Excellent customer retention and increased revenue is the bedrock of most companies. Sure, creating new sales tactics and using content in the sales process can be wonderfully effective approaches. But having reliable income from existing customers provides companies with a sense of ease that cannot be guaranteed with new sales strategies, which is why SaaS companies look to software package updates as a solid tactic to decrease churn and boost sales.
Revenue expansion using existing customers is key to increasing monthly recurring revenue. It’s four times cheaper to upsell current clients than to acquire new ones. However, if you get it wrong, you run the risk of increasing your churn rate and hurting your conversion rate.
Things move at lightning speed in the SaaS industry. As a software company, you have to be smart about changing or enhancing your packages to address your customer’s needs.
When should your SaaS company update its software packages? Here are the signs to look for that signal a facelift is needed.
Your Audience Has Changed
What if you are experiencing a high churn rate or clients aren’t upgrading to higher packages? Or worse, what if they’re downgrading and you’re simultaneously failing to attract new buyers? If this sounds familiar, one culprit could be that your audience base has changed.
Your clients’ needs can change over time, making it so that they no longer achieve the desired outcomes using your products. When this happens, tap into your CRM to see who your loyal customers are. Track how long certain customers have been using your software, and use surveys to determine how happy they are and what they’d like to change. Also, survey exiting customers to determine why they’re leaving or what aspect of your software is lacking that justifies their departure. Use what you uncover to establish new buyer personas, which will in-turn help you put together packages that are better suited.
With tools like an all-in-one CRM, you can monitor your customers’ growth and needs and calibrate your pricing strategy from the value you provide each segment of your audience. Uncovering the most valuable areas can make your new packages more appealing, encourage more natural upsells, and engage new customers that are aligned with your new personas.
Your Inbound Sales Are in a Slump
You can charge the fairest price and set up the best support team but still fail to attract new subscriptions. If your inbound sales are in a slump, it might be the right time to revamp your offerings. Chances are your services aren’t effective at showing they can solve a user’s problems and are therefore losing their perceived value.
Take a look at your inbound marketing strategy for any gaps or areas of concern. Before you make any package changes, make sure your user experience is in check and that you’re doing enough to promote your packages with digital advertising and other outbound efforts. If you’re still noticing that once people get to your pricing page, or once they set up demos, they just aren’t converting, it’s time to dig deeper into your packages and make some changes.
Your Sales Team is Experiencing Issues
Common challenges for SaaS sales teams is how to generate repeat sales and drive new conversions. Sometimes releasing a package update is the best solution for dwindling sales, as you can add new features to your software that are too attractive to ignore.
If your sales department is still experiencing problems convincing clients to upgrade, or getting new clients to sign up, here are some things you can try:
- Make customers get used to new updates first before charging them. For example, offer their first month free.
- Try a “free forever” plan that has a usage limit. Once a user reaches their limit, they’ll choose to upgrade to the option with more capabilities.
- Personalize the package by focusing on individual customer needs. Provide upgrades to different packages depending on what the user wants or prefers.
Your analytical tools can help you compare user-profiles and service consumption patterns with SaaS package updates that add value. They will help you engage with your customers and personalize your marketing campaigns so you can continue to bring the most value.
How Often Should You Update Your Software Packages?
First and foremost, you should monitor how your sales efforts are doing as well as your customer retention rate. Talk to your sales and marketing teams, too, to see if there are any issues they’re experiencing. As good practice, however, it’s probably smart to look at your packages for update potential every three to six months.
Quarterly SaaS Software Package Update
Any update that you make within three months shouldn’t be major or need extensive customer communication. Depending on your company’s quarterly goals, collect all the necessary data that will help you analyze your price level, value metrics, and plan features.
Common quarterly goals that might necessitate an update include:
- Improving the customer’s lifetime value (LTV)
- Lowering customer acquisition cost (CAC)
- Improving conversion rate
Quarterly price changes can include reducing the value metric you offer and reducing or eliminating package discounts. Remember, such measures can only work well if data shows that you’re already offering too much. You can also improve package features or move features from one plan to another.
Bi-Annual Major Update
Six months is enough time to make significant updates to a SaaS company of any size. However, you should consider conducting an impact assessment before making any substantial changes to your packages. Examples of bi-annual changes can include:
- Package price changes—use your price sensitivity data to price your packages based on your product’s perceived value.
- Significant alterations to free or trial packages
- Major value metric changes
- Implementation of market-driving SaaS features to raise the product’s competitiveness, such as chatbots, augmented reality, advanced analytics, and reporting, etc.
Updating your software packages doesn’t come with a straight and narrow guide. It’s best to address this change by first looking at your sales performance and customer satisfaction rate. And don’t start by implementing anything too drastic, which could lead to negative repercussions, like a substantial loss in existing customers. By making enhancements as seamless as possible, you should maintain a steady growth stream and keep churn to a minimum.