Few companies have the brand strength or large enough market share to assume a purchase or subscription sign-up is the end of the customer lifecycle. And as the savvy consumer builds up a near endless arsenal of resources to find the most satisfying option at the price point they want, a digital business’s set-it-and-forget-it approach simply won’t be effective enough for reducing churn.

We’ve previously discussed the different kinds of churn, churn rate calculation, and best practices for churn reduction. Here, let’s take a deeper dive into some other tactics your business can apply to turn a one-time customer into a lifetime customer.

Educate Customers Early in the Buying Cycle

According to intercom.io, 40-60 percent of customers who sign up for a free software trial log in and never make a purchase. And even ones who do may not trigger the installation process or build a satisfied relationship with your brand. A drop-off this early in the buying cycle may be attributed to a lack of education around product value and product functionality.

When selling to customers of all ages and technical savvy, education is particularly key. Make sure potential customers understand exactly how the product operates, why it’s beneficial to them, and how it differentiates from the competition. Provide a series of video tutorials, an FAQ page addressing users’ most common issues, or launch an email campaign exploring key concerns.

Segment Your SaaS Customer Lists

When it comes to the outbound marketing methodology, it’s vital to send specific messaging to your customers based on buyer persona and position in the buying cycle. A one-size-fits-all email marketing approach will feel impersonal to your base, likely ending in the tempting “unsubscribe” button, and ultimately, a failed retention opportunity.

For example, a customer who has used your software for five years should receive different messaging than the customer who purchased a couple months ago, or is still in the freemium stage. A richer understanding of what your customer needs from your product can reduce the chances of a short- or long-term customer fleeing to a competitor who can offer a more personalized experience.

Market to Current Customers (Not Just Prospects)

Digital businesses tend to invest much of their marketing ad spend in finding and nurturing prospects. This is obviously an important part of the customer acquisition process, but just because someone becomes a customer doesn’t mean they’ll be a customer for life. If a competitor offers a more versatile product or compelling price point, don’t expect a current customer to stick around.

Using email campaigns and social media as a delivery service, offer content that reminds current users why your product provides the greatest value – product updates, new features, or news of your company’s recognition by a respected association or awards program. Or, position yourself as a thought leader in your industry by providing blog content, ebooks and white papers, and other collateral that shows how your company has its finger on the industry’s pulse.

Stop Churn Before it Happens; Identify At-risk Customers

After a customer churns, they’ve ultimately decided that your product no longer meets their needs (if voluntary), or factors not associated with action they’ve taken have derailed their subscription (if involuntary). Either way, once a customer churns, it becomes exponentially difficult to get them back.

So, since the nature of a SaaS business allows a richer understanding of customer behavior, why not use that information proactively to prevent an at-risk customer from churning before it happens?

Free ebook: Three Things You Need to Know About Flexible Subscription Billing

In his blog on churn threat, marketing, sales, and customer success though leader Lincoln Murphy lays out a few red flags indicating that a customer might be ready to churn:

– Downloading data: This may indicate a customer is backing up their data with intent to cancel their service. Have your customer success team reach out.
– Unusual website behavior: Is a customer not utilizing your website, or are they spending some time on the “cancel subscription” page? It may indicate a desire to end their subscription. Use the other tactics we discussed above to prevent them from doing so.
– Widget removal: Many SaaS businesses have a widget with an embed code for users’ sites – for chat, surveys, opt-in forms, pop-overs, analytics/tracking. The removal of any of these tools should be flagged as a significant churn threat.

Read Lincoln’s blog for more churn threats for at-risk customers.

Maintain Competitive Advantage, and Know When it’s Time to Improve

A digital business can take any and all measures to mitigate voluntary churn, but the most effective one remains offering a quality product with a strong competitive advantage. Customers won’t churn when you don’t give them a reason to.

In the SaaS market – or any market for that matter – there’s always a company positioning themselves as of a higher standard for a lower price. So, follow suit. In your messaging, including email campaigns, blogs, promotions, sales collateral, etc., communicate specifically why a customer should choose your product over someone else’s. A case study, price/benefits comparison, or other points of differentiation keep your value top-of-mind.

If your competitive value proposition isn’t immediately clear, it’s time to do some work and find out where you can improve. If your business or merchant of record operates customer success and customer service teams – and it certainly should – survey the most customer-facing groups to identify common frustrations. What are your customers saying? The software is too expensive, no auto-updates, poor user experience? Once you understand end-user complaints, your business can work backwards from there.

