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SugarCon presentation: "Best Practices in Managing Customer Renewals"

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Sugar con 2010-ad

  1. 1. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />1<br />
  2. 2. ©2010 SugarCRM Inc. All rights reserved.<br />Best Practices in Managing Customer Renewals<br />Andy Dreisch<br />Christine Sharma<br />4/11/10<br />2<br />
  3. 3. Topics<br />Why Retention is Key<br />What to Measure<br />Boosting Retention<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />3<br />
  4. 4. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />4<br />The Importance of Customer Retention<br />Tough macroeconomic times<br />Competitive pressures<br />Increased costs of customer acquisition<br />Fundamental to subscriptions-based business<br />
  5. 5. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />5<br />The Benefits of Customer Retention<br />Increased profitability<br />Increasing retention by 5% can boost profits anywhere from 25% to 85% depending on industry<br />Reduced operations costs<br />It is 3 to 5 times cheaper to keep a customer than to recruit a new one<br />Satisfied Customers<br />Stay loyal longer<br />Talk favorably about the organization<br />Pay less attention to the competition<br />Are less price sensitive<br />Offer service ideas to the organization<br />Cost less to serve than new customers<br />
  6. 6. Classifying Customer Loyal Segments<br />Strangersshort-term/low-profit customers<br />Butterflies high-profit potential but tend to be short-term and disloyal<br />Barnacles stay around for the long-term but generate relatively low profits<br />True friends are both highly profitable and are long-term customers<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />6<br />(Reinartz, W. and Kumar, V., 2002)<br />
  7. 7. Retention and Profitability<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />7<br />
  8. 8. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />8<br />Why Do Customers Defect?<br />Price<br />Product<br />SERVICE -- Customers leave service organizations due to service reasons about 2/3 of the times (Keveaney, S.M., 1995)<br />Market<br />Technology<br />Organization<br />
  9. 9. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />9<br />Customer Retention Tactics<br />Set a retention goal and bake it in to corporate objectives<br />Segment your customer base<br />Build and foster trusting relationships<br />Build a loyal employee base<br />Allow for discretionary surges of effort; empower your service reps<br />Know when enough is enough<br />Focus on all-important on-ramp<br />Monitor, measure, improve, repeat<br />
  10. 10. The All-Important On-Ramp<br />On-Ramp = 90 days<br />Subdivided: immediate post-sale, +30, +90<br />Waves of capabilities to secure entrenchment<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />10<br />On-Ramp<br />Acceleration<br />Optimization<br />Sugar Adoption Program <br />
  11. 11. 4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />11<br />Measuring Customer Retention<br />By subscription<br />By renewal $$$<br />By including up-sells and cross-sells<br />Bookings<br />Monthly Recurring Revenue<br />Committed MRR<br />ACV (Annual Contract Value)<br />CAC (Customer Acquisition Cost)<br />Customer Lifecycle Value<br />
  12. 12. Deep Dive on Retention<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />12<br />
  13. 13. Sugar Retention Best Practices<br />Baton Pass Program<br />JumpStarts and other PS Packages<br />Customer Advocacy Constant Touch Program<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />13<br />
  14. 14. Sugar Retention Best Practices<br />Baton Pass Program<br />New Customer Email Drip Campaign<br />5 emails, issued immediately post-sale and over 15 days<br />Informs customers of relevant content<br />Warm Hand-Off:<br />Personalized outreach<br />Ensures excellent initial customer experience<br />Introduces Customer Advocate<br />Customer Advocate first touch (within 2 days of sale)<br />Support On-Boarding team activated for first 90 days<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />14<br />
  15. 15. Sugar Retention Best Practices<br />JumpStarts and other PS Packages<br />Inexpensive, easily consumed, topical deliverables<br />Mixture of training and upgrade-safe customizations<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />15<br />
  16. 16. Sugar Retention Best Practices<br />JumpStarts and other PS Packages<br />Inexpensive, easily consumed, topical deliverables<br />Mixture of training and upgrade-safe customizations<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />16<br />
  17. 17. Sugar Retention Best Practices<br />Customer Advocacy Constant Touch<br />Account ownership transferred immediately<br />First touch within 2 days of signing<br />No customer goes untouched in 30 days<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />17<br />
  18. 18. References<br />Bessemer Venture Partners Bessemer’s Top 10 Laws of Cloud Computing and SaaS (Winter 2010)<br />SaaS Metrics – A Guide to Measuring and Improving What Matters (http://www.forentrepreneurs.com/saas-metrics/)<br />4/11/10<br />©2010 SugarCRM Inc. All rights reserved.<br />18<br />

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