Let’s say that after a titanic effort and once all your arsenal of marketing strategies have paid off, you have managed to attract a new prospect to take a free trial period on your software. Let’s say that during the free trial period, this new lead has found value in your service and has made the decision to enter a payment method to activate a subscription plan. Congratulations!, but I have news for you, the real work is just beginning…
We can summarize the SaaS business model in two words that you should have tattooed on your forehead, “ATTRACT” and “PRESERVE”. If you cannot consistently attract new users to your platform, you are doomed to fail. Worse still, if you fail to preserve the users who have decided to activate a payment plan on your service, there is no chance of long-term survival.
Within the universe of rules that govern the SaaS industry, we know from pure mathematics that it is much cheaper to retain an existing customer than to convert a new one, so this time we are going to focus on the journey that we must undertake together with our customers, to take them by the hand from the acquisition stage, to the point of turning them into the number one fans of our service.
At Publifix.net we have outlined the crucial stages that a user goes through, from being a new subscriber exploring a digital product without great expectations, to becoming a true ambassador of our brand. This journey is made up of by 5 stages, some more crucial than others. To make life easier for us, each stage corresponds to the number of months that a user has been active paying a subscription:
Acquisition (1 – 3 months paying subscription)
This is the “Red Zone”, in a few words: More than 50% of the churn (cancellations) will take place within the first three months. So if you’ve thought about living and breathing for a customer, now is the time!, at this stage you are nothing but an interesting product, among hundreds digital platforms, so the possibility of the service being cancel is just around the corner.
If you want to survive this stage, you need to stand out not only with a product that consistently delivers value to your customer, but to highlight peripheral values like an excellent customer service and a constant training of your users through all imaginable channels (videos, webinars, e-books, 1 to 1 sessions, live chat…).
If your user manages to survive these crucial first 90 days, you may still have a chance to succeed. Otherwise, I have bad news for you, this is where you are losing A LOT OF MONEY since, by having churn at this stage, there will be no way for you to even recover your CAC (customer acquisition cost).
Engagement (4 – 6 months paying subscription)
Good job! Your customer is now moving to a yellow zone, where things looks to be a little more comfortable. But be careful! There is nothing written yet, at this stage you still going to have a high churn rate. In our case, between month 4 and 7, we still registered 15% to 20% of cancellations.
If you manage to take a customer to the engagement stage, that’s because they have found true value in your service, however your client is not yet evangelized, so he could easily switch to another product without thinking too much.
This stage is especially important for two reasons, the first is that you are about to recover your CAC, so very soon you will start earning money from this client. The second because if you manage to get through this stage, you will have a high probability of obtaining a sale in the long term. In other words, the magic of the Software-as-as-Service business model, with recurring and predictive earnings, it´s just about to start!
Retention (7 – 9 months paying subscription)
Excellent, now you have a happy customer that has been paying a subscription for more than six months. At this stage the churn rate begins to decrease drastically and we can see the light at the end of the tunnel. The good news begins to arrive… One of the most important is that serving your client will now be easier and cheaper, consider that he has already used the tool for more than half a year, knows its strengths and how to get the most benefit.
At Publifix.net, the churn rate at this point is significantly less than 10%, that is, it begins to be rare that a client will make the decision to cancel the service, although of course it is still possible.
If you make any updates or add a new functionality, consider your customers in “retention stage” to try it out first. Do not rule out granting them an upgrade or reward in some way the loyalty they have had with your platform. You are just one step away from making them fall in love forever!
Expansion (10 – 12 months paying subscription)
You made it! It has been more than 10 months since your customer add a payment method and guess what? Is still there and now seems almost impossible that are going to leave. Welcome to the “expansion stage”, where miracles begins to happen.
An encouraging fact (100% real): No Publifix.net customer who has been paying their subscription for more than 10 months has canceled the service… none in 2 years. In other words, from month 10, at least in our case the churn rate is equal to 0.
At this stage, you begin to build relationships with those who will be your most loyal customers in the future, your brand ambassadors and where your best recommendations will come from. Every single customer in the “expansion bag”, equates to future, recurring, and predictive earnings, which is exactly why you made the decision to build a SaaS product.
Advocacy (13+ months paying subscription)
Mission accomplished! You have managed to take your client to the sweet stage of “advocacy“, from now on, unless something very strange happens, you can be sure that you will have recurring earnings from this subscription in the long run, I’m talking about years, not months.
Your customers in the “advocacy” stage will be your main spokespersons, they will not stop to recommend your product over and over again, they have been evangelized. Of course, there is always the possibility of losing them, but when that happens, it will be due to a factor not associated with your product, so you can rest easy.
Just as in the “expansion” stage, until now at Publifix.net we have never lost a single client that has reached the “advocacy” stage, so once at this point, the future can only be promising.
Some conclusions…
- During the “Acquisition” and “Engagement” stages (months 1 to 6), focus on an outstanding customer service and great educational efforts. Remember, these are the most crucial, toughs and challenging months.
- “Retention” and “Expansion” stages (months 7 to 12), are all about listen carefully to your most active users, their feedback is the key to reach the following milestones.
- Take the most of your users in the “Advocacy” stage, for example, ask them for a review in a software advice platform. Build all your success stories around these customers.
- Pay attention to your unit economics, at some point you need to understand the exact moment when you start to make money with a customer.
- Know perfectly the stages where you are having the highest churn rate and put the best members of your team to work on it.
Although it is true that each SaaS product is different and these stages do not necessarily apply to your service, it is a fact that all platforms of this type seek to generate long-term customers. So, trace your own journey and take your best customers to the moon!
About Publifix.net
Publifix.net is a press release distribution platform, used daily by hundreds of journalists. Our cloud-based solution allows PR Teams from any size and across very different industries, to create in just a few clicks, content collections segmented by geographic area and category, which are available for free to all publishers affiliated with our platform. Features include press release distribution , download notifications, content update alerts, analytics and media search functionality.