Increasing net retention requires an innovative approach to CX
See how leading software and cloud services companies are making a name for themselves by leaning into customer experience as a differentiator.
Published October 5, 2022
Last updated November 15, 2022
There was a time when “growth at all costs” was the prevailing philosophy in tech.
But times are changing, and as a result of today’s economic climate, more software and cloud services companies are focusing on profitability instead of growth. They are in protection mode. This drives a focus on quality customers rather than quantity, and a need to develop loyalty and reduce churn.
In this new paradigm, net retention is the name of the game, and software businesses that aim to achieve higher growth must put as much effort into caring for and expanding existing customers as they do into acquiring new ones.
To increase net retention, you need to give your customers a reason to stick around even when they could easily switch to another competitor (This is especially true in the SaaS universe). Customer experience is one factor that can help increase customer “stickiness.”
Why you should make customer experience part of your value proposition
We know from our research that customer experience frequently sways purchasing decisions.
- 61 percent of customers would switch to a competitor after just one bad experience.
- 90 percent of customers are willing to spend more for personalized experiences.
- 80 percent will spend more with companies that allow them to find answers themselves.
In a crowded market like software and cloud services, having a good product isn’t enough. You need to have a great experience to match. Can your customers get quick answers, or do they have to wait days for a response? Do conversations flow naturally and easily, or are you constantly backtracking and asking customers to repeat themselves?
Small misses on your experience–like not knowing basic account details about a premium customer–can cause customers to churn. Remember, they have plenty of options.
Qumu, an enterprise video SaaS platform, learned this lesson the hard way when it realized it simply didn’t have the high degree of visibility needed to support its most important enterprise customers.
In a crowded market like software and cloud services, having a good product isn’t enough. You need to have a great experience to match.
Since partnering with Zendesk, Qumu has turned its greatest weakness into its greatest strength and built a loyal customer base. The company has all-time high customer satisfaction (CSAT) scores, driven its customer retention rate to 90+ percent, and turned its customer support into a competitive differentiator.
“We were able to make the Qumu support team a competitive advantage, and we know for sure this wouldn’t have been possible if we had stayed with the previous solution,” says Chad Sears, Vice President of Customer Success at Qumu.
Focus on customer experience improvements to build brand loyalty and reduce churn
To boost net retention, software and cloud services companies need scalable CX solutions and they need to shift their way of thinking about customer service. It’s more than just emails and ticket queues. With the right tools, it can be a powerful, data-driven motion that builds trust and increases net retention.
Here are four areas of opportunity for software and cloud services companies who want to transform their CX.
Meet your customers where they are, and be open to shifting tactics based on customer needs.
Customers expect your software to be convenient and easy to use, and there’s no reason that your customer service should be any different.
Omnichannel customer service is an approach that centralizes all your service channels–email, live chat, Twitter, Instagram, Slack, etc.–into a single platform where you can easily track and manage all your customer conversations.
Slack was able to achieve unicorn status using this philosophy. Since launching with Zendesk in 2014, Slack has understood the value of meeting customers where they are, and the company built its CX with scale in mind.
“I knew Zendesk Support would work if we reached the scale we were aiming for, and I also knew that the Zendesk API would allow us to build whatever we needed to meet our specific needs.”
Ali Rayl, Vice President of Customer Experience at Slack
The flexibility to bring on new channels, or change up your tech stack, is another key benefit of Slack’s omnichannel approach.
Customers’ needs and preferences are continuously changing. We saw that at the onset of the pandemic in 2020. It’s also why we introduced Slack Direct Messages in Zendesk—B2B companies can now talk to their customers wherever they are.
Omnichannel allows you to manage and move between these different tools without needing to change your workflow on the backend. You can show up consistently on every channel, and it’s highly secure.
Another aspect to consider is how customer service can be integrated directly into your product or service. Any friction in the experience that you deliver is going to be a pain point with customers. This is especially true in the software industry, where UX standards are very high.
One example is Limeade, an employee well-being software solution. The company uses the Zendesk mobile SDK to extend customer care into its app, so customers can ask for help without navigating elsewhere.
Give customers the VIP treatment and manage customer relationships proactively to avoid churn.
After going through a lengthy sales process, closing, and implementation, customers will expect a certain level of care. If they’re premium subscribers, they’ll want premium treatment.
