Six years ago I founded a SaaS business (Software as a Service).
Back then, every effort went into winning the first customer, then the second and so on.
Before long, we’d shaken off the trappings of startuphood and embraced the realities of a mature business. This meant getting our heads around customer retention.
Customer churn is inevitable. Whilst we tried incredibly hard to keep every customer, as well as delighting them, some churn is always going to happen. We’d largely accepted it. Over time you lose some customers, but you work hard to keep everyone you can. You go out and sell more too. Net gain. Success.
But deep down, I suspected we could do more.
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Becoming 100% customer retention focused
We could have carried on the way we were, winning more than we were losing. Customers were hardly leaving in droves. In 2015, our churn was low and our net sales growth was strong.
Like every other business, we’d put more effort into winning new customers, rather than fully understanding the nature and lifecycle of our existing ones. Throw into the mix the already dramatic growth of Customer Thermometer, and the fact that industry niches were changing over that time, we had some real knowledge gaps.
So we decided, customer retention would be our major focus for the next 365 days. Every decision we made would have our customers at its heart. We would still facilitate new business acquisition, but our energies would be more focused on existing customers. After this experiment we put together our customer retention guide and case study for other startups and SMEs to learn from our experience.
7 changes that transformed our customer outlook
We saw this as more than just sales and marketing. Every aspect of our business was a candidate for change.
This is what we did. We hope you can apply some or all of these to your business today.
1 – Branded our customer support team
Support people are capable of miracles, and I’m proud of what ours do. When a customer told our customer support team, “you should call yourself magicians” we jokingly started referring to them as The Ministry of Magic. I had no idea of the difference of the effect this would have.
It’s become a brand, a vision and a reason to go the extra mile. It has empowered our team to pursue the highest possible standards and constantly out-do their achievements. New support recruits have a tangible sense of something to live up to. It’s given us the confidence to reject customer support metrics (like minimum enquiry response times) and concentrate instead on giving the best possible response(s) to a customer requirement as soon as one arises.
Customers understood the value straight away and enjoyed knowing that high expectations will always be met. It’s also made our support environment a positive, effortless place to interface with customers, not a stressful one.
2 – Stopped forcing people to cancel when they just wanted a break
Our product helps businesses take the temperature off their customers, but not everyone wants to do this month-in, month-out – though they still want occasional access to historic data.
Consequently, we were losing valued customers because our pricing plan was too rigid, pushing them through a cancellation process and hoping they’d come back when they wanted to restart.
Our ‘At the Beach’ option now provides that pause button at a negligible cost, which has not only stopped churn but put it into reverse gear. We were keeping accounts live and secure for no fee which was wrong. Free isn’t valued. Our paused plan is now win-win for all.
Digital entrepreneurs should be aware of overlooking the importance of having a fully customer-centric approach to their plans and how they are priced.
3 – Started policing credit card declines more positively
‘Dunning’ is the process of chasing payments and automated dunning management is where a billing system polices credit card declines to ensure revenues keep flowing and accounts remain uninterrupted. This is really important for SaaS providers, but we were getting it wrong. The revenue flow wasn’t so much the issue – it was infuriating customers who had no intention of missing their payments.
Our old system was noisy and intrusive. It focused on single payments rather than customer accounts. That’s a bad recipe for policing valued customers effectively. We’ve now replaced it with Recurly, because it’s calmer, friendlier and handles this process seamlessly.
Changing your billing system as we did feels like a heart transplant and my advice to anyone attempting it, is to allow six months of planning to get it right. Even better, put the right billing platform in place from the start.
4 – Moved to a continual release cycle
Big releases distract focus and resources away from your other efforts. They are harder to get right, take longer to test, and necessitate big changes to the self-serve support resources on your website. Big releases also inevitably get delayed.
You can’t claim to be customer-centric just because the bulk of your product development is driven by customer feedback. That’s just par for the course. And saving it all up for two releases a year might be conventional wisdom, but it doesn’t actually help anybody.
Key customers might wait 6-8 months to see us implement a product change, because we thought that’s what mature SaaS companies did. When each new release went out, the seismic shift in unfamiliarity would create extra support tickets as customers came to terms with it.
Hence we now have an ongoing roadmap for development, and new releases are put out every few weeks. Just last month, a key customer had a specific request and we added the feature within 10 days.
5 – Discovered the value of our content – and shared it all
So often in business, content is prepared lovingly for an audience of one. As part of the sales process, lists of URLs, slide decks, videos and documents are diligently researched and created. This is not smart use of time.
The change was to start sharing this content with other customers, taking care to redact references identifying who the content was originally for. We also used the content to inspire new guides, blogs and documentation. Now more than 5% of our blog traffic now comes from a single ‘new content’ ad on our app’s login page.
The test of really valuable content is whether it makes you question if you’re giving away too much. Learn to embrace that anxiety as a sign that you’re doing the right thing. (This blog post is a good example of opening that kimono!)
6 – Augmented automated onboarding with a sincere welcome
Like other SaaS providers, we use autoresponders during the customer lifecycle – predefined email sequences sent at predefined intervals.
For all their advantages, we felt we were leaving our sincerity in the hands of a machine, and missing opportunities to reach out and add value to a recently acquired customer.
As founders, Mark (Copeman) and I now invest more time finding out about new customers and getting in touch. Can we help? Have you thought of this or that? The objective is to help them feel confident we will personally help them if they need us to, not to elicit the maximum % response.
Look at autoresponders as a framework, rather than a rulebook, for your onboarding communications. Mix it up once in a while – go and talk to a real customer or prospect whenever you can. It’s hugely rewarding.
7 – Ensured regular customer-founder contact
Our customers are spread across 50+ countries and there are a lot more of them than us. Coupled with our low cost of product (typically sub $50/month), visiting them all in person is sadly a pipedream.
But existing customers are massive users of webchat, and Mark and I personally staff it at least twice a week. This isn’t a vanity exercise; there is no reason to make a point that “you are chatting with a founder today.”
Do this to discover a real-time intimacy with customers that you haven’t had before, understand their perspective and give the highest possible level of service. Being on the front line is a good place to spend your time as a business owner.
What you get for challenging the revenue status quo
We’d hoped to create a foundation for future growth. What we weren’t expecting was significant, immediate growth of nearly 130%.
The ultimate, unintended consequence of focusing entirely on existing customers was to have won lots of new customers. This is exactly what happened.
It’s hard to measure, but we believe that referrals from happy customers have increased significantly. We’re also seeing existing customers spend more, largely because we’ve made it easier for them to upgrade and we’re concentrating on showing them the value they get through better interaction and content.
Worksheet: Benchmark your unique customer retention potential
There are no shortcuts to being more successful at customer retention. Review the following questions and have in the back of your mind: “Do we do it this way for our own needs or for our customers’ needs?”
- What is your product development/release cycle? Are you putting your organization under undue stress and making customers wait too long to see changes realized?
- How do you onboard customers? Is it entirely automated or do you take the opportunity to inject some humanity?
- As a founder, how connected to customers are you? Do you get the full picture?
- Is your customer support team just set up to deliver against a series of minimum requirements, or are they inspired to go the extra mile?
- Do your pricing plans reflect how your customers want to consume your product, or is it solely based on your costs and revenue/margin expectations?
- How do you treat customers when they appear to have stopped paying their bills? Are you noisy and insistent, or more quietly effective?
- What’s your approach to creating content? To produce thinly-veiled versions of your value proposition, or create insight that’s almost too valuable to give away?
Guest Author: Barrie Adams