Last updated 01 October, 2020.
As the saying goes, churn is the silent killer of SaaS. It simply doesn’t matter how many new customers your marketing and sales teams manage to acquire if you can’t convince your existing customers to stay.
In fact, according to ProfitWell, boosting customer retention is twice as valuable than acquiring new customers. While a 1% improvement in acquisition results in a 3.32% increase in bottom-line revenue, a 1% improvement in customer retention results in 6.71% bottom-line improvement.
But what kind of mechanisms, team structures, and hierarchies should you put in place to keep your churn in check? And more importantly, which role or department should be ultimately responsible for customer retention?
To answer these questions, we turned to 8 retention experts. 👇
Should customer success own retention?
According to several of the SaaS retention specialists we talked to, customer retention lies first and foremost on the shoulders of the customer success team.
“Customer success should own retention. They’re the closest to the customer and work with them on a day in and day out basis,” Tim Busa, Director of Demand Generation at Zaius says and continues:
“Ensuring they’re driving the most value from product, sniffing out any tones of frustration, looking to solve them, and being the voice of the customer to the product team falls naturally to them.”
Similarly, Josh Ho, Founder and CEO of Referral Rock, argues that while customer success should assume ultimate responsibility for retention, it would be unrealistic to expect that they could do it alone.
“In our SaaS business Customer Success owns retention. They are responsible for all the customer interactions post-sale and some pre-sale with support,” he says.
“Retention is also strongly affected by sales and product departments, so we make sure CS has a seat at the table to influence the product roadmap. It’s ultimately in their hands but we understand they cannot control everything, including the customer themselves.”
This view is also shared by Dan Madden, Marketing Director at citrusHR who says:
“The first point of contact for a cancellation conversation is always the customer care, service, or success team, so retention is owned by them.
However, keeping other areas of the business (sales, marketing, ops, and/or product) focused on the goal of keeping customers happy is essential to keeping churn down, so despite owning retention, CS teams need to facilitate company-wide retention conversations.”
Long story short, while these three experts all agree that customer success should ultimately own retention, they admit that churn prevention is no job for lone cowboys, as it requires a lot of cross-team collaboration.
Should customer retention be everybody’s business?
At the other extreme, three of our experts strongly believe in distributing the responsibility between the entire company.
As Paul Ard, Head of Marketing at CMAP Software says:
“Every department should contribute!”
He goes on to suggest the following split between retention-related responsibilities:
- Customer success: human interaction with customers, helping to solve higher level problems to help customers achieve success
- Support: day-to-day problem solving
- Product & development: constantly pushing the product forward
- Marketing: making sure customers are aware of new functionalities
- Sales: up-sell/cross-sell opportunities
- CEO & CTO: on-site visits with select/influential key customers
Similarly, Tove Zilliacus, Sales Executive at SEB Kort Bank makes the case for cross-team collaboration:
“As I have stated many times, all of the business should be responsible for customer retention. You can’t keep a customer if sales is doing a brilliant job and then customer service stumps it.
At the same time, if product development is not hearing the customer, it’s hard to keep them. We need to rethink the whole silo thinking for once and go truly customer-centric. If I would have to name a function, I would create a function called Customer Delightment, and put the responsibility there.”
This view is also shared by Databox CEO Peter Caputa IV, who says:
“I am not a big believer in assigning big goals like ‘improving retention’ to just one team. This should be a company goal and multiple teams should be responsible for coming up and executing different initiatives to improve it. This is actually our main focus here at Databox right now. So, I can share some examples of initiatives each team is doing.
Our churn rate is average for SaaS companies selling to small businesses, but we think we can do better. So, the whole team is working on it.
Marketing is shifting focus towards product-related content that is useful for users. We've doubled our support team and are providing free support to our free users. We have had a free product that allows users to try us, but we recently implemented a free trial in order to let our users setup the product fully before purchasing. One third of our churn happened within 75 days of purchase as people buy monthly to continue setting up/evaluating. So, we’re hoping the trial reduces that significantly.
Our product team has reduced friction in the setup process by reducing the number of initial choices a user can make. They’ve also introduced wizards that guide users through learning our more advanced tools. Our customer success team expanded our help documentation and is rolling out live chat to provide immediate support to users.
As you can see, there’s no way one team could do all this.”
TL;DR: These SaaS specialist believe in rallying the whole company together to improve retention.
Or should you build a retention team?
Somewhere in between “everyone should own it” and “customer success is ultimately responsible” lies this third camp of SaaS experts who argue that you might be better off with a dedicated retention team (much like Tove already hinted at in her answer).
Anna Shutko, Product Marketing Manager at Supermetrics makes the case for a purpose-built retention team led by a customer success manager.
“In my opinion, it depends on 3 things: 1) the product/service structure 2) the team structure 3) the phase of development a company is in. For example, Supermetrics has always been developing as a product-led company, and a lot of customer retention activities have been attached to the product itself, i.e. the development of new features according to customer feedback,” she says and continues:
“I think that this role should ideally be separated into e.g. a customer success manager, who should then seek help from 1) the customer support team (as they act as the point of interaction), 2) growth/data analytics team (as they can back the theories with data and ideas on how these could fit into the business/product framework the company has) and 3) marketing team (the one developing the BOFU content to delight the customers).”
Similarly, Kristen LaFrance, Head of Growth & Community at Churn Buster argues that instead of letting customer success call all the shots or trickling down the responsibility throughout the entire organization, a safer bet is to get organized and build a dedicated retention team:
“One of the biggest issues with customer retention is that it's “everyone's job.” But, if it's everyone's job then it's really no one’s job. Which is what happens in a lot of businesses, allowing retention efforts to slip by.
The main departments that contribute to customer retention are marketing, sales, and customer success. The easy answer is to say retention falls on customer success, but I believe that’s too alienating.
One of the biggest roadblocks for companies working to improve their retention can be the diffuse nature of churn—i.e. it’s an issue with ripple effects through your entire company, but no single source.
So when possible, I always suggest companies grow a retention team. However, it’s not always feasible to do this. When that’s the case, I encourage companies to build an internal retention department from their existing teams.
Have a lead—or representative—from marketing, sales, product, and support and give them the power to handle retention together. Create a high-level retention strategy, divide tasks by department, and then set up a system for passing along important information, like lead quality from sales back to marketing or common CS issues being reported back to marketing.”
Psst! To read more about Kristen’s approach to retention teams, check out her awesome post on how to build a retention department.
To summarize, Anna and Kristen agree that as the company grows, you’re better off with one centralized team for all things retention.
In closing: Why should marketers care about retention?
By now, it should be painfully obvious that subscription-based businesses can’t grow if their customers keep churning. Unfortunately, though, most marketing departments are still measured in demand generation and customer acquisition metrics, rather than in (marketing-generated) customer lifetime value.
As marketers, we need to accept that in B2B SaaS, not all customers are created equal. And instead of spending all our time on acquiring any new customers, we should focus on acquiring good-fit customers—and helping them become so successful that they’ll end up staying, buying more, and telling their friends.
Dubbed as “retention-based acquisition” by Kristen LaFrance and “growth marketing” by the team here at Advance B2B, this approach boils down to understanding who your best customers are, developing (and iterating) an ideal customer profile based on your findings, and then targeting your marketing specifically to people and companies who match that description.
And while all that is a topic for another blog post (or seven 🤷🏻♀️), if you’re interested in swiping the very process we use here at Advance B2B, feel free to check out a recent talk I gave at the SaaS Breakthrough Summit. 👇