With ongoing shifts in the economic climate, customer retention continues to be a main focus—and in many cases, it has become even more important in 2023. According to a report by Twilio, in the face of recession, 67% of businesses are shifting focus from customer acquisition to customer retention.
So, what’s working vs. not working when it comes to retention in the modern SaaS space? While it may look slightly different at each company, it comes down to three main things.
Recognizing changes in the buying process
Changes in the economy have undeniably impacted the overall software buying process. Of course, it’s always a tablestake for SaaS teams to have empathy for their buyers, but it’s also important to take that a step further and adapt selling strategies to accommodate for the shifts in their world.
One major change that has come about in the current economic climate is that CFOs are now the main drivers of renewal conversations. This makes the roadmap to renewal more data-driven than ever before as these finance executives evaluate performance, ROI, benchmarking, and usage data when making purchase decisions. While proving ROI has always been important, teams need to work together to fine-tune their approach and make their renewal strategies more CFO-friendly.
Keep in mind that CFOs are having to prioritize line items ruthlessly, so it’s crucial for them to know the value of your product. However, it can be challenging to get time for a conversation with a busy CFO. So in order to do this, your CSMs need to enable your customers with key data points that will help them advocate for the product in conversations with their CFO.
Leveraging data in customer touchpoints
Most companies are great at using data as a signal to determine whether an account is in danger, how they may want to approach a conversation with a customer, and other insights. However, few are incorporating data into the actual conversations they’re having with customers, and even fewer are doing it well.
The fact is this: Data builds trust between the company and the customer. It moves conversations away from the realm of subjectivity. With so many customers reevaluating their spend and cutting non-essential expenses, data-driven trust is a necessity for keeping customers around and connecting with key decision makers.
Data needs to be brought into conversations as early as possible during the customer journey. CSMs should understand each customer’s main goals, objectives, and pain points and should tie data to these objectives throughout all conversations to prove product value. When CS teams strategically present different data insights at particular stages in the customer journey, they can build trust and establish themselves as proactive, credible advisors.
Many companies don’t use data to its full capability because they don’t think they have the templates, narratives, or data readiness they need. However, everyone starts somewhere — and even just a small bit of feedback is a great starting point. Instead of forgoing data insights all together, start small, share what you can, and then build upon that. To start, try sharing information without absolute values, or pulling data in from case studies.
Strengthening relationships between customer success and other teams
Customer success teams need to be in lock-step with other teams. There are ways for CS teams to build trust with product and sales—these relationships are what can turn a CS team from a reactive department to a proactive, and even innovative, one.
CS teams need to work closely with product teams as customer advocates in order to respond accordingly to customer needs. CS and product teams should be meeting frequently, with CSMs acting as product managers, discussing blockers, bugs, and other feedback. This will overall improve the customer experience because customers are more likely to feel that their feedback is being heard.
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As I reflect on the past year as a CEO about what has helped my own team retain customers, I recognize how important it is to make sure customers see value in our product right away. We’ve accomplished this through adjusting our sales approach, utilizing data throughout the customer journey, and creating synergy between our CS, sales, and product teams. We know that the landscape is ever changing, but one thing remains constant in our renewal strategy—we will continue to rely on data in all customer conversations.
