As a CSM working in SaaS, you already know customers are worth their weight in gold to your business. It can be markedly more expensive to find new customers rather than keeping existing ones, not to mention taxing on internal resources. The past year has highlighted precisely how critical current customers are to the success of SaaS organizations, thanks in large part to net retention rates.
What is customer net retention?
Customer net retention is the total number of customers who do not churn year over year. One of the most critical associated metrics with net retention is net revenue retention, which is the total recurring revenue retained year over year, including everything from renewals to upsells to expansions. At their core, net retention rates help measure precisely how profitable – and scalable – a business is by tracking how many customers come back every year and how much they’re spending.
Measuring and boosting retention rates
While CSMs are working diligently daily to impact net retention positively, some additional steps can be taken to address customer net retention strategies on a broader basis proactively. Here are a few things you need to know about measuring and boosting customer net retention:
1. Net retention rates encompass all changes to your customer accounts. Tracking net retention rates mean tracking all changes to customer revenue over time, both good and bad. So, if a customer renews but downgrades their service, this could change your net revenue retention rate. As your team is tracking revenue changes, make sure you keep these ups and downs in mind.
2. Set retention goals for your entire CSM team as well as individual customers. If you are a CSM leader, make sure you have clear retention goals in place for your entire team as well as for individual accounts. Because all customers are different, the measurement of success from one account to the next may vary slightly. Additionally, it’s a good idea to have these goals in place and visible to the entire team, so there are no questions or concerns.
3. Customer retention is the responsibility of more than just the CSM team. Even though CSMs are responsible for the daily management and ongoing success of customer accounts, retaining and, to some degree, growing these accounts should be the responsibility of an entire organization. Customer retention is a critical strategic initiative for any SaaS organization. Everyone from c-level executives to the newest intern should be highly aware of where customer retention numbers stand, the strategies in place, and the steps for success.
Want to learn more?
Check out these additional resources from the ClientSuccess archive to learn more about boosting and measuring customer retention: