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CLOUD COMPUTING AND SOFTWARE-AS-A-SERVICE (SAAS) – IMPORTANCE OF CUSTOMER RETENTION IN SAAS BUSINESS MODEL

Cloud computing is generally defined as delivering on-demand computing services over the internet on basis of a pay-per-plan.  In today’s business environment, cloud computing is used to create new applications, host websites, backups and restore data among others.

Cloud computing Services can be categorized into three categories as illustrated below:

Software-as-a-Service (SaaS)

SaaS uses the web to deliver applications that are managed by a third-party vendor to deliver services to the client side.  Most of the SaaS applications can be run from web browser without the need to download and install applications on computers.  In recent times, enterprises are using SaaS applications so that maintenance and support services can be taken care of by the vendors.

It is deemed important for IT Infrastructure vendors to have a customer-centric approach and not brand-centric strategy to have a direct impact on the business.  The SaaS customer life cycle comprises of three important tenets as illustrated below.

  • Acquisition– The first stage in the SaaS customer cycle is acquiring and bringing the customer. It is most important to ensure the right kind of traffic is interested in buying the product or availing the service.
  • Engagement– After attracting the right type of customers into product, it is imperative to convert the product qualified leads (PQL) to paid customers. PQL’s are generally defined as the behavior which trigger customers into paid customers. The service which is promised on the website should not greatly differ to the customer during the trial period engagement which leads to higher ROI on the marketing campaign.  It is estimated that sales team generally converts 25- 30% of the PQL.
  • Retention– Retention of existing customers in SaaS market is very important as acquisition of new customers is considered to be very hard.  One of the important ways to retain existing customers is by reducing the churn.  A feedback mechanism should be implemented in a manner where new features are added as per requests of the user and learning outcomes from the market / industry.
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