According to Divante, 91 percent of unhappy customers will simply leave and never come back, and 96 percent don’t complain at all. So, it’d be wise to heed the call of those that do.

Keystone

Every SaaS company experiences churn, no matter what you might do to avoid or reduce it. But the efforts you take to minimize both voluntary and involuntary churn are fairly straightforward, not to mention more than worth the investment. Deploying these tactics can enable your business to focus on acquiring valuable new customers, instead of playing catch-up with the ones that jump ship.

Interested in learning how cleverbridge can help your business reduce churn? Reach out to us!

Kyle Shamorian is the content marketer for cleverbridge.

The post SaaS Churn Rate Reduction: 5 Ways to Take Action for Your Digital Business appeared first on cleverbridge.

Churn & the Different Types

First, a quick overview of churn.

Churn happens when a customer no longer subscribes to your product or service. It’s typically measured as a churn rate (simply divide the total number of customers lost by your total number of customers). It’s the best representation of how your business is doing with keeping customers by your side.

Churn comes in many different flavors:

1. Voluntary Churn – a customer actively chose to cancel their subscription.

• Example: A customer does not renew or continue their gift subscription.

2. Involuntary Churn – this happens indirectly, a result of a passive action by a customer.

• Example: A customer’s credit card expires or is replaced, resulting in the payment failing and the subscription ultimately expiring.

3. Happy Churn – a customer finished using your product for the purpose they intended, and the original challenge they were experiencing is resolved.

• Example: A customer uses your product for a promotional campaign and then cancels their subscription, having had a positive experience.

So in the case of a customer that left due to happy churn, you will need to spend the same level of energy and resources winning them back as you might if they churned voluntarily or involuntarily. Right? Not necessarily.

In fact, customers that leave due to this reason can provide huge advantages to your SaaS company:

• They experienced great value from your product or service as a customer and are therefore likely to choose your service again when the same need arises.
• They are also likely to advocate for your service. They make great candidates for testimonials, case studies and a referral.
• They can provide a wealth of feedback as it pertains to your product roadmap and help you address the very reason they stopped using your service.

It’s best to keep these relationships alive and to look for engagement opportunities so these former customers stay current on the direction of your product. They could become one of your strongest brand advocates.

To Reduce Churn: Focus on Your Most Valuable Customers

Although losing a customer here or there may seem insignificant, this loss can impact your business significantly, from revenue and reduced profitability to greater acquisition costs.

So how can you protect your investment? There is behavior you can watch for to detect customers at risk of canceling.

Is their contract coming up for renewal? Customers are more likely to churn when faced with a renewal decision.

Are they paying their bills on time? This is an indicator of the customer’s financial health.

Are they engaged with your product by making it part of their daily workflow? Are they referring other customers? These are two strong signs that churning away is unlikely.

It’s easy to identify customers based on their likelihood to leave and then offer incentives to retain them. But this thinking is flawed.

Just because a customer is likely to churn doesn’t mean it’s worth your time and investment to prevent it as not all customers are equally important to your company. Companies often fail to take into account whether a customer creates any substantial revenue, as well as their likelihood of responding to an offer to stay.

According to Gartner, 80 percent of a company’s future revenue comes from just 20 percent of its existing customers. These are your most valuable customers and must be cared for.

Tips for Reducing Churn

Once you’ve identified your most valuable customers, keep them satisfied using the following tactics:

1.    Customer Experience – Optimize processes and prevent issues with your product by avoiding bugs, data loss and slow performance. A good Customer Success Team can support this.

2.    Customer Service – Focus on providing good service to customers who reach out for help. Utilize the channels that are convenient for them, such as within your app, your documentation or product reviews.

3.    Feedback Sessions – Survey customers to identify their needs and apply this information. It’s the best way to understand their line of thinking.

4.    Referral Program – Happy customers refer other customers, which are your best leads. Identify customers that act as referrals and extend a discount their way.

Keystone

When all is said and done, churn is churn and your customers are no longer paying you. But there are tactics you can use to identify your most valuable customers and ensure they are getting the benefits that drove them to sign up in the first place.

Good news! We’re currently developing new features for our Revenue Retention Tools that will make it even easier to fight churn and increase renewal rates. For more information on our retention capabilities, click here.

