SaaS operations must be wrapped with intelligence to open new opportunities beyond the first deal

Mar 15, 2017

Knect356 | Amy Downs

While it’s always great to win a new customer and the revenue that brings, delivering additional value beyond the initial business need is one of the greatest challenges facing SaaS providers. The promise of SaaS is to provide great flexibility to the customer but that flexibility means that it’s easy for a company to switch providers. Churn therefore is a significant issue and SaaS providers need to balance the cost of attracting a new customer against the costs of keeping existing customers happy.

It’s clear that customer retention costs less than winning new customers but SaaS providers sometimes neglect to include the dollar value of second-order revenue that comes from customer recommendations, references and the relationships that can be reignited when product fans move to a different company. Success in SaaS is about the lifetime value of a customer so steps that can be taken to build the relationship beyond the first deal are vital to delivering more value for customers, which ultimately leads to greater revenues. A Harvard Business Review demonstrated the value of customer retention by reporting that a 5% raise in retention rates will increase profits by 25% to 95% for an average business