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04/13/2023 ©2010 SugarCRM Inc. All rights reserved. 1

©2010 SugarCRM Inc. All rights reserved.

Best Practices in Managing Customer Renewals

Andy Dreisch

Christine Sharma

04/13/2023 2

Topics

Why Retention is Key

What to Measure

Boosting Retention

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The Importance of Customer Retention

Tough macroeconomic times

Competitive pressures

Increased costs of customer acquisition

Fundamental to subscriptions-based business

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The Benefits of Customer Retention

Increased profitabilityIncreasing retention by 5% can boost profits anywhere from 25% to 85% depending on industry

Reduced operations costsIt is 3 to 5 times cheaper to keep a customer than to recruit a new one

Satisfied CustomersStay loyal longerTalk favorably about the organizationPay less attention to the competitionAre less price sensitiveOffer service ideas to the organizationCost less to serve than new customers

Classifying Customer Loyal Segments

Strangers short-term/low-profit customers

Butterflies high-profit potential but tend to be short-term and disloyal

Barnacles stay around for the long-term but generate relatively low profits

True friends are both highly profitable and are long-term customers

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(Reinartz, W. and Kumar, V., 2002)

Retention and Profitability

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Why Do Customers Defect?

Price

Product

SERVICE -- Customers leave service organizations due to service reasons about 2/3 of the times (Keveaney, S.M., 1995)

Market

Technology

Organization

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Customer Retention Tactics

Set a retention goal and bake it in to corporate objectives

Segment your customer base

Build and foster trusting relationships

Build a loyal employee base

Allow for discretionary surges of effort; empower your service reps

Know when enough is enough

Focus on all-important on-ramp

Monitor, measure, improve, repeat

The All-Important On-Ramp

On-Ramp = 90 daysSubdivided: immediate post-sale, +30, +90

Waves of capabilities to secure entrenchment

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Sugar Adoption Program

On-Ramp Acceleration Optimization

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Measuring Customer Retention

By subscription

By renewal $$$

By including up-sells and cross-sells

Bookings

Monthly Recurring Revenue

Committed MRR

ACV (Annual Contract Value)

CAC (Customer Acquisition Cost)

Customer Lifecycle Value

Deep Dive on Retention

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Sugar Retention Best Practices

Baton Pass Program

JumpStarts and other PS Packages

Customer Advocacy Constant Touch Program

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Sugar Retention Best Practices

Baton Pass ProgramNew Customer Email Drip Campaign

5 emails, issued immediately post-sale and over 15 days

Informs customers of relevant content

Warm Hand-Off:Personalized outreach

Ensures excellent initial customer experience

Introduces Customer Advocate

Customer Advocate first touch (within 2 days of sale)

Support On-Boarding team activated for first 90 days

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Sugar Retention Best Practices

JumpStarts and other PS PackagesInexpensive, easily consumed, topical deliverables

Mixture of training and upgrade-safe customizations

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Sugar Retention Best Practices

JumpStarts and other PS PackagesInexpensive, easily consumed, topical deliverables

Mixture of training and upgrade-safe customizations

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Sugar Retention Best Practices

Customer Advocacy Constant TouchAccount ownership transferred immediately

First touch within 2 days of signing

No customer goes untouched in 30 days

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References

Bessemer Venture Partners Bessemer’s Top 10 Laws of Cloud Computing and SaaS (Winter 2010)

SaaS Metrics – A Guide to Measuring and Improving What Matters (http://www.forentrepreneurs.com/saas-metrics/)

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