Andrea Bailif-Gush is the Product Marketing Manager at cleverbridge

The post Four Tactics To Increase Retention and Reduce Churn appeared first on cleverbridge.

Today, customers easily compare your pricing with your competitors, share positive or negative reviews of your product, and demand personalized options for engaging with your brand.

The business model focus has shifted from one-time transactions to nurturing long-term customer relationships. The result of this shift is that you must continuously bring valuable experiences to customers — if you don’t, you’ll see your churn rates increase as customers leave you for your competitors.

In contrast, research published in the Harvard Business Review showed that even a 5 percent decrease in churn can increase profits by up to 85 percent. For digital goods companies shifting to subscriptions, the ability to decrease churn and retain customers becomes even more important.

With that fundamental understanding, let’s dive in to how to retain subscribers and optimize the renewal process to dramatically improve the economics of your business.

Three Key Touchpoints for Retaining Customers

There are three critical times to connect with your customers, and we’ll review actionable tips and best practices to minimize churn and maximize retention.

1. The first 48 hours after signup or purchase
2. Throughout the customer lifecycle
3. Pre-renewal time

The first 48 hours after signup or purchase

“The first 48 hours are the most important to set up for the rest of your customer’s lifetime value.
– David Walsh, former Marketing Director at Intuit

You start building a relationship with your customer as soon as they sign up. By creating a good first impression, you can help educate your customer on the true value of your offering, which will aid in creating a stickier relationship that is less likely to churn.

What types of communication should you be sending at this juncture in your customer relationship?

• Say, “Thanks!”
• Explain the benefits the customer stands to gain as a paying customer
• Educate customers with tips for using your product or service

As we noted in World Class Customer Service – Enhancing Confirmation Pages, you should view your order confirmation emails as marketing emails because they represent your brand and they can also drive more business.

Throughout the customer lifecycle

The better the experience you offer your customers while they’re using a product, receiving support, and buying and renewing their subscriptions, the lower your churn rate will be.

Manage customer expectations with information about new product features and upcoming enhancements. By relentlessly analyzing subscriber data, it’s easy for you to know exactly what interests your customers.

This insight enables you to constantly change offers and add personalized extras, increasing overall revenue.

Pre-renewal time

Here are some best practices to implement in your subscription program for streamlining your renewal process and maximizing retention.

• Automate subscription renewals.
• Offer a variety of payment methods.
• Launch an integrated marketing campaign to notify subscribers of upcoming renewals.
• Utilize revenue retention tools to identify upcoming renewals with outdated credit card details.

Start communicating with customers no fewer than 30 days out. This gives them adequate amount of time to decide how they want to proceed with their service. Your subscribers may need a bit of encouragement, so contact them with reminders seven days out, 48 hours out, 24 hours out and then on the day of renewal.

Even after multiple renewal reminds and strategic revenue retention efforts, there will always be those few customers who fall into the black hole of inactivity. When a subscriber has gone radio silent on your brand, use these last-minute efforts to re-engage them:

• Communicate the unsuccessful renewal to the customer.
• Utilize a winback email campaign.
• Don’t hide the “Cancel” button.

Keystone

Focusing exclusively on customer acquisition — without a plan to reinforce value and nurture a relationship — is a recipe for short-term success and long-term failure.

Check out What Does It Take To Retain Customers? for detailed examples of the emails discussed in this blog post.

Ryan Greives is the Public Relations Manager at cleverbridge.

The post What Does It Take To Retain Customers? appeared first on cleverbridge.

You also need a new way to relate to subscription metrics. With subscriptions, KPIs are no longer simply about conversion rates.

But how do you define subscription metrics? And how do you ensure they correspond to the subscriber journey? Finally, how do you use reporting on your subscription metrics to derive meaningful insights?

Subscription Metrics 101

Subscription metrics are a set of measurements focused on your developing long-term customer relationships and building a stream of predictable revenue. These metrics are jointly owned across an organization, meaning the Sales team, the Customer Success team — even the CIO — help meet strategic KPIs.

There are many subscription metrics to be aware of, but we’ve outlined the most critical subscription metrics to track.

• Monthly recurring revenue
• Churn rate
• Customer lifetime value
• Customer acquisition cost

Want more metrics? Download Mapping & Measuring the Subscriber Journey 

Monthly Recurring Revenue

A calculation of your subscription revenue amortized by month. It is the most important metric your subscription business needs to calculate.

