Retain SaaS Customers in a Downturn: 3 Things To Do Today

Posted on March 30, 2020March 30, 2020Categories ArticleTags , , , , , , , , , , , , 3 Comments on Retain SaaS Customers in a Downturn: 3 Things To Do Today

In a downturn, customers may want to leave. You need a strategy to retain SaaS customers in spite of everything going on. Here are 3 things you can start doing today to retain your profitable and valued customers.

With the recent events happening around the world right now (Covid-19 at the time of publication), markets falling, the general economy taking a downturn, many business owners are wondering what is going to happen to them. More importantly, what will happen to their customers. Now it’s critical to understand how to retain SaaS customers when there’s a downturn.

As a B2B SaaS provider, you need to have a finger on the pulse of what other businesses are doing. While some companies are being forced to close temporarily, others are telling their employees to work from home, and yet others are going out of business entirely. Will something drastic happen to them?

Knowing how to retain SaaS customers requires preparation. Start now.
Knowing how to retain SaaS customers requires preparation. Start now.

The answer is that if you are a business owner, your company will most likely feel some kind of effect—especially if you run a SaaS company. So, if you run a B2B SaaS company you can expect to have some kind of disruption to your revenue flow.

So what do you do? Do you start cutting costs and laying people off? Well let me tell you. The smartest thing you can do is to focus on the most efficient use of your dollars to preserve as much of your revenue as possible.

You need to start worrying about revenue preservation, which means retention! Customer retention to be precise! You should have a very robust program focused purely on customer retention either in use, or in the creation process right now.

You should be doing all the “regular” things you would do to retain SaaS customers. For example, you should reach out via e-mail and let them know how you are handling the downturn and what they can expect from your company during that time.

This simple communication however is not enough!

Your customers are also business owners who are trying to intelligently plan what to do with their spending. You need to put yourself in their position and think about why they should keep paying you during this downturn.

Why should they pay for your particular subscription? Take yourself out of their position now. So, how do you get them to realize they need your services?

Let me share with you 3 action items that need to be a part of your planning for SaaS customer retention.

Know Your Customers’ Success Goals

You should already have a basic understanding of the return on investment that your customer gets for using your software. If you want to retain SaaS customers, now is the time to get really clear on it.

Understanding the definition of success will help you retain SaaS customers even when things have changed.
Understanding the definition of success will help you retain SaaS customers even when things have changed.

What is it that your customer is trying to do with the software? Realize that their entire world might be changing with this downturn, and it shouldn’t be a surprise if how they are using your software changes. You need to touch base with them and see what things have changed.

For some companies this may not be feasible, however, if you want to retain your SaaS customers during a downturn, you may want to reach out to key customers and get an update on what their expectations are for using your software going forward. Find out what would constitute a positive return on their software investment over the next 12 to 18 months then make adjustments as necessary.

You need to start talking about these success goals around your employees and in the office. For example, are your customers moving from growth to expense savings. Will that change how they use your software? Maybe they’re reducing staff and need to consolidate roles. How will that affect user management in your software?

Learn more about user management in SaaS

Start Monitoring Your SaaS Customers’ Usage Metrics

Under the same framework of the principle we just covered, your customers’ usage metrics may have changed. The key here is to identify early on if the success metrics have changed, and if so, you need to know what they are tracking now and what you should be tracking as a result. Once you have a system in place to track these metrics, you then need to create control charting mechanisms.

Control charting mechanisms are statistical tests that you can use on a data set to identify changes. This is especially useful if you do not have someone monitoring your customers’ usage metrics. With the appropriate measurement in place you can detect when a customer is doing something really different as opposed to what is part of their normal activity.

An example of a control chart is a 3-sigma alert. Let’s say your customer logs in 2 or 3 times a day. If they suddenly log in 6 times in one day, that may set off an alert about unusual activity. We use control charting for security and fraud alerts, but it can also alert us to unusual activity of your customer that could indicate a problem.

There are many more control charting applications. Having a proactive alert set up when one of these statistical milestones is hit can be a very useful tool when you’re learning how to retain SaaS customers.

Prepare an Offer to Retain SaaS Customers

A sophisticated software company will know some customers will want to cancel their subscriptions and licenses. Will you be ready? Or will your frontline sales staff say they need to “talk to the manager?”

To be prepared to retain your SaaS customers, you need to first define who your most profitable customers are. You don’t want to keep customers who aren’t profitable and in a downturn, it’s even more important.

