The Top 10 Things We Have Learned about Client Retention

In my last “Top 10” series for this week, I chose to review another Jeff Bennet’s article: Top 10 Things We Have Learned about Client Retention.

Client retention is a critical component to any organization, especially for subscription based revenue model organizations.

I agree with Jeff that reducing churn is not only the concern of your Support group – the entire company should focus on client retention and reducing churn as focusing on existing leads is more profitable than acquiring new ones (see: Treat Customers Based on Their Value)

Below are the most critical elements for client retention strategy:

  1. Losing an executive champion opens the door for competitive bids at renewal time – In order to leave their mark, new executive champions will be open to more competitive bides before agreeing to renew.
  2. Many software companies are surprised when clients renew or leave – technology companies need to adopt a client lifecycle approach that removes the element of surprise.
  3. Understanding the true retention rate – many clients will renew in year two more as a reflex then as a choice (Unless you have failed them miserably) making the 3rd 12 month term less likely for renewal. Therefore, it is important to measure retention rate per subsequent renewal years
  4. Having high client retention, frankly, is hard work – clients will renew only if they find value in your product. Ensuring retention requires hard work and the whole organization should be focus on that.
  5. A disconnect between the purchaser and the user community spells trouble – Companies rarely renew a solution that is not being properly used.  Wherever necessary, bridge the void between purchaser and user when a divide exists.
  6. The bad news – SaaS solutions are easy to deploy – If they are easy to deploy, they are also easy to remove and in many cases, the customers’ risk in replacing a SaaS provider is low. Retention is always a risk, when leaving you is painless – relative to the on-premise model.
  7. Client retention is strengthened when your solution is connected into a larger eco-system of solutions – your clients will be more dependent on your solution and less likely to leave if your solution can integrate, communicate or otherwise “hook into” other key tools that your client needs such as financials, CRM, project management tools, etc.
  8. Complimentary service offerings positively impact client retention – That too will create dependency for your service – offer complementary services that will help to ensure that your solution is entrenched in your client’s business process and workflow.
  9. Sales rarely take an active involvement in client retention – Sales people skill set is very different from Customer Success skill set (read: Hunters and Farmers post) and even though Sales is often responsible for all revenue they cannot and should not spend the amount of time and effort on client retention.  This is another reason why you need a client lifecycle approach that complements the Sales team and gives them the confidence to pursue new business because they know the company is pursuing client retention and revenue protection.
  10. Clients will not renew if they think they have chosen a market loser – have your Marketing and PR teams communicating you market wins to counter any perceived “market loser” symptoms.  i.e. RIM, a great company, that has great products, but will lose clients not because their products or solutions, but because they are perceived (wrongly so) as a “market loser” – and no one wants to be associated with a perceived loser.

So take a hard look at your organization through the lens of each of our Top 10 items, and adjust accordingly.

For the full version of the tips, please refer Jeff’s post on ServiceVantage blog

Guy Nirpaz

I'm the CEO and Co-Founder of Totango. I love people and technology and I've dedicated my career to tech that will improve the way people do business. Prior to starting Totango I worked in the space of real-time big data as EVP of Engineering at GigaSpaces and as Chief Architect at Mercury.

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