MRR = Amount paid / Number of subscription months 

Churn Rate

The rate at which customers are canceling their subscriptions.

Churn rate = Number of customers who canceled in a billing period / Total number of customers at start of the billing period

When it comes to addressing the churn rate, the focus is usually on voluntary churn. This occurs when a subscriber willingly cancels a subscription. It’s important to consider involuntary churn, which occurs without action on the subscriber’s part. Many times, this occurs when a credit card expired or due to loss or theft. Luckily, there are revenue retention strategies available to prevent involuntary churn that utilize a strategic, multi-step approach.

Tackling churn by focusing on retention can significantly boost your online revenue. Read our guide to learn more best practices on customer retention.

Customer Lifetime Value

An estimate of the average total value of a customer over their lifetime (from signup to churn). This is one of the most difficult metrics to calculate, but is vital to getting a better picture of the overall health of your business.

CLV = (ARPA x Gross Margin %) / Customer Churn Rate

ChartMogul does an excellent job of explaining how customer lifetime value can be estimated, how to respond if it is low or high, and why one that fluctuates over time can be a sign of instability.

Customer Acquisition Cost

An estimate of the costs to acquire a customer.

CAC = Sum of all sales & marketing expenses / # of new customers added

Building Subscription Metrics Into the Subscriber Journey

The subscriber journey documents the touchpoints your buyer may experience on their way to their decision to purchase. The subscriber journey powers your ability to understand your customers: where they start, what challenges they’re facing, and how fast they’re moving. It’s important that your metrics are in line with the journey of your subscribers and that they center on recurring revenue.

Your subscription metrics should help you answer key business questions like:

• How quickly are customers adopting your product/service?
• Does your customer experience allow your organization to hit revenue targets?
• Knowing that no single buyer journey is exactly the same, how do you model the sales cycle?
• With an eye on recurring revenue, are your numbers telling you whether your customers committed?
• What do renewals look like?

Considering the subscriber journey as you measure your subscription program forces you to pay attention to your customers’ behavior to prevent losing them. It will also help you to avoid the pain of churn by watching for red flags. You’ll also know how to engage with your users at critical points in their subscription lifecycle – trial, subscribe, renew and upgrade.

Bringing more value to customers is more important than ever, and you cannot risk them churning away. Get more tips for attracting and acquiring new subscribers.

Reporting Subscription Metrics

Subscription-based reporting is a powerful tool for identifying trends, measuring customer satisfaction, and improving the health of your business. Combining key subscription metrics with the right reporting provides important business insight. If metrics show customers are losing interest in your product, then reporting will alert your team to the issue. Reporting provides the insight to identify the potential loss of recurring revenue and to put preventative measures in place.

Maintain a current view of your business by reporting on monthly recurring revenue, churn, customer lifetime value and customer acquisition costs. Then run all of these metrics through your ERP tool. It’s even possible to connect the billing tools your team uses most for more accurate analytics — regardless of where your data sits — and then run customer-centric subscription reports that can be presented to the board or across your organization.

Use these reports to answer your most important questions: Which customers are past due on their billing? Which marketing channels send us the most valued customers? How much revenue are up-sells contributing to our bottom line?

For further details, look at how we integrate with ChartMogul to offer real-time subscription analytics specifically for subscription businesses.

Keystone

Running a subscription business requires a shift in thinking about your customers, your products and your metrics. Reporting on subscription metrics helps you build a better, more predictable business. It also makes it easier to forecast future revenue and provide visibility into the health of your business. All this will make your business more responsive to customer demands. Moving quickly to respond to those demands cements strong and long-term customer relationships, which are the foundation of growing recurring revenue.

Andrea Bailif-Gush is the Product Marketing Manager at cleverbridge

The post Subscription Metrics Defined appeared first on cleverbridge.

The Evolution of CRM Data

Of course, focusing on customer relationships is not new. Companies have been using CRM tools for years. As we see from today’s infographic from Signal, CRM tools have evolved over time with technology and customer demands. In the early days, companies used simple pen and paper to record customer transactions. As businesses began to count on repeat business from influential customers, the Rolodex was added as a customer contact management tool. Coordinating customer contacts with a record of transactions took customer relationship management to new heights. As technology allowed for the digitization of this information, the modern CRM tool was born. The modern CRM tool is cloud based and mobile ready — just like your customers.

