Why democratizing customer experience is key to profitability and customer success for SaaS companies

No doubt your sales and marketing team is heavily focused on acquiring the next customer, right? Do you realize how much that costs you? According to the White House Office of Consumer Affairs, it is six to seven times more costly to attract a new customer than to retain an existing one. For Software-as-a-Service (SaaS) companies selling to enterprise customers, this has a major impact as revenue depends on subscription renewals. The sales cycle may be long and arduous. For many companies, profitability doesn’t happen until a customer has been on board for two to three years. You can’t afford not to improve retention.

But what drives retention? Customer experience. Yes, pricing, solution fit, scalability, these impact retention; but overall, it’s the customer’s experience with your brand throughout the relationship that weighs heaviest toward whether or not they renew. Today, customers can replace vendors more easily than ever before – which means retention isn’t just a concern when subscriptions are expiring. It’s a 24/7/365 challenge.

Historically, sales and marketing had been heavily tasked with acquiring new customers while Customer Support or event Finance was left to handle retention. That’s the old model, folks, and it doesn’t work anymore. According to McKinsey, 55% of current marketing spend is on new customer acquisition, 33% of current marketing spend is on brand awareness, but only 12% of current marketing spend is on customer retention. Our marketing spending has not caught up to the new reality in high tech.

There’s a saying that you can’t expect different results if you continue to do the same things over and over again. Today’s companies need to realize that everyone owns retention because everyone owns the customer experience.  As products are commoditized, and your differentiation shrinks, it’s your customer experience that sets you apart. Forrester reports that, second only to revenue growth, customer experience is the top priority for executives in 2015. The numbers prove why. Improving customer retention by just 10% increases the value of your company by 30% (Bain & Company). Think about it: a 30% increase just for keeping existing customers happy.

Democratizing the customer experience isn’t an optional way to do business. It’s the only way customers already do business with you. Their experience with you is driven by every contact they have with your brand. While companies often find that customer expectations are “extreme” the fact is, they are the new normal. It’s challenging all of us to keep pace and think in new ways.

As a SaaS business, it’s the experience you provide throughout the subscription period and not just the product itself that determines satisfaction. According to McKinsey, 70% of buying experiences are based on how the customer feels they are being treated – that includes repeat purchases and it also includes expanding your footprint within a client company – which is almost equally as important to profitability as retention. But without retention, there will be no opportunity to sell more to the same customer – and without a great customer experience there will be no retention.

So how do you democratize the customer experience to improve retention? An effective way is to take a “Total Community” approach — where you empower everyone (customer peers, internal experts, influencers, vendors) to be able to shape the customer experience by providing faster, more accurate information throughout the customer experience journey. (Let’s face it, the best thing you can ever do for your customers is save them time.) With a Total Community approach, you speed up your responsiveness and provide a better interaction with your brand.

Creating and leveraging a strong community engages existing customers and prospects (with support, troubleshooting, self-serve solutions, crowdsourced innovation, advice) and gives them an overall sense of feeling supported. Why does this matter? B2B customers’ primary need is for your software to work right and for their users to be able to learn how to use it effectively. They need support when they need it, because anytime they have an issue, it’s costing their business productivity and money. Community (and a Total Community approach) creates a responsive format where customers know they can find the answer on their own, get it from peers or find the right experts to quickly resolve their concern. The content generated by users provides an added learning base to get their people up to speed quickly. Communities are proven to drive loyalty, increase spending per member and boost Net Promoter Scores.

Ultimately, SaaS companies’ success in the B2B market depends on being able to create more than just great software that meets the customer’s business objectives. It depends on creating an outstanding customer experience at every touchpoint — achieved by democratizing ownership of the customer experience. Doing so will be key to increasing retention and profitability.