If you want to experience the excitement of fierce competition in the marketplace, join a SaaS company. This year, the SaaS market is expected to grow to $157 billion. This is more than double the size it was only six years, when it hit $63 billion.
This rapid growth means your competition is also growing and this means protecting your customer base, in addition to customer acquisition, is more important than ever. 55% of finance leaders in SaaS companies state that customer churn is one of their top metrics to watch.
Do you know what your churn rate is?
As you calculate your churn, keep in mind:
- The average churn rate for a company with over $10 million in revenue is 8.5%.
- Top SaaS companies are able to keep their churn rates under 7%.
- SaaS companies experiencing less than 20% growth annually have an 8% survival rate.
Where do you fit, and what are you doing about it?
With 41% of workloads moving to the public cloud by 2020, and 93% of CIOs declaring they will be taking advantage of SaaS tools this year, there is clearly a market opportunity to grow. But the key to growth is ensuring that you keep that net churn rate under 7%, and to do that, you need to keep your current customers happy.
Paying attention to how your customers are paying as a retention strategy.
If you’re perceived as difficult to do business with, you customers will look for an easier solution. And in the SaaS space, for many businesses, it’s easy to switch vendors since there’s no physical tech investment or lock-in. This means maintaining your competitive edge once your customers are onboard is critical to your success.
The AR process is one of the most overlooked areas that can have a significant impact on your customer relationships. Your AR team has the most frequent, most regular touchpoints with your customers. Doesn’t it make sense to ensure that this is a smooth and friction-free experience, so that your customers delight in working with you?
So how can your AR process become a customer retention tool?
- Ensure you have a seamless onboarding process. The whole point of SaaS is that it’s digital - your customers don’t have to implement new hardware, don’t have to manage the security and compliance requirements, and don’t have to store the data. But if the integration and deployment process with your technology is complex and clunky, you’re losing your customer’s trust before you’ve even begun to deliver your service. This is especially important when you’re onboarding customers into your AR process because this is where the money is. If your customer doesn’t have the confidence that their data is protected, that they have access to their account information and they can easily connect with you about their invoices, payment due dates and even disputes, you are setting the stage for a disappointing customer service experience. Ensure you’re working with an AR platform that makes it easy for customers to access you and their account information.
- Offer flexible payment options. Giving your customer flexible payment options benefits both of you. First, your customer is able to manage their business finances as best suits their needs. Whether this means they’re paying you by ACH or credit card, or they’re able to negotiate a payment plan during a rough patch in their own business, the ability to work with your team and have some flexibility is key to earning their loyalty. Providing this type of flexibility is good for your business, as it actually drives higher on-time payments, which grows your cash flow, and ensures your customer is interested in working with you for a long time. Invest in an AR system that makes it easy for you to offer flexible payments and payment terms.
- Give your customers an online portal to view their account. Transparency is the key word here, and a smart AR platform will provide this. When customers can access their account information, on their own time and in their own way, you achieve several objectives. First, they are able to self-serve for tasks that might have previously taken a phone call during business hours and eaten up some of your AR team’s time. This is inefficient when the requests are for things like copies of invoices or double-checking invoice terms. Second, they are managing their business on their time and not restricted to your business hours, which means you are more likely to have issues addressed and payments sent in a timely manner. And with gratitude - not with grumpiness that they had to take time out of their working hours to accommodate yours. Third, the more information customers have available to them, the more they feel in control of their business. This transparency provides a sense of confidence and trust that they are working with the right vendor.
- Use your frequent communications to build the relationship. If you’re on the AR team, you have more touch points than anyone else in the business. You’re sending invoices, payment reminders, and receipts. You’re following up on disputes, inquiries and late payments. You have more reason than anyone else in the business to call a customer and learn more about their business. So do it. This doesn’t have to be a time consuming, manual effort. A smart AR platform will automate many of the messages, which allows you to stay top of mind with your customers in a helpful and friendly manner without spending hours in your inbox. With automated communications and a predictive communications program, you will be able to set up your email cadence in advance, schedule call reminders, and respond quickly to messages that have been prioritized by the system, such as disputes or responses to late payment notices.
When you’re in such a high growth, highly competitive market that has only a 10% success rate, maintaining your competitive edge and reducing customer churn are top priorities. By giving your AR team smart tools to manage the customer experience for the entire credit-to-cash cycle, you are taking a strong step towards increasing customer satisfaction and loyalty, while at the same time positively impacting cash flow. Investing in a smart AR platform is an investment that will pay off in spades.
YayPay offers smart tools for smart AR
YayPay’s one platform, one system, one code base solution automates the entire accounts receivable process, from credit to cash application. Leveraging automated tools and communications, customers see a 3x increase in productivity. YayPay’s solution easily integrates with accounting, ERP, billing, and CRM applications for improved transparency, ensuring customer and payment information is accurate for AR and collections teams. Our proprietary predictive analytics engine identifies credit risk and reduces the potential for revenue losses, driving smart business decisions.