The COVID-19 pandemic increased the risk of customer churn across almost every industry. Forrester predicts that software growth as a whole will slow down to two to four percent or may be flat if a recession occurs.
However, you still have a say in how well your business makes it through this period. COVID-19’s effect on customer churn may have already begun, but there is still plenty you can do to increase customer engagement and retain the customers you have worked hard to win. By embracing the following customer retention best practices, you can guide your customers through the current business landscape and be poised to thrive on the other side.
- Lean on Customer Data
- Segment Your Customers
- Be Proactive Communicators
- Be Flexible
- Revisit Goals and Success Points
Recovering from the Effects of COVID-19
The COVID-19 pandemic has had an economic impact that threatens to cause a lasting downturn in SaaS business. The likelihood of a long-term decline in the U.S. and global tech markets beginning in 2020 is now at about 50 percent. As SaaS customers tighten their belts to survive the pandemic, there are expected to be major to severe revenue losses across more than half-a-dozen critical industries, including banking and finance, telecommunications, manufacturing, and others.
This reduction in cash flow is likely to increase rates of SaaS customer churn. High churn can be dangerous for SaaS enterprises as more than 90 percent of customer value is derived from recurring revenue.
However, there are ways to reduce COVID-19’s effect on customer churn.
What Customer Success Can Do
Now is the time to lean on your Customer Success team. CS has long prioritized the importance of customer retention as a way to grow and preserve customer lifetime value, which evaluates the total potential customer spend over an extended period of time. This retention effort is led by the daily, proactive pursuit of customer value. It is the search for practical ways to improve a customer’s business outcomes. Those goals and the definitions of success may have to be revised during times of economic stress such as the current pandemic, but they should never be abandoned.
There are five key CS best practices that can guide your customers through to the better times ahead.
1. Lean on Your Customer Data
Times of economic volatility can make customer behavior unpredictable. When conditions are uncertain, it pays to rely on the data. Now, more than ever, you need real-time customer data in order to identify trends in behavior and make data-driven decisions. Automating this monitoring process by using an early warning system can give your team time to react to potential churn or capitalize on opportunities for growth.
The right customer success platform gathers and shares a range of customer information to allow your business to act on that data in a way that offers value. With the right CS solution in place, you can act as a calming, stabilizing force amid great change.
2. Segment Your Customers
You can amplify the effectiveness of your resources and create a more personal relationship with your customers by segmenting your accounts according to COVID-19 exposure. Grouping customers by industry, size, location, structure, and level of COVID affectedness can help personalize your messaging, keeping your engagement relevant to each customer. Segmentation also allows members of your Customer Success team to communicate with many customers at a time while still delivering value through personalized solutions.
3. Be Proactive Communicators
Clear communication in a time of uncertainty is invaluable. Make sure your customers know how to reach you and how your relationship will be impacted by the current environment. Regular communication that adds value for the customer will protect the successful connections you have worked hard to develop and ultimately increase customer retention.
Specifically, you should aim to:
- Develop digital communication channels, in-app communication channels, and/or online discussion forums
- Conduct evaluations of how COVID-19 has impacted each customer’s industry
- Help your customer adapt to remote working conditions
- Coordinate communication across all customer touchpoints
It is likely you will have to re-evaluate and re-tune your existing methods of communication and the frequency of that communication. Yet, while the means of communication may change, your conversation with your customer should continue.
4. Be Flexible
The effects of COVID-19 will be felt at every level of your customer’s business strategy and may impact the resources available for your product. If your Customer Success team determines that a customer is significantly affected by the pandemic and at serious risk of churn, offer flexible financial solutions. Discounts, downgrades, a free trial extension, or temporary access to premium features can all offer value that supports your customer’s survival during this time.
5. Revisit Goals and Success Points
The current environment has brought about unprecedented change and your customer relationship needs to reflect this new reality. During this transition, it will be important to proactively manage customer expectations and help them identify core values.
Collaborate with your customer to develop a new set of business goals that can help them chart a path through the current conditions and beyond. The focus may shift from revenue-based metrics and toward product knowledge, staff retention, and damage mitigation. Such goals can create a sense of momentum despite the ongoing downturn and provide a clear focus for a changing workplace.
Don’t Fear COVID-19’s Effect on Customer Churn
COVID-19’s effect on customer churn is not written in stone. To survive the current pandemic conditions, turn to the customer success practices that have helped you build your customer base. Through communication, flexibility, and the use of comprehensive Customer Success technology you can remain an essential part of your customer’s present and future.
Explore Spark to find an extensive range of fully customizable metrics designed to keep you knowledgeable, in touch, and ready to help your customer. In these challenging times, you can’t afford to buy before you try. Get started for free today.