SugarCon presentation: "Best Practices in Managing Customer Renewals"

1. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 1

2. ©2010 SugarCRM Inc. All rights reserved. Best Practices in Managing Customer Renewals Andy Dreisch Christine Sharma 4/11/10 2

3. Topics Why Retention is Key What to Measure Boosting Retention 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 3

4. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 4 The Importance of Customer Retention Tough macroeconomic times Competitive pressures Increased costs of customer acquisition Fundamental to subscriptions-based business

5. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 5 The Benefits of Customer Retention Increased profitability Increasing retention by 5% can boost profits anywhere from 25% to 85% depending on industry Reduced operations costs It is 3 to 5 times cheaper to keep a customer than to recruit a new one Satisfied Customers Stay loyal longer Talk favorably about the organization Pay less attention to the competition Are less price sensitive Offer service ideas to the organization Cost less to serve than new customers

6. Classifying Customer Loyal Segments Strangersshort-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 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 6 (Reinartz, W. and Kumar, V., 2002)

7. Retention and Profitability 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 7

8. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 8 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

9. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 9 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

10. The All-Important On-Ramp On-Ramp = 90 days Subdivided: immediate post-sale, +30, +90 Waves of capabilities to secure entrenchment 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 10 On-Ramp Acceleration Optimization Sugar Adoption Program

11. 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 11 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

12. Deep Dive on Retention 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 12

13. Sugar Retention Best Practices Baton Pass Program JumpStarts and other PS Packages Customer Advocacy Constant Touch Program 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 13

14. Sugar Retention Best Practices Baton Pass Program New 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 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 14

15. Sugar Retention Best Practices JumpStarts and other PS Packages Inexpensive, easily consumed, topical deliverables Mixture of training and upgrade-safe customizations 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 15

16. Sugar Retention Best Practices JumpStarts and other PS Packages Inexpensive, easily consumed, topical deliverables Mixture of training and upgrade-safe customizations 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 16

17. Sugar Retention Best Practices Customer Advocacy Constant Touch Account ownership transferred immediately First touch within 2 days of signing No customer goes untouched in 30 days 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 17

18. 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/) 4/11/10 ©2010 SugarCRM Inc. All rights reserved. 18