The Worst Isn’t Behind Us 

After weathering a bleak year in 2023, 2024 carried the promise of a rebound for SaaS companies. Gartner predicted global IT spending to grow 8% from 2023, with AI driving new growth. A majority of companies are allocating new software spend as they plan to incorporate AI into their tech stack. 

However, we’re halfway through 2024, and many SaaS companies still feel like they are holding their breath on renewals despite the uptick they may have seen in 2023. According to data from Profitwell, new software sales in 2024 sit at the lowest point since 2020.   Companies are still practicing the cost-cutting measures of 2023 and re-evaluating software spend. Teams are being asked to reduce disparate, competing software and consolidate on one or a few applications. 

Companies in software cost-cutting mode are becoming increasingly selective when it comes to software purchases and renewals. This leaves sales teams and client success managers sweating when it comes to renewing even their most loyal accounts. 

Why Customers Don’t Renew 

1 - Satisfaction Doesn’t Equal Retention 

According to research from ChurnRX, there is zero correlation between customer satisfaction scores and customer lifespan. This means your happy customers could still churn. However, the same research shows that customers who achieve measurable results stay six times longer than those who don’t. 

Get serious about tracking progress and results. 

Given measurable results drive 6x impact on renewals, consider moving budget from customer engagement activities like events, swag, or incentives to building out the tools and processes needed to consistently track customer results. Most interestingly, the quality of the results is far less important than whether or not results are being measured and tracked in the first place. 

2 - Vitamins vs. Painkillers 

When organizations are in software scrutiny-mode, they encourage employees to do more with less. If your software isn’t serving a business-critical need it may soon be on the chopping block. In today’s climate more than ever, software must be a pain killer, not just a vitamin. 

Expand your depth and breadth with customers. 

To avoid that fate, it’s important to work with your primary contact to embed the software into other parts of their organization. You can do this by: 

  • Helping your contact identify other teams that could benefit from using it. Tip: Work with marketing to identify potential case studies that highlight expanded use cases your clients could implement. 
  • Leveraging integrations to embed your product into more of your customers’ most central business applications like Salesforce. 
  • Helping your client weave the product into everyday employee workflows, such as employee onboarding, meetings, presentations, report building, email, and more.  
  • Making your software a household name within that organization. Empower your contact with the materials to run awareness campaigns, including email templates, digital signage, tech fair materials, and swag.  

The stickier your software is within an organization, the harder it is to replace. 

 3 - The risks of re-structuring 

Another all-too-common threat to your renewals is organizational re-structuring. People move on, teams morph, ownership shifts, and you get lost in the shuffle. When retention-likelihoods are tied up in business relationships, you can’t expect to keep that client for long.   

Build your relationship on results, and be prepared to react quickly. 

To reduce the risk of churn during a customer’s re-structuring: 

  • Be prepared to point to impact, results and successes with past contacts. Until you’ve established yourself as a trusted partner with your new contacts, you’ll need to rely heavily on objective indicators of value and impact. 
  • Establish new contacts as soon as possible. Do your own contact hunting on LinkedIn. Ask your past contact for introductions. Get creative about finding the right people – fast. 
  • Request a meeting with leadership to demonstrate your value. Tip: Bring your own leadership team member to that meeting as well. Depending on the deal size, consider traveling out for an in-person meeting.  
  • Remember investing in the customer relationship is worth it. Acquiring a new customer can cost 5x more than retaining an existing one. Increasing customer retention by 5% can increase profits by +25%. 1 
  • Establish next steps and a plan to keep existing momentum going, or to quickly pivot to the most pressing priorities for your new contacts. 

How to Keep Your Software Renewal Off the Chopping Block 

1 - Move Your SaaS Product to “Necessity” Status 

No one is getting rid of their CRM because it’s essential to daily business operations. Here are steps to move your software to necessity status: 

  • Getting Leadership Buy-In: Engage with top-level management to showcase the strategic importance of your software. Get creative about how you capture their attention and make it onto their calendars. Empower your contact with the resources they need to secure buy-in. 
  • Making Your Software a “Household Name” for your Customer: Ensure your software is deeply integrated into the daily operations and workflows of various departments. Introduce your software at a company town hall, internal tech fair, or company-wide training. The more widely known and used your product is, the harder it is to get rid of. 
  • Getting buy-in among more teams and departments: Work with your point of contact to identify use cases for other teams to leverage the software and set up time with those teams to activate them within your tool thus growing reliance throughout the org. Ask your contact for introductions to teams across the business who may also find value in your product. Make it easy on them by suggesting names based on your own LinkedIn research and provide them a simple email template they can use to make the introduction. 

2 - Selling Your Value Across the Organization 

To solidify your software's position, it’s crucial to communicate its value effectively across the organization. This involves: 

  • Showcasing Success Stories: Highlight how different teams within the organization are benefiting from your software. Share case studies that demonstrate how other customers have succeeded in expanding your footprint withing their org. Supply use case specific collateral to your contact to distribute. 
  • Demonstrating ROI: Provide concrete data that demonstrate the return on investment and the business value your software offers. 
  • Regular Check-Ins: Maintain consistent communication with your clients to understand their evolving needs and ensure your software adapts accordingly. 
  • Professional growth: Find ways to help your point of contact leverage your software for professional growth. Highlight the good work they do to their boss, in blogs, or consider inviting them to a podcast or webinar. Showcasing successes and results proves a great opportunity to advance careers – help them get ahead and thereby increase the longevity of the relationship with your business.  
  • Inspiring community: Find ways to connect customer contacts over similar obstacles and successes. Creating community among your customers is another way to create stickiness and add value prior to renewal.  

3 - Keeping a pulse on customer sentiment 

 Finally, eliminate any surprises in the customer journey by deploying surveys to assess customer health. Customize your survey questions based on leading indicators of client success and renewal likelihood.  

 If you find that results are not where they should be, bring in other teams within your organization that can help to get things back on track. 

Shore up your success 

In a climate of cost-cutting and intense scrutiny, ensuring your software remains indispensable is crucial. By focusing on delivering measurable results, embedding your software deeply within client organizations, and effectively communicating its value, you can significantly enhance your chances of securing renewals and fostering long-term client relationships. 

Learn more about how other Client Success leaders are uncovering new ways to keep their software renewals off the chopping block and create valuable experience for customers on the SaaS Therapy podcast.  

 

Sources 

  1. Retention data from Outbound engine.