Joel York has a great post in which does the math to prove what most SaaS companies knew instinctively, if perhaps not so crisply: that new customer acquisition has to outpace churn. But the devil is in the detailed math -- the rate of new customer acquisition must also increase if the business is to continue growing. Given the declining productivity of many SaaS salesforces, this is a tough objective for 2010.
SaaS vendors need to buy time to repair their sales productivity, and the best way to do that is to reduce churn. Some good ideas I've seen are to centralise and improve account and renewals management, and to look for quick-win product improvements that make the service a lot stickier.
This is a great time for SaaS companies to think about what benchmarking data, or other analytics they can layer on top of their solution -- something that is proprietary to them, and has value for the users. We talked about this a lot in 2009, but I haven't seen many examples yet.
Great post, and so true. The fastest and easiest way to increase growth and combat churn is to KEEP customer you already have. Check out SaaS Frontier (www.saasfrontier.com) which is SaaS to help SaaS providers improve customer quality of experience (QoE).
Posted by: H.M. | February 12, 2010 at 02:35