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SaaS 2020 Trends: Customer retention lies in engagement, partnership, and nurturing the P2P community

30-second summary:

  • Successful SaaS companies will figure out how to develop truly bi-directional partnerships with their customers, to the point that customers become contributors to the overall vision of the product.
  • Net Promoter Score is a snapshot of the past, not a roadmap of the future. Customer happiness and future loyalty require customer-centric metrics.
  • If done right, peer-to-peer communication can be used to assess customer health and sentiment.
  • The act of engaging with a software ecosystem will ultimately drive value, and successful companies will encourage it.

It’s been twenty years since Salesforce launched the world’s first fully Software as a service (SaaS)-based service, ushering in a new era of software delivery.

The SaaS market has been booming ever since, and shows no sign of slowing down soon.

According to Gartner, the cloud-based services market will top $332 billion in 2020, a clear endorsement of the model among businesses and consumers alike.

But rampant growth always comes with some risk, and SaaS-based software is no exception, as SaaS Mag points out: “Healthy competition is one thing, but with saturation, potential customers may simply have too many choices.”

An abundance of choice leads to customer inertia and makes it difficult for companies to break through the noise, which is why it’s more important than ever for software companies to nurture their existing customers and provide a plentitude of reasons for them to stay.

Software bells and whistles will only get you so far; customers want to know their software vendors have their backs.

In my opinion, the SaaS companies that will see the most success in the next 12 to 18 months are those that embrace the following four trends.

#1: Think of customers as partners and be dedicated to their success

Successful SaaS companies view themselves as partners as opposed to vendors.

Their job is to move beyond adoption and usage, and to ask proactively: Is our solution meeting this specific customer’s business need now, as well as over the long haul?

This shift in thinking changes the dynamic of the software-user behavior.

I see a lot of software companies offer a one-size-fits-all feature set, and leave it to the customer to figure out which features are right for their internal skill sets, experience levels and resource pools.

This isn’t ideal. Successful companies will figure out how to develop truly bi-directional partnerships with their customers, to the point that customers become contributors to the overall vision of the product.

#2: Implement product roadmaps based on customer’s success metrics

We still see a lot of instances in which Customer Success teams think in terms of onboarding, driving early adoption, quick time-to-value, and most important of all — Net Promoter Score (NPS).

But let’s face it, these metrics measure vendor — not customer — success.

For instance, let’s say an online retailer purchased a product recommendation solution as a strategy for increasing lifetime value of its visitors.

It doesn’t really matter if implementation was easy if the recommendation engine promotes low cost items. It’s not meeting the retailer’s goal.

NPS is still considered the Holy Grail of SaaS companies, but one must take care as to how it’s used.

In many cases, it serves as an indicator of which customers to focus on, and not as a barometer of customer happiness.

Moreover, NPS is a snapshot of the past, not a roadmap of the future. Customer happiness and future loyalty require customer-centric metrics.

#3: Embrace peer-to-peer communications

Successful SaaS-based platforms are more than just a brand; they’re an “ecosystem.”

Take the ecommerce powerhouse Magento, now owned by Adobe. The company has built a global community of ecommerce developers, contributors, and innovators.

At the heart of this community is peer-to-peer communication, enabling online retailers to tap into a vast pool of product experts – far bigger than the brand’s support organization – to have their questions answered.

This makes a lot of sense to me. Often, SaaS solutions are highly specialized, designed for architects, or corporate compliance officers.

Sometimes the questions users have can only be answered by a peer who experienced the same challenge.

Going back to trend number two, done right, and with the right tools, that peer-to-peer communication can be used to assess customer health and sentiment.

Trend #4: Focus on Lifetime Engagement vs. Lifetime Value

Renewals and annual recurring revenue are the lifeblood of SaaS companies, but customer loyalty is predicated on genuine, mutually beneficial partnerships.

The more a customer thinks about a particular SaaS solution — influences product development, contributes use cases to discussion groups, answers peer questions — the higher their lifetime value (LTV).

In other words, the act of engaging with a software ecosystem will ultimately drive value, and successful companies will encourage it.

I truly believe that in the coming years, the SaaS companies that will succeed are those that rethink what customer engagement means, and figure out ways to use engagement in ways that the clients truly believe a partnership exists.

Robin van Lieshout is the Founder and CEO of inSided, the only community platform built specifically for B2B Customer Success teams. He’s passionate about helping companies harness the power of their user communities to scale Customer Success. An Amsterdam-native, Robin travels between the inSided offices in Amsterdam and New York to connect with customers globally, and focuses his energy on making sure the company is always innovating.

The post SaaS 2020 Trends: Customer retention lies in engagement, partnership, and nurturing the P2P community appeared first on ClickZ.

Reblogged 9 months ago from www.clickz.com

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