The Growing Need For Customer Retention Software
What is customer retention software? Well duh, it helps companies retain more customers. But there are many ways to skin a cat, and there are many approaches to retaining customers, subscribers, or users.
The benefit of leveraging software to support customer success efforts is automating the process of targeting and outreach, so that retention efforts can be made at scale.
Customer retention software is at the backbone of customer success teams, who are primarily focused on ensuring that customers get value from the product. And as customers continue to believe that they get value from a product, they will continue the relationship as a paying customer.
The double-edged sword of customer retention programs is that they are binary: you keep your customers, or you lose them (let’s ignore the nuance of upsell or downgrades for a moment).
Moreover, it is also very easy to quantify and track the success of a customer retention program: did you keep more customers than you did last month?
What Is A Customer Retention Program?
Customer Retention is the process of engaging, and keeping, your existing customer base. You have converted these folks from leads into customers; now your job is to engage, and continue to show value.
Customer retention programs, and customer retention software, help facilitate the process of bringing value to customers. Continuing to bring value is ultimately at the foundation of building a scalable software as a service business: success is made by keeping customers. It is impossible to grow a scalable and profitable business solely relying on lots of new sign ups, if customers churn out shortly after signing up.
Retaining customers is a scalable growth strategy, that is more cost-effective, profitable, and scalable.
A few statistics from this survey illustrate the value of customer retention
- It is 5x more expensive to acquire a new customer than it is to retain an existing customer
- 89% of companies see customer experience as the key to customer loyalty and retention
- And yet 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention.
Building relationships with customers is crucial to ensuring happy customers who stick around. This is where Customer Retention software comes into play.
There are a variety of SaaS products that are designed to help improve customer retention.
Below is a list of some of the use-cases, and examples, of customer retention software. Ultimately, at the core of each of these apps is a way to help understand, and connect with, customers more effectively.
Customer engagement and conversational platform
For example, Zendesk, Intercom, even Drift. Communicating with your customers, at the right moment with the appropriate messaging, is a challenge that is at the crux of customer retention. This is channel agnostic, as these apps offer multiple channels to engage, whether by email, SMS, in app messaging.
However the value comes from the contextual messaging and segmentation. There is a significant ramp up period to the technical implementation and setting up the automation sequences, yet these platforms are incredibly powerful in scaling micro-interactions with customers.
These days there is a growing trend towards chatbots (like Drift and Intercom) as opposed to live chat widgets (like Olark). This makes the solution more scalable, so that the customer experience is not impacted by the volume of other customers needing help at the same time (have you ever been on a live chat that just went….silent? A frustrating experience for sure).
These apps are great for creating in app messaging or campaigns to address the needs of the customer at that very moment, or can also be designed to re-engage customers who have disengaged.
Product Onboarding Apps
While onboarding apps like Appcues and Chameleon don’t explicitly position themselves as improving customer retention, there is a direct correlation between proper onboarding and customer retention. If a customer doesn’t have a good first impression and understand the value that the product brings, then they are going to be less likely to continue paying for it. Churn goes up, recurring revenue goes down. Boo.
New users are those who are often those most likely to churn, so a thorough introduction to product features is critical to improving customer retention. These apps are designed to improve user adoption, which can have positive long terms impacts on engagement, feature adoption, and ultimately retention.
Dunning Email Services
The best type of customer retention software can be the set-it-and-forget-it type that continue to improve retention rates in the background. To do that, dunning email services get the job done (no pun intended).
Dunning is the process of notifying customers and collecting outstanding unpaid payments. There are automated services that hook into your payment processor (Stripe, Braintree, etc). For this service you can look to SaaS products like Stunning, ChurnBuster, ProfitWell or others to help collect from failed payments. These failed payments are often unintentional on the part of the user, and can be attributed to expired credit cards, failed payment transactions, or just a card that has been flagged as potential fraud.
Customer loyalty programs can be very impactful on improving customer retention. Maybe you are even like me, and fear the high likelihood of a delay or problem when flying with United, but continue to do so because of the accrued points. Why do I subject myself to the potential delays? Well, the loyalty program of course!
How well do loyalty programs work? Some studies show that existing customers are 5x more likely to purchase again, 7x more likely to try a new feature or product, and 4x more likely to refer other customers. Amazon Prime has been one of the most pivotal programs to make Amazon the go-to ecommerce option for many households around the world (capturing nearly 50% of all ecommerce!).
Customer Success Platforms
Customer lifecycle managmeent for enterprise companies. Companies like Gainsight, Totango, and Natero and others are ideal for larger companies that often bill on annual contracts, have dedicated customer success managers, and high dollar value contracts. These apps help companies with customer segmentation, communication, and mapping customers through the customer journey. They are incredibly powerful and integrate with much of an existing tech stack that a customer success team would use. The ideal target market for these solutions are high touch enterprise level customers that build their business on high dollar value contracts. These are the go-to dashboard for customer success managers and tie together many of the different data points and CRM data to offer a holistic view on customers.
Exit Survey Apps
How can you be certain about the reasons that customers are canceling and churning out? You have to ask them! That is where apps like Brightback, LessChurn, and Raaft can add a valuable data point by validating why users are churning. These qualitative surveys occur at the point of cancellation and in aggregate can answer some of the questions of where a product can be falling short–does it have to do with features (or lack thereof), pricing, competitive alternatives, value, or something else? The answers to these questions surface after many surveys are completed and data points answered.
The Obvious Benefits of Keeping Customers
The process of leveraging customer retention software to reduce churn is not a quick fix, but instead happens over time. Moreover, these are often not one-size-fits all solutions, but can be leveraged in tandem to play off of each other.
And it should go without mentioning that these are not magic bullet solutions. Simply signing up for these will not reduce churn outright. A retention strategy is necessary in order to gather, interpret, and act on the data that is collected.
We will cover many aspects of a customer retention strategy for SaaS companies in the upcoming posts.
Regardless, the most important thing that a customer retention software can do is empower you to keep happy and engaged customers. From there, customer retention is a natural byproduct. And that byproduct of greater customer retention will generate more recurring revenue, greater profits, and a healthier business.