Totango Blog: Your Guide to Managing the Customer Journey

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Two things you need to know to build a retention grader for your online application

Holiday wish list: renew more customers! (with free retention grader)

Do you know what part of your current customers will renew their subscription or maintenance next year?

Do you know how much revenue is currently at risk because customers might cancel?

Do you know what you can do TODAY to maximize recurring revenues? And do you know how much money is lost forever every day you wait?

This holiday season we bring you a free retention grader report which helps you detect accounts and revenue “at risk” of churning and, more importantly, tells you what you can do about it. See an example of the retention grader report here.

What you get in your own retention grader report?

1. Revenue at risk

By looking at the last login date of your users and applying our proprietary algorithms developed after the analysis of over 10 million users we can tell you what percentage of your renewal business is at risk. The algorithm is complex but the principle is simple:

Principle #1: The best predictor of churn-risk is usage (or lack thereof) of your application

This is pretty obvious– if a user is not using your application as frequently as he/she should, it’s highly likely they will cancel their subscription on their next renewal point. In fact, these users are 4 times more likely to churn than active and engaged users. Therefore, any user that is not using the application and approaching their renewal date should be considered a high-risk customer


2. Revenue leakage prediction

If you call a customer shortly after they have stopped using your application to offer help you have a very good chance of not only winning back the customer, but of gaining a loyal user for life. However, if you wait until a user cancels their subscription, you have only 10% chance of changing their mind. Using this principle we can calculate for you how much every day you are not acting on customer activity data is costing your business.

Principle #2: To successfully get a user ‘back on track’ you need to approach them much earlier than their renewal-date

If a user has already cancelled their subscription, the businesses chance of convincing to roll-back their decision are small. We’ve all been there where we canceled a subscription to a service of offering and then, magically, customer-support representatives jump all over us to try and help us get “back on track”.  It’s not dignified and it doesn’t work.

For web-applications, the success-rate of these engagement tend to be sub 10%. But if you engage the user much earlier, as close as possible to when they stopped using the application in the first place, success rates go dramatically up. You are catching the user “in-context”, when the issue or problem or concern that made him stop using the application are fresh in his/her head and are likely a priority for them. Your call, offering help, will likely be much appreciated and in fact can be rewarded with a loyal customer for life.


3. Industry benchmark

The third part of the customer retention grader report will compare your data against industry benchmarks. We have helped over one hundred customers to increase their renewal rates and customer lifetime value. See how you stack up today!

4. Recommendations

Every retention grader audit concludes with some concrete steps you could take today in your business today to identify accounts and revenues at risk and to take proactive steps to offer the right kind of help to turn the customer around and increase renewal rates.

So don’t wait, but come to claim your holiday gift today and end the year with more renewal revenues!

Oren Raboy

Prior to Totango, Oren founded Kidyosj and Beyondo, and served as the Head of Products at P-Cube (acquired by Cisco). In short, he’s a perpetual entrepreneur who has finally found the winning product in Totango.

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