to compensate for their inefficiency by throwing more money at the issue. And you didn’t even notice it. So, what can you do? At Woodpecker.co we use metrics that help measure the value we provide for our customers. One such metric is: ↳ “Replies per $10 spent with Woodpecker”. The industry median is 4 replies per $10 spent. Our top 20% of agencies get 20 replies per $10 spent. If you assume 1-2 interested leads for each 10 replies ... That means 2-4 interested leads per $10. Let’s say the client’s deal size is $1000, and they close 1. That’s a 9900% ROI. Cold email is NOT dead. Now, that metric is not perfect. That’s why we have a few more. But remember… Long-term MRR growth is tied to your client’s success. Focus on delivering actual value (not just features). And your MRR growth will follow. I am curious: how are you measuring your clients’ success? #SaaS #KPI #CustomerSuccess
-
Struggling to retain customers? Gross churn is the key metric you must watch. Dive into why focusing on reducing churn can make or break your SaaS business's future! https://lnkd.in/g7dJqDT3 #GrossChurn #CustomerRetention #BusinessGrowth
-
Helping SaaS companies to deliver, grow, and monetize Customer Value with the CSM Operating System.
If you are a SaaS CEO or CRO and prioritize new acquisitions over keeping and growing existing customers you are setting your company up for failure. Because you don’t understand how your own business model works. Before the economic downturn, it was at least 5x as expensive to bring on a new customer than keeping an existing one. I don’t know where we are now but x10 at least seems to be a safe bet. Acquiring new customers and failing to keep them (long enough) is how you run your business into the ground No SaaS company can run on 36 months of CAC payback and 12 months of customer lifetime. Not a single one. 80% (at least) of your revenue and 100% of your profits come from existing customers. But unlocking it is not like switching a button. There are 6 fundamental problems you need to solve before 1. Bad-fit customers They are costing you money every month they stay. First, because their service costs exceed the revenue they bring in. Second, you are missing a lot of opportunities because your CSMs have less time to grow the value of your top-class customers. Politely show them the door. 2. Lack of ICP It would be completely useless to eliminate your bad-fit customers while you continue to acquire them in the first place. Reverse-engineer your ICPs from your most successful and profitable customers. 3. Churn Not all churn is bad. If bad-fit customers leave you should not mourn the loss. The churn you want to resolve is from customers that fit your ICP. And in the end, all churn comes down to customers failing to get enough value. Use frameworks like the 5-Why to uncover where and why things are going south. 4. Lack of CS program Customers buy your product to achieve their desired outcomes. You need to build a CS success program that LEADS customers to the promised land accurately and repeatedly. A combination of training, education, and consulting services designed to help customers build the skills and knowledge to get the most out of your product. 5. Gaps in skills and knowledge Building a world-class CS program requires a similar level of CS team. If they spend 80% of their time resolving support tickets, running demos, and putting out fires it will never work. Your CS team needs to build expertise in - the subject - problem-solving - CS plan design - content creation - data analytics 6. The wrong metrics For a decade customer success has been measured with inaccurate proxy metrics. But customers don’t give a s*** about any of them. - If you want to measure customer success you need to use the same metrics as your customers - If you want to evaluate your performance you need to measure the % of customer goals achieved - And eventually, you will see the correlation between customer success and its impact on renewals, expansions/upsells, and referrals. If your customers paid you 3x as much and stayed 3x as long, how fast and profitable would you grow?
-
-
Hidden pricing in a SaaS world rant. Many hot takes have already been made about it, ton of user research was done, and many great minds have shared their buying experience. But to this day, many many companies still don't get it right. I came across this great article from Chris Heard on CFO Dive and decided to highlight things that stood out to me: Only 45% of vendors publicly show their pricing. Less than a half. Being a prospect, what is your initial impression when you don't see public pricing? Exactly: 1. You think you are about to be ripped off, and somebody else might get the same product for a lot cheaper price. 2. Or that the pricing is so complex, you barely can make sense of it. Which probably means a very complex product with difficult-to-understand product value. 3. Or equally bad, that the product is totally overpriced Why would you ever want to give this feeling to a prospect before they even engage with you? Just as a reminder: for 49% of prospects, pricing is the top consideration when buying software. Am I missing something?
-
Helping SaaS companies to deliver, grow, and monetize Customer Value with the CSM Operating System.
CSMs are the heart and the soul of every SaaS company. Without all their contributions, SaaS companies are doomed to failure. Here’s why: - They help to identify the ICPs to increase conversion rates, and lower CAC, and churn. - They create demand for expansions and upsells for efficient growth - They build meaningful customer relationships to get their commitment and loyalty - They source new and better leads through referrals - They gather the insights that power your product development - They power your marketing with use cases, success stories, and educational content - They help sales reps close more deals when they are brought to the sales process - They provide the intel to build a profitable pricing strategy And yet they are often underrated, underappreciated, and underpaid. That’s why I love working with CSMs. PS: Join 4.8k+ CS professionals and sign up for my weekly newsletter if you like this post --> https://lnkd.in/dtC7MEjP #saas #customersuccess #customervalueledgrowth
-
-
Chief Marketing Officer | Financial Services | Fintech | B2B Marketing Strategist | Content Marketing | Demand Generation
Wow - THIS. Misalignment on the effort (sales, CS, marketing… everything) between new sales and engagement and retention sinks a SaaS business fast. This doesn’t even touch on the “client value chain” elements of focusing on existing clients… For example, turning them into promoters to help you engage and win NEW deals. #saas #b2bmarketing #demandgen #clientengagement #fintech
Helping SaaS companies to deliver, grow, and monetize Customer Value with the CSM Operating System.