Should you make a special offer to retain SaaS customers?
Should you make a special offer to retain certain customers?

Once you know who to “save” and who to let attrite, identify what kind of an offer should you extend to them. This is going to be different for every company. Some companies value profit more than volume or vice versa. Once you define this, then you can determine how much you can “pay” to keep a customer.

This payment will come in the form of a special retention offer. This offer can come about one of two ways: reactively or proactively.

The reactive approach to retain SaaS customers occurs when the customer comes to you to terminate their subscription and you provide this special offer to keep them longer.

The proactive approach to retain SaaS customers occurs when you can predict attrition in advance. This prediction comes from knowing what kind of changes in usage metrics are indicative of a customer wanting to leave. Once you’ve determined attrition is likely, you extend a special offer to those individuals before they cancel or terminate their subscription.

The proactive approach can be tricky and can make business owners nervous, however, if done correctly it can be very powerful.

To find out which usage metrics are predictive in order to retain SaaS customers, you would need to perform a quantitative analysis that will give you a high-probability of confidence on which customers are going to leave. This approach often provides the most success during an economic downturn.

Here’s why: during a downfall the customer is looking for ways to save money. Suppose they want to cancel 5 of their subscriptions and yours is on their list. Once someone makes up their mind in a downturn they seldom will change it, even if a reactive offer is made.

On the other hand, if a proactive offer is made giving them an incentive to keep your subscription, then chances are your software is not even going to make it on that list to begin with.

You don’t want to use the proactive approach unless you are confident in your ability to predict attrition. This requires some quantitative work. If you do not know how to do this, hire an expert to do this for you. It will be well worth the investment!

If you are interested this analysis, talk with SaaS CX experts. We’ll guide your approach.

Three Principles You Can Use Now to Retain SaaS Customers

So as a recap:

  1. Get clear on what your customers’ success goals are and realize that those may have changed.
  2. Watch your customers’ usage metrics.
  3. Prepare a special offer for your profitable SaaS customers.

These are all things that you can start doing immediately to retain SaaS customers. If you would like to talk to an expert about different quantitative analyses or if you’d like to do an “emergency” retention analysis, contact us.

How to Run a Demo for SaaS that Gets More Customers

Posted on March 4, 2020March 27, 2020Categories ArticleTags , , , , , , , , , ,   Leave a comment on How to Run a Demo for SaaS that Gets More Customers

If you’re a SaaS company, you know the demo is a critical part of the sales process. But not all demos are effective. In fact, many are downright boring and end up losing the customer’s interest. This article intents to answer the question once and for all, how to run a demo for your SaaS company that actually gets more customers to sign up.

If you’re a SaaS company, you know the demo is a critical part of the sales process. But not all demos are effective. In fact, many are downright boring and end up losing the customer’s interest. This article intends to answer the question once and for all, how to run a demo for your SaaS company that actually gets more customers to sign up.

Learn how to run a demo that generates customers
Using a right demo script is critical to gain new customers

In order to describe the “perfect demo”, we need to talk about the types of demos. There are three different demo styles or scripts.

  1. The “Menu” Demo
  2. The “Feature Review” Demo
  3. The “Day in the Life” Demo

Each of these three scripts has a different feel to them. And they can all be useful in different parts of the sales process.

Whatever script you use, the structure is critical. You need to capture the attention of your audience in the first 2 minutes of the discussion. Otherwise, you might lose their interest – and the sale.

Once you get the sale, don’t lose the customer. Check out our SaaS Churn Checklist for ideas on how to retain your ideal customer.

How to Run a Demo and How Not to Run a Demo

The three demo types we’ll be focusing on highlight different perspectives on the purpose of a demo. Some are useful in some scenarios. Some are not.

The important thing is knowing what part of the sales process you’re in. If you’re trying to sell to potential users, you need to speak their language. Sometimes, however, we’re just trying to check boxes off an RFP questionnaire. That’s a completely different scenario requiring a different script.

But we’ll run through each one and highlight the pros and cons.

The “Menu” Demo

The “Menu” demo is the most frequently used demo script. In the “Menu” Demo, the demonstrator goes through each of the major functions of the software – as if going through the top level menu – and explains why they’re there and what they do. The demonstrator doesn’t go into each detail, but the overall context of each section is provided.

For example, imagine the main menu of your software were: Import, Review, Approve, and Reporting. Those menu items forms the script of how to run a demo of this software.

