Daniella Goodwin

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Software as a service may be a futuristic technology, but most SaaS businesses have been living in the past. Even though SaaS depends on recurring revenue, they’re still obsessed with new sales and put little to no effort into retaining existing customers.

But with everyone looking to save money still after COVID, those existing customers are disappearing in droves. Will it go back to normal once the crisis is completly over? Probably not. Here are five reasons why.

1. Winning cloud companies already put customer experience first

Unicorns like Zoom and Slack focus intensely on product and customer experience. Sales is a side-effect. They constantly measure and improve adoption, activity and churn. Startups are hiring Customer Success Managers before salespeople – and it’s working. Older companies should watch and learn.

2. Customers have higher expectations

With the massive financial pressure on businesses during COVID, if a client is going to pay you, you’d better be offering something well worth the money. If you don’t meet a real need and provide measurable outcomes, you’re toast.

3. SaaS companies are realising the importance of churn

With churn on the rise, 37 out of 41 CXOs of SaaS companies surveyed say churn reduction is “very important.” They’re realising revenue doesn’t “recur” all by itself – it takes investment to make that happen.

4. Public investors want to see retention

Investors are getting savvy too, asking probing questions about retention and churn rates and customer success. They’ve realised these are the key to momentum in SaaS during the recession – and they won’t stop asking these questions when it’s over.

5. Management teams are shaking up their priorities

With new sales slowing down, companies are telling their sales teams to focus on top account health and on expansion, and even moving account execs into Customer Success Manager Roles to drive up net retention.

These methods are working – so they’re going to stick. The future of SaaS is going to be customer-centric.