In the subscription economy, cost of delivery matters in setting prices, but the factor that’s quickly becoming dominant is value delivered. As described in the book B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship, customers increasingly want to pay for outcomes, or “realized value.”
User nurturing can have a big positive impact on both adoption and customer success, as we’ve discussed in earlier research alerts. But user nurturing can also be critical to retention. Like so many customer dynamics, churn starts gradually—and if left unnoticed, it can develop into issues that are impossible to resolve. Assuming you’ve been able to achieve your implementation and adoption milestones, any customer and revenue churn usually starts with user churn. User churn (i.e., loss of users) is when individuals start to drift away from using your solution. At renewal time, this drop in usage results in seat churn (i.e., loss of quantity on renewal), which is the first loss of revenue. Ultimately, further usage drops can result in […]
In a perfect world, we’d like to see all provisioned users become loyal users—but the reality is that even getting a majority of users to adopt (let alone become loyal users) can be a struggle. At the same time, reaching majority adoption is critical to renewing a customer. So how do you tackle this adoption challenge? Through user nurturing. You need to make sure that every user is contacted at the critical stages in your onboarding process—with training, best practices, and (of course) reminders. In fact, even a simple login reminder can have a significant impact on adoption. But you can do even more. Consider the situation of one SaaS company from our data. The company defined users into three […]
If you’re a CFO of a SaaS business, one of your biggest challenges is gross margin. As we all know, gross margin is essentially the difference between the revenue for a subscription and the cost of fulfilling that subscription—and with the software industry’s seismic shift from an on-premises model to a SaaS model, we’ve watched gross margins go from about 99% to more like 70 to 80%. That’s a big change. Unlike the old on-premises model, the SaaS model now has operations, customer success, and other functions to include in the gross margin equation. A SaaS company needs to fulfill on the terms of subscriptions, and that entails both “assets” (e.g., computers, bandwidth, operations) and “services” (e.g., on-boarding, adoption, retention). The good news? […]
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