Today’s VentureBeat guest post by Vishal Sankhla covers the topic of how to keep customer churn low in the SaaS business model. I definitely recommend checking out the article “The SaaS Churn Challenge: How to Hold Onto Your Customers”.
The crux of the issue is that in the SaaS business model, you invest up-front to acquire each customer, but you only get positive ROI from that customer if the customer lifetime value is high enough. In other words, you are counting on customers staying customers for longer than a few subscription periods. If your churn is too high, then you never make enough off each customer to cover the acquisition costs. That is a losing proposition for any SaaS business! The key is finding ways to maintain customer support and interaction while keeping those costs down.