The demonstrator would spend some time on the Import function. Describe some of the major features, talk about why it’s there and when you would use it.

Then the demonstrator would move onto the Review menu item. Again, they would discuss what Review is for, who would use it and what major features are there.

And so on until each of the menu items have been covered.

The “Menu” demo is a popular way to run a demo because it’s easy to remember – you simply follow the menu. Hence the name. The demonstrator is sure to cover all the major points because they’re included in the menu.

The problem with the “Menu” demo is that it’s “software-centric.” The menu items were created to resemble some broad workflow, but not necessarily from the user’s perspective.

And if the menu was created without the user’s workflow in mind, then this script is even more disconnected from what a real user would do with the software.

If your software is even moderately complex, a user will rarely use all the menu items in a single session. In fact, many of the menu items might not be used on a regular basis. If your software is designed for the enterprise, then a user might not even need many of the menu items; they have been designed for other user types.

Despite how you might view the workflow, the menu items will likely not represent how your customer actually uses the software. And because of this disconnect, although the “Menu” demo is informative, it’s rarely persuasive.

The “Feature Review” Demo

The “Feature Review” demo is like the “Menu” demo on steroids. The demonstrator goes through each and every feature, every box, every option to demonstrate the power of the software.

The idea is to overpower the the prospect with all the possibilities and they will want to license your software.

That result rarely occurs. In fact, unless such a demo is required by a Request for Proposal (RFP), you should never run a “Feature Review” demo. They are overwhelming and usually end up making your software look complex and unwieldy.

Enterprise SaaS sales can be tricky. Listen to our interview with Gregory Giagnocavo about the unique challenges of the enterprise SaaS sales.

Just like the “Menu” demo, the “Feature Review” demo is “software-centric.” It’s all about your code and nothing about the customer. What the “Menu” demo tries to do is stick with the workflow embedded in the menu. The “Feature Review” leaves this intention behind, getting lost in functionality at the expense of actual function.

Most customer who watch a “Feature Review” demo end up impressed by the thought that has gone into each component, but often do not understand how the software actually works.

This “shock and awe” approach is not how to run a demo. You’ll find your prospects with more questions afterwards than they had before. And worse yet, they may be too confused to know what to ask.

The “Day in the Life” Demo

It turns out what your prospects want to know most is how they’ll use your software in their day-to-day work. You will want to think through how to run a demo that highlights the typical use cases your customer will go through.

The focus on use cases can be complex when you have enterprise software and multiple user types. That only emphasizes how important it is to structure demos around the audience.

Regardless of the different types of users, your demo needs to be “customer-centric.” It needs to focus on things your customer actually does. Build a script around what life actually looks like for your user – pre and post-implementation of your software.

The “Day in the Life” demo is a scenario-based demo. Start with a typical situation – ideally one your software makes easier. Set up the scenario verbally and then walk through the exact steps the user would take to handle that scenario.

Choose scenarios that are common rather than one-off “corner cases.” If you can include commentary about workflow that is happening outside the software, you’ll find your prospective user understanding better how your software will affect their work.

In the end, you’re shooting for dramatic changes in outcomes. You need to justify the return on investment in your software. And your demo should make it clear that the day-to-day work of the user will result in that ROI.

You will be tempted to “throw a few things” into the “Day in the Life” demo because your scenario doesn’t hit on some key features or functionality. Resist this urge. Your prospect will be won over by seeing how your software interfaces with their already existing workflow. Detours and breaks in the flow only serve to confuse the prospect. That disruption makes it less likely for them to see your software fitting “into their life.”

If you find your “Day in the Life” demos are missing key features and function, that should tell you something. Either you’re telling the wrong stories or your key features aren’t all that key.

If you adopt an agile development framework, some of these stories should already be a part of your internal language. You’re just showcasing them to your prospects now.

How to Run a Demo that Gets People to Buy

All the theory in the world isn’t helpful if you can’t visualize it in action. That’s true for your customers. And it’s true for you. To that end, here are some examples of outstanding demos you might use for some inspiration.

In the end, your goal is simple. More customers.

But to do that, your prospect needs to go on a journey with you. They need to see a relevant, valuable outcome. They need to recognize a problem with what they’re doing today. And they need to see you solving that problem.

These problems are a part of your customers’ daily life. The scenarios you describe in your software demo need to reflect those daily challenges.

Your potential customer will not be swayed by the latest feature or shiny object. Especially not when that new gadget doesn’t immediately address their pain points.