It is marketing 101 that it is easier and cheaper to retain your existing customers than it is to acquire new ones. In the SAAS world, even a modest improvement in the customer retention rate can have a large impact on the company’s profits.
It should therefore be the focus of all founders and their teams to reengage any customers that may be close to canceling their engagement. It is far too common for customers to just leave without any effort being made to retain them.
Here is what I believe you need to do to stop those customers from walking away.
First, you need to raise your awareness of the situation. What is your current retention rate? What is the industry standard for retention? Where would you like your retention to be? Why are your customers leaving and is it something that can be overcome?
Understand the problem
Next, you need to understand the problem more deeply. To save a customer from leaving, you need a deep understanding of why they are leaving in the first place. Often the first reason given by your customer isn’t the real reason or at least not the underlying cause.
Make a move
Once you understand the root cause of the problem, make a move and do everything you can to resolve it. You need to do the unexpected from your customer’s point of view, for example show up at their door unexpected.
The reason for the looming cancellation may not even be related to anything you have done. It may instead be a result of internal politics or maneuvering internally for your customer. In these circumstances, it may be possible to engage with different stakeholders and decision-makers who may change their minds after being directly presented with your value proposition.
The steps you take to retain and reengage a customer must be within reason. Every customer won’t be worth going to the ends of the earth for. If you reach a point where you have done everything reasonable to try and retain the customer but have failed, then cut your losses and focus your efforts elsewhere.
TAKEAWAY: Customer retention is a key metric for SAAS businesses. This single metric is a key indicator of the stickiness of your product, the appeal of your product and its scalability. After all, small improvements in retention rates have a huge impact on your bottom line.