Three Reasons Why, In SaaS, Customers Really Are the Drivers of Revenue & Growth
Yes, every new company starts with no customers and a greenfield of prospective ones. The focus, naturally, is on customer acquisition. The focus is on prospects. For software-as-a-service (SaaS) companies, like other subscription-based industries, as the company grows, the focus and prioritization should increasingly shift from acquiring customer to retaining and satisfying existing ones. This isn’t just the case for established, low-growth companies, but even for those companies still on an upward growth curve. Here are three reasons why.
1. Happy customers are the most effective sales and marketing engine.
Talk to any experienced software salesperson and he or she will tell you that her most powerful tool in her sales toolbox is the customer reference. It’s only possible to have lots of great and relevant customer references if the company places a great deal of focus and investment on its existing customer base. Furthermore, happy customer becomes evangelists and there’s no better sales force than an “already-paid-for” and effective one: how can one deny the priceless value of an unsolicited, uncompensated (and therefore unbiased) recommendation from an existing customer?
2. Customers are real revenue; prospects are potential revenue.
This often-forgotten fact is so straightforward that it should be self-evident: today’s bills are paid by today’s customers; tomorrow’s bills will be paid by those same customers as long as they’re retained and happy. Prospective customers, on the other hand, are exactly that: prospective revenue. A company focused primarily on selling new prospects at the expense of existing customers is gambling with its real revenues.
3. The customer’s success & growth = the company’s success & growth.
This is perhaps my favorite of reasons: the more a company can help a customer grow and succeed in their own business, the more that customer will in turn depend on more of the company’s services (e.g., more growth = more licenses). It makes for a gratifying and copacetic relationship. What’s more, it’s not hard to argue that it is easier to help an existing customer grow than it is to acquire and deploy a brand new one.