That level of personalization requires more powerful technology. An integrated customer experience platform can compile inputs from multiple sources into a single view. This means you can see things like account details, subscription tier, and conversation history without having to toggle between different apps and databases.
When you have a 360° view of your customers, you can identify when a customer might be at risk of churning and run interference before it’s too late.
Personalization benefits customers, and it helps the bottom line too. When you have a 360-degree view of your customers, you can identify when a customer might be at risk of churning and run interference before it’s too late.
Foundant, a software provider for nonprofits and philanthropic organizations, credits its industry-leading renewal rate to its highly personalized customer service. The Salesforce integration in Zendesk has made it easier for the renewals team to access client conversation histories and see all the details in one place.
“If a distressed client contacts support, agents can quickly flag the ticket as high priority and escalate it in Zendesk,” says Jake Sharp, Senior Manager of Support Delivery at Foundant. “That information will be collected and shared with other teams, so they can work even harder to retain that client.”
Customer service for software and cloud services is rarely one and done. It’s a series of conversations happening over time, and it’s easier to have productive conversations when you have a complete picture of the customer and their history.
Solve problems faster by optimizing your service workflows and automating routine business processes.
Everyone is short on time these days, and keeping your customers waiting sends the wrong message. Most customers expect a response in less than 12 hours for email, and even faster for social and messaging.
Faster service requires some level of workflow automation. You can use business rules for routine processes, like following up with a customer who’s gone cold or automatically routing payment questions to your Finance team.
Unity, a development platform for 3D creators, is a good example of how these small operational changes can add up.
“Last year, we deflected almost 8,000 tickets due to self-service enabled by Zendesk. That amounts to about $1.3M saved due to the reduction in tickets.”
David Schroeder, Senior Manager of Services Support at Unity
Since taking advantage of Zendesk’s self service and AI features, Unity’s resolution time has decreased by seven hours, and the company is able to meet its SLA of solving 75 percent of tickets with two responses or fewer.
Unity’s success proves that it’s possible for high-growth companies to scale customer service without sacrificing customer satisfaction…or speed.
Transform your data into actionable insights that help you deliver exceptional customer experiences.
Customer service should be a data-driven motion, just like every other part of the business. CX platforms contain a wealth of information about your customers’ priorities, preferences, and pain points.
For example, you can look at ticket tags to identify which products or features cause customers the most technical difficulty. This will help your product team prioritize bug fixes and feature updates within the overall development roadmap.
Analytics and KPI dashboards can also help you track agent performance and identify issues before they start to impact service quality, and predictive analytics can be used to drive proactive support.
o9 was able to increase agent productivity by 40% within 18 months.
Enterprise supply planning software company o9 used Zendesk to track data and reporting metrics across the organization in near real-time, enabling the business to gather insights and build reports to analyze key information about its customers.
As a result, o9 was able to increase agent productivity by 40 percent within 18 months. With these productivity gains, the company has seen a 74 percent improvement in first reply time and reduced its resolution time by 38 percent.
When the COVID-19 pandemic severely disrupted supply chains, o9 was also able to utilize Zendesk to generate robust reports and identify which customers were affected around the world, and proactively reach out to them to offer support.
With Zendesk, you can also hear what your customers love about the product and collect ideas for new features, iterations, or add-ons through surveys and community forums.
Discord uses Zendesk’s community forum tools to stay in touch with its most passionate fans and collect user feedback.
Discord should be accessible to everyone. That's why we've worked with our community to add requested features such as
— Discord (@discord) July 7, 2022
“A large chunk of our contacts are from customers who are super happy about the product but are writing in with passionate suggestions and feedback on every little thing we do,” says Danny Duong, Director of Customer Experience at Discord. “We needed a spot to collect all this feedback and share it with the product teams so they could consider it when working on their roadmaps. The product team loves it—the more they incorporate user feedback into their decision-making, the higher their success rate at making customers happy with the features they’re pushing out.”
Net retention is the foundation of sustainable growth
The net retention model is a fundamental shift in the software and cloud services industry. Instead of focusing on growth at all costs, it places value on the ability to build lasting relationships with customers.
Turning customers into loyalists requires a more innovative approach to customer relationship management. Conversational CRM represents a new era in customer service where businesses are focused on building relationships instead of closing tickets. We believe this is the key to sustainable growth for software and cloud services companies, and everyone else, too.
See how Zendesk powers innovative CX for software and cloud services companies.