If you are a SaaS CEO or CRO and prioritize new acquisitions over keeping and growing existing customers you are setting your company up for failure. Because you don’t understand how your own business model works. Before the economic downturn, it was at least 5x as expensive to bring on a new customer than keeping an existing one. I don’t know where we are now but x10 at least seems to be a safe bet. Acquiring new customers and failing to keep them (long enough) is how you run your business into the ground No SaaS company can run on 36 months of CAC payback and 12 months of customer lifetime. Not a single one. 80% (at least) of your revenue and 100% of your profits come from existing customers. But unlocking it is not like switching a button. There are 6 fundamental problems you need to solve before 1. Bad-fit customers They are costing you money every month they stay. First, because their service costs exceed the revenue they bring in. Second, you are missing a lot of opportunities because your CSMs have less time to grow the value of your top-class customers. Politely show them the door. 2. Lack of ICP It would be completely useless to eliminate your bad-fit customers while you continue to acquire them in the first place. Reverse-engineer your ICPs from your most successful and profitable customers. 3. Churn Not all churn is bad. If bad-fit customers leave you should not mourn the loss. The churn you want to resolve is from customers that fit your ICP. And in the end, all churn comes down to customers failing to get enough value. Use frameworks like the 5-Why to uncover where and why things are going south. 4. Lack of CS program Customers buy your product to achieve their desired outcomes. You need to build a CS success program that LEADS customers to the promised land accurately and repeatedly. A combination of training, education, and consulting services designed to help customers build the skills and knowledge to get the most out of your product. 5. Gaps in skills and knowledge Building a world-class CS program requires a similar level of CS team. If they spend 80% of their time resolving support tickets, running demos, and putting out fires it will never work. Your CS team needs to build expertise in - the subject - problem-solving - CS plan design - content creation - data analytics 6. The wrong metrics For a decade customer success has been measured with inaccurate proxy metrics. But customers don’t give a s*** about any of them. - If you want to measure customer success you need to use the same metrics as your customers - If you want to evaluate your performance you need to measure the % of customer goals achieved - And eventually, you will see the correlation between customer success and its impact on renewals, expansions/upsells, and referrals. If your customers paid you 3x as much and stayed 3x as long, how fast and profitable would you grow?
-
-
5% monthly churn is not just a statistic, it’s a potential death sentence for your SaaS business. If you think that number is acceptable, it’s time for a serious reality check. Sure, many SaaS companies operate under the delusion that high churn is just part of the game, but let’s be honest — it’s killing your bottom line. Want to know what a 5% monthly churn really means? You’re losing nearly half your customers in just a year. This isn't a sustainable model; it’s a financial treadmill where you’re running just to break even. I challenge you to reflect on your own metrics: Are you really on solid ground, or are you building your business on a crumbling foundation? If you want to dig deeper into churn and how to tackle it head-on, I’m sharing insights and strategies in my newsletter, 5 Minute Founders. Don’t just sit back and hope it gets better — take action. https://lnkd.in/ep-Qf7Bn
SaaS Churn Rate - What's Acceptable?
https://sixteenventures.com
-
Senior Customer Success Manager | Advancing ROI from technology investments | Leading change management | Digital and work-flow transformation | Executing customer results strategy
How do you succeed in driving SaaS expansion and renewals in your account portfolio Steps to success: 1. Never "check in" with your customer 2. Never keep asking "what projects are you working on?" 3. Never use every interaction to share new features! How do you do it? 1. Establish a key result and set milestones with the customer! 2. Correlate the key results to current projects and the job to be done! 3. Use every interaction to assess whether the customer is taking advantage of how your product delivers value in an optimal way to reach their objective and achieve the RESULT. The Key: The result must be so important to a business that their current spend is seen as something that needs to continue, they renew YoY and expand because they want more value. The budget to continually achieving the outcome should be easily justifiable in perpetuity or growing incrementally. How powerful is the RESULT you are tracking with your customer? Are you actually tracking a result? How do you deliver massive value and help customers improve their work using your product?
-
Great interview with Nick Mehta, CEO of Gainsight, about the power of net retention, a metric we've written about a few times. "Net retention has become, by far, one of the top metrics that people look at in SaaS. We’ve done research on publicly traded stock multiples, and net retention—as much as almost any other factor, right alongside growth rate—is one of the biggest drivers of shareholder value." https://lnkd.in/g3eFgqtH #netretention #metrics #SaaS #customersuccess
Net retention and customer success: Gainsight CEO Nick Mehta on winning at SaaS
mckinsey.com
-
Is your SaaS company leaving money on the table? The answer might surprise you. I just read a fascinating article from Billsby on Net Revenue Retention (NRR) in SaaS businesses. It dives deep into this crucial metric that's reshaping how we think about growth and customer value. A standout insight: "A mere 1% increase in revenue retention can lead to a significant 12% rise in a SaaS company's value after five years." That's huge! My take: In today's market, acquiring new customers isn't enough. The real gold lies in nurturing and expanding existing relationships. It's time we shift our focus from just filling the funnel to maximizing the value of every customer interaction. https://lnkd.in/eraXmiHC Subscribe to our monthly NRR newsletter to get curated articles on NRR strategies, trends, and best practices as well as our takes and opinions. https://lnkd.in/ehNkUFTA
The Role of Net Revenue Retention in SaaS Business Success
medium.com