Everyone’s Retention Problem

Hi, Leo here. 

Five years ago or so, when I joined a SaaS company to lead marketing, a long-time marquee customer had just given notice that they weren’t going to renew. 

I was spending time understanding our funnel and talking to customers, so I invited myself to the “feedback” call (the one where they agreed to tell us where we had gone wrong.)

At the beginning of the call, our team ran through a number of bullet points around the value we had created for them during the partnership. Most of that value was revenue-related. 

Our main point of contact at the customer chimed in. I don’t remember her words exactly, but she basically said “we never cared about revenue.” 

Turns out, they viewed our solution as brand-accretive first, and, therefore, not worth their measuring from a revenue perspective. They had a completely different set of criteria for how they were measuring success, and there was one thing we failed to deliver on—just one time!—that prompted their decision to look elsewhere. We never even knew.

In a weird turn of events, I’ve found that—for as bad as most SaaS vendors are at actually understanding what their customers value—brands are equally bad at understanding why they bought software in the first place (which is usually the SaaS vendors’ fault … to a degree).

It’s been stuck in my craw for a long time, and Eli gave me an opportunity to vent about it. 

Maybe this is just therapeutic for me, but hopefully, it’s helpful for you.

Awkward Dancing is Fun For No One

The whole thing ends up as awkward as two middle schoolers trying to slow dance for the first time. While the middle schoolers eventually figure it out, many of us in the SaaS-brand relationship space don’t. And it’s hurting the ecosystem.

Less dancing, if you will, means brands end up less confident in aspects of their tech stacks. That leads to two less-than-ideal sets of events, which impact both brands and SaaS vendors: 

1. Brands end up switching SaaS vendors, redoing a bunch of work, and trying something else altogether. It wastes time and money.

2. On the SaaS vendor's side, constant switching and reconsideration from brands leads to higher levels of churn than necessary, less word-of-mouth marketing, and price sensitivity. All growth inhibitors.

The net/net of this is that the Shopify ecosystem ends up with a bunch of “meh” reactions to software (often an entire category) after chasing the next shiny thing. No one wins because no one's business really gets better in this scenario.

This is especially bad in the world of retention marketing, where SaaS vendors cherrypick stats that are based on correlation (not causation), and brands don’t have an informed view of what the software should actually do outside of claims that “we improve LTV” (but no one ever plans to measure it).

So, what’s the solution?

Dancing Better Starts With The Sales Process

We all need to learn to dance better, if you will.

Instead of stepping on toes or forcing a cadence that’s too fast, most of what needs to change is SaaS vendors need to learn to sell better and brands need to learn how buy better.

SaaS vendors, really, lead the way here, but brands aren’t absolved of the responsibility. So, let’s break it down. 

SaaS Vendor Moves

You make claims about what your product does for a brand’s business. You post case studies as proof points. You highlight your best results.

These are rational things to do.

But are those proof points easy to replicate and measure in a way that a skeptical prospect accepts? Have you aligned with your prospect that these proof points are what they’re prioritizing and will measure success against? Is your in-app dashboard providing insights related to these proof points? Are your account managers/customer success managers confirming these proof points still matter to your customer 6/9/12 months down the road? 

These are often overlooked things, but they change the relationship from “I’m not sure I’m getting what I paid for” to “I know this SaaS vendor is delivering.”

SaaS vendors shoot themselves in the foot when they overshoot their impact claims. Be intellectually honest about who you are, what you impact, and by how much. Sell that. 

Sounds basic, and it is, but when you do it, it reduces churn, increases confidence, and word-of-mouth grows. So, it tackles the second problem we talked about above. 

Brand Moves

You read the case studies SaaS vendors put out there. You dream of those best results. 

These, too, are rational things to do. 

But you, like the SaaS vendor, have to ask yourself: Is this the most pressing need of investment for the business?

Software is part of the fix, but allocating the time to get the most out of the software is where most of the fix comes from. If you’re not willing to put in the work, you’ll likely not get those results you read about.

This, too, is overlooked. And you end up “not sure” about the value. 

The truth is, there’s probably nothing wrong with the software. The sales rep probably did oversell you on claims (maybe just a little bit), but the software probably does do a lot of what the rep said it does.

You just have to be committed to measuring it yourself, holding the vendor accountable to your measurement, and putting in the work to move the needle. 

If you’re not, don’t buy. There’s a reason why, in enterprise organizations, brands tie their software purchases to “corporate initiatives.” It’s to give focus to the team.

That’s too rigid for most brands, of course, but the idea is right. If you’re deciding whether to buy a particular SaaS vendor, you’re likely to buy from a category for the first time (or make a renewed attempt at getting that category to work for the first time).

The main decision shouldn’t be Vendor A versus Vendor B. It should be whether the opportunity to succeed with that initiative is greater than the opportunity cost of succeeding with a different initiative.

Allocate your time wisely. You only have so much.

There’s likely a tidy little bow to the dance analogy here, but I don’t, in fact, know what it is. I just know that 10+ years into software, DTC, and DTC software, we’re all responsible for making sure we’re mutually successful.

Thanks, Eli. I feel better now.