In tech, and especially in the world of SaaS, it usually takes more than one year for a customer to become profitable. Even after three years, some customers haven’t hit the profitability mark. When customers leave sooner, it means your company has spent energy, effort and expense to acquire a customer – only to have served them at a loss. You have to replace the customer you’ve lost just to run in place. Growth gets harder.

Not only that, every customer that churns increases your risk of negative word-of-mouth – another potential barrier to acquiring new customers. 

The antidote to these problems is to improve customer retention. 

Better retention leads to long-term customers who are highly profitable vs short-term, unprofitable customers.

Customer retention is essential for profitability.

To improve retention, companies employ customer success teams to help buyers incorporate their purchases into client-side tech environments. Your customer success team can integrate your solution into a customer’s tech environment. 

Technical integration is the first step to renewal and profitability. 

But technical integration is generally not enough to inspire long-term retention. Customers stick around when they actively use your products and services consistently, which extends beyond technical integration.

Your solutions become part of a customer’s everyday working reality when the people who work for your customers are also engaged, and using your products. Once people are engaged with your solutions, customers become more likely to renew. If your solution fails to take root inside your client’s world, the likelihood of churn shoots up.

Here’s an example of integration done right:

For our tenth wedding anniversary, my husband and I stayed at Hotel Erwin in Santa Monica, California. I booked our stay through a third-party website and soon after received an email from the hotel asking whether we were staying for any particular reason. I replied and shared that we were staying for our anniversary. A couple of months later, we arrived at the hotel. When we checked in, the front desk attendant congratulated us on our celebration. When we got to our room, we found a bottle of Prosecco in a fresh bucket of ice, along with a handwritten anniversary card from the hotel staff. 

Consider the technology-enabled touchpoints needed to connect those dots. The hotel sent me an email, asking for information about the reason we were visiting. That was likely tech-driven and automated. The information about our celebration was flagged and added to our customer profile. When we checked in, the technology system cued the front-desk to wish us a happy anniversary. It also notified housekeeping to bring the bubbly. Those notifications were probably automated, but the human engagement meant we got a warm welcome that was personal and authentic. Plus some lovely, cold vino.

For our experience at Hotel Erwin to work successfully, the hotel employees had technological integration AND human engagement. 

Is customer turnover a challenge or an opportunity?

In Max Yoder’s excellent book, Do Better Work, he shares a valuable insight by suggesting that we “look for opportunity.” What the Lessonly CEO means is that challenges in business will happen. They’re inescapable. By contrast, how you respond to those challenges is a choice. You can decide to look at them as a threat (“this is really bad”) or as an opportunity (“I can do this better”). The opportunity mindset turns a problem into a positive. 

Delivering a stellar customer experience could be perceived as a challenge. Sure, it’s easier to push a product out to the customers, get it integrated technically, and let them worry about the human side of engagement. Getting humans to engage is more complex than developing new product innovations or acquiring new customers, which are relatively easier to control.

The win happens when tech companies make sure their products are fully utilized, not merely technically functional. When companies develop consistent processes to achieve integration and engagement, customers stay longer and are more likely to be highly profitable. 

As Yoder’s book shows, when companies employ a growth mindset, they see customer engagement as an opportunity. The companies that enable stellar customer usage reap rewards that boost the bottom line.

The path to long-term, highly profitable customers is through retention. Your opportunity to improve customer retention occurs when your company develops consistent processes to deliver both technical integration and human engagement of your solutions. 

Ali Cudby is the CEO of Your Iconic Brand and an adjunct professor of Entrepreneurship at Purdue University.