Client Retention Lessons from Software as a Service

Not too many years ago, there was no such thing as software as a service (SAAS). The business model didn’t exist. Instead, you bought a packaged box with the software enclosed on a disk, and you ran the software on your computer.

But software companies learned that they could create and capture more value with a better model. By delivering the software as a service, they could continually roll out new features and functions, reduce your hardware costs, and generally provide a better experience. But more important still, they could generate predictable revenue. As long as you are subscribed, you pay every month (or in some cases, every year).

But SAAS companies worry that you will cancel your subscription if you aren’t getting the value greater than your recurring monthly payment. So smart SAAS companies devote themselves to ensuring you know how to get the most out of their software. They create training videos and walk-throughs to help you maximize your investment. They provide webinars to help you take advantage of new features. They don’t want you to defect, and the fact that your relationship is only with the service itself, and not a human being, is a problem for SAAS companies.

But even though your business isn’t software as a service, you would do well to think of it as a subscription model. At any time your clients feel that they are no longer receiving value for the payment they send you for your services each month, they can cancel their subscription. They can defect, and they can sign up with your competitor. Churn is a problem.

But you have an advantage over software as a service companies. You have the relationships that allow you to continuously create new value. You can do more than provide web-based support tools to help your clients help themselves figure out how to maximize their investment. You can schedule meetings and work with the stakeholders inside your client’s company directly. You can troubleshoot their issues, and you can ensure that they receive the support they need. You can ensure that you retain your clients by being accountable for delivering the outcomes that your clients need. This is what they bought when they bought from you.

Even if you don’t think you have a subscription model, you do. Your clients can cancel their subscription. Your job is to create so much value that your clients would never dream of defecting.

Filed under: Sales 3.0

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