CRM Data — Value Unlocked

Using your CRM data to support customer relationships isn’t just an exercise in kindness or diplomacy. It will return increased revenue, increased customer satisfaction and decreased subscriber churn. After detailing the development of CRM technology, Signal tells us just why CRM data can be so valuable, saying “Above all, CRM data paves a path for advertisers to shift to one-to-one marketing at massive scale.” Integrating your CRM data with your email marketing platform and subscription management solution allows companies to precisely target customers through list segmentation and communication personalization.

Signal points out that companies who use a personalized CRM data-based approach win two to three times more subscribers than companies who focus on traditional cookie-based methods. And the best news of all — your company already owns this data. The trick is unlocking the value stored deep in your CRM data to forge long-term customer relationships and a stream of recurring revenue to your business. Enjoy the full infographic below.

Learn how the best teams use APIs to connect their data sources.

The post Unlocking Value From Your CRM Data [Infographic] appeared first on cleverbridge.

One of the main things we’ve concluded through our focus on the customer experience is that it facilitates customer acquisition and retention, which are obvious prerequisites for making money online. As we see in this week’s Ecommerce Eye Candy, “89 percent of companies see customer experience as a key factor in driving customer loyalty and retention.”

This infographic from Invesp begins with the adage that it costs more to create a new customer than to keep an existing one, so you should work hard on keeping your existing customers happy. In this case, the infographic claims the cost is five times as much. When I googled this interesting tidbit I wasn’t exactly surprised to find some discrepancy among the results regarding both the extent and veracity of that claim.

The infographic further wades into the challenge of focusing on the truly important aspects of customer loyalty, and shows that it is difficult for companies to prioritize the things that drive business growth. For example, we previously learned that marketers and sales teams spend an inordinate amount of time marketing to prospects and leads at the bottom of the sales funnel to the detriment of those potential customers at the top of the funnel. Similarly, this infographic says that companies spend too much time trying to acquire new customers at the expense of investing resources into retaining the ones they already have.

Another challenge in keeping customers coming back is that although “76 percent of companies see customer lifetime value as an important concept for their organization,” less than half are able to measure it accurately, and it is already an axiom in the business community that if you can’t measure something, you can’t improve it.

Infographic by- Invesp

The post Ecommerce Eye Candy – Customer Acquisition Vs. Retention Costs [Infographic] appeared first on cleverbridge.

For this month’s Ecommerce Digest, we will discuss tactics for reducing churn rate, look at some of the hot new trends in B2B website design, and investigate the intersection between data, SEO and content marketing.

Churn Rate

8 Advanced Tips for Never Losing SaaS Customers | KISSmetrics
The subscription era of ecommerce came into its own with the influx of SaaS. With the advent of these cloud-based products, the market turned from ownership to access, and ecommerce shifted accordingly. Instead of selling a lifetime license to a customer and hoping they would upgrade with the next release, subscription business models force merchants to prove their value to buyers on a more frequent basis. This post from KISSmetrics provides practical tactics that subscription companies can use to make sure that their business model is providing them with the predictable revenue they desire.

Web Design and B2B

15 B2B Sites That Put Design First | NewsCred
Prospects and leads consume a good amount of content through independent market research and resources offered on prospective vendors’ websites. Therefore, they already have a good idea of what they will hear by the time they speak with a sales agent of a B2B merchant. That is one of the many reasons it is so important for B2B merchants to fine tune their websites, and make certain that design and content are focused on communicating value to prospective buyers. If it’s been a minute since the last time you updated your site, you need to think about how you can improve the face of your brand. Use this blog post for inspiration.

Content Marketing, SEO and Data Analysis

Using Data to Create an Effective Content Marketing Strategy | PerformanceIN
One of the goals of your content should be to educate prospects and leads so that by the time they reach the bottom of the sale’s funnel, they are already well-versed in the value your company offers. This post teaches businesses that they should focus not just on blog posts and landing pages, but every page on their site. One idea to keep in mind, according to this post, is “Would somebody want to read this if Google didn’t exist?” Additionally, businesses have an imperative to look at their web analytics tools and survey their audience to find out which content is most effective.

The post February Ecommerce Digest appeared first on cleverbridge.