Thursday, January 24, 2013

4 Ways to Increase SaaS Success and Decrease Client Churn

First, you might be asking what is SaaS? It is also referred to as "The Cloud". Burke come on. Alright, let's make this simple. 

What is SaaS?

SaaS is Software as a Service, which is software you use via the internet. No need to install a software disk. It's the future of software. Many of you already use SaaS products. Netflix and Spotify are SaaS companies. They have changed the way we watch movies/shows and listen to music. No more DVDs or CDs. Typically clients buy SaaS software on a per user per year basis.

I am a huge fan of the SaaS model and like to build SaaS companies. SaaS and it's delivery method make life simple. It really makes software implementations quick, easy, and cost effective. This model is the way of the future.

Tons of SaaS companies are popping up each day. I will focus the rest of my post on how to make a B2B SaaS technology company that succeeds and doesn't lose customers.

I am going to assume two important things. You have built a product that resonates with your target audience and that your target audience is willing to buy your product or service. These are two huge items you need to nail before you succeed, but for the sake of this post. I assume you "Nailed It". 

The SaaS Revenue Compound Effect

SaaS is awesome because of the revenue compounding effect. The happier your customers, the more renewing customers, and the more revenue. SaaS companies have the potential to have year over year hockey stick growth. You get a compound effect as you build upon your paying customer base. 

SaaS Kryptonite

There is a kryptonite for SaaS. Currently many SaaS companies struggle with renewing their customers. This is also called client churn. So what are 4 ways to decrease client churn and create raving fans. Once again, I assume you have an awesome product that is easy to use.

4 Ways to Increase SaaS Success and Decrease Churn

To best take advantage of the SaaS compound revenue effect, I propose 4 best practices that will help you decrease churn.

1. Develop An Account Management Team

Most companies have sales professionals that do the selling and the renewing of products or services. After years of building SaaS companies, I have learned that there are two different sales personalities, hunters and farmers. 

So account executives go after new logos and account managers are measured on renewing customers. Dividing up these roles will help you succeed with renewals.

2. Define Success

This is huge. I always teach to under promise and over deliver. This focus is the first step to decrease client churn. The best practice is to have your account executive introduce your account manager to the client before the deal is closed. This is the prefect check and balance for sales. The client's definition of success should be very clear. I know this sounds so simple, but most SaaS companies forget this important step. If you miss this, you might miss the renewal. Define success before you close the deal and you will renew more clients.

3. Strong Implementation Process

Your account managers should follow a simple, but outlined implementation process. Change management is a huge part of creating a successful client and a raving fan. It should not be a complicated process, but should help ensure your clients are set up to succeed.

4. Regular Cadence Calls

This is the most important part of renewing a customer. As a marketing executive, I use tons of SaaS tools. You would be surprised how many of these SaaS companies close a deal with me, help me implement the tool, and then disappear. 

I can almost guarantee I won't hear from them until 60 days prior to renewal. Sometimes it's 30 days or less. 

Cadence calls are a must. They can be short calls, but really need to focus on knowing the pulse of the client. Are they red (mad), yellow (just alright), or green (a fan). Regular cadence calls will help you keep clients and take advantage of the SaaS compound revenue effect. 

Don't forget #4. Most SaaS companies do this very poor. These are 4 ways to ensure SaaS success and decrease client churn. Do these 4 very well and realize the full advantage of the SaaS compound revenue effect.

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