Tuesday, June 23, 2009
SAAS Renewals - the Most Critical Piece of the SAAS Business Model
SaaS: Increasing Renewal Rates to Maximize your Company's Growth and Success
Recently at our SaaS Forum: Overcoming the Challenges to Deliver Successful Sales and Marketing Results, SaaS renewals rose to the surface as a hot topic for the audience. Today's event was a deep dive on the topic. The panel shared many metrics and techniques to help increase customer retention across a broad spectrum of company sizes and contract terms.
Moderator, Peter Cohen from SaaS Marketing Strategy Advisors, kicked off the event and shared two graphs that demonstrated how extending the life of the customer's subscription is critical to the success of the SaaS business model. It's bad business to lose customers you've already paid for. View Peter's presentation for more information.
Panelists included Jim Driscoll - CFO, Kadient, Jonah Lopin - VP of Customer Operations, Hubspot, Brian Martin - VP of Client Management, OpenAir and Teri Shipp - SVP of Sales, Salary.com.
Key insights included:
- Jonah Lopin discussed Hubspot's use of "The Customer Happiness Index" or CHI rating to rate customer's satisfaction level and the likelihood to renew. It is a 1-100 scale that takes into account many different indicators including, who is using the technology within the company, how many people are using it, which parts of the solution are they using, etc. Hubspot is changing from a 30 day contract to a one year contract. This will provide Hubspot the opportunity to fully engage and demonstrate to their customers the value of the entire solution.
- Jim Driscoll's experience is that it is much easier to close the 1 year deal than the 3 to 5 year deal which requires a higher level of approvals. Once they are engaged for the year, it is up to Kadient to prove the value of their solution and upsell from year to year.
- Brian Martin said the key to their success is a very high touch rate. They are constantly communicating with their customers to keep them happy and have an active user community on their website.
- Teri Shipp stated that one of the keys to success is to make client interaction and the renewal process programmatic vs. serendipitous. Any data or metrics around customer usage can be tracked in Salesforce -- it is a critical tool for Salary.com's success.
In addition, the panel discussed compensation plans for renewals. The companies do compensate the account management group on renewals but not at the same level that a Sr. Sales executive would have to be compensated. If they were to compensate the sales executives, the customer acquisition costs over 3 to 5 years would skyrocket.
The Advisory Board met briefly following the event to discuss plans for the fall. Topic ideas for fall events will be circulated -- we welcome your input!
Post Contributed by Jillian Hegarty, MassTLC Relationships Manager