* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

We're closed, folks!

Links:

» Business of Software FAQ
» The Business of Software Conference (held every fall, usually in Boston)
» Forum guidelines (Please read before posting!)

Moderators:

Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Ideas for increasing retention

We have a product that converts well.  But the retention is poor.  The product works and provides a value that should more than justify the price.  Obviously people want the product and want to pay because it converts.  But the retention rate sucks, really sucks.

If we could increase retention, even just a little our business should grow exponentially.  I guess that is the case with everybody who sells software without perpetual licenses.

Any ideas for increasing customer retention?
C. Stark Send private email
Saturday, October 04, 2014
 
 
Add new features frequently?
maxlmus Send private email
Saturday, October 04, 2014
 
 
I'm sure you thought about it but ...

Is the problem your software solves an one off problem or a problem that people keep having?

For example: A tool to convert old vinyl records to MP3 - most people will use it once to convert their collection and then never touch again. Selling such a product as a subscription service would be suboptimal.

So maybe your product is "too good" and solves the customers' problems too well? In that case offering your software as a classic "upfront fee" software package for a higher price would be better?
Jeremy Morassi Send private email
Saturday, October 04, 2014
 
 
What exactly do you mean by retention? Do they cancel a monthly sub? Or do they not pay for major version upgrades? Or something else?
Andy Brice Send private email
Saturday, October 04, 2014
 
 
Yeah it would help if we knew what you're referring to?





AC
Reluctantlyregistered Send private email
Saturday, October 04, 2014
 
 
The mention of non-perpetual licenses does indeed suggests he means either that he is not getting people to upgrade to version N+1, or they are not paying his monthly/annual renewal fees.

It's difficult to give advice without specific details of the system.

How much is it new? How much are updates? How often do you have to pay? In between paying how many updates do you typically get? What happens if you don't update? Does it stop working? What time frame are we looking at for non-renewal?

Own example, typically my customers update every other major (new feature) version or so. Many go for many years between updates though. Right after a new release there are upgrade sales. But other sales trickle in. Over a long time frame, it seems most people stick with the software.
Scott Send private email
Saturday, October 04, 2014
 
 
Thank you all for your interest in helping me solve this problem.  I will try to answer all of your questions.

I prefer not to mention my product by name.  We are small so there is limited information published on the internet about us, it would be easy for this thread to end up on the top of google for my product name direct searches.  I am sure you understand.

To answer the questions:

Our product is something that users in our niche will need all of the time it is not a one time use thing.  It is a highly competitive field with many large established companies.  But we have identified a small niche in the market, and developed a product that addresses this niche better than the big guys.

We charge a monthly recurring fee of $50.  In our market, this is on the low end.  There are a few competitors at $30 per month.  But the average price of the established competitors is $100 - $400.  Depending on what package of services the user orders.

Our customer feedback has been generally positive.  But we get a lot of people that cancel their subscription.  We often try to find out why they cancelled.  We even give them free extra time when they cancel, and point them to our tutorials so they can learn exactly how to use our product in a way that would end up justifying its cost.

Most say they liked the service and will return later.  Some do.  Each month, 20% of our sales is customers that cancelled and then resubscribed.  But the bulk of it is new people.

But overall when I look back at all of the people that have ever bought our product we retain a very small number as long term users of the product.  I know you can't keep them all, but if I could improve this number just by a little, it would have a dramatic effect on the overall business.

Any suggestions for doing this?
C. Stark Send private email
Sunday, October 05, 2014
 
 
>We often try to find out why they cancelled.

Wouldn't it be better to talk to them *before* they cancel? I believe some SAAS companies use various metrics to predict which customers will cancel (e.g. they didn't log in the last month would be a red flag) and contact them first, to see if they are having any problems.

Maybe you could also try to nudge them to contact you with their problems (perhaps offer to call them) as part of the cancellation process?
Andy Brice Send private email
Sunday, October 05, 2014
 
 
>We often try to find out why they cancelled.

What do they say?
Andy Brice Send private email
Sunday, October 05, 2014
 
 
"Wouldn't it be better to talk to them *before* they cancel? I believe some SAAS companies use various metrics to predict which customers will cancel (e.g. they didn't log in the last month would be a red flag) and contact them first, to see if they are having any problems."

This is a good idea.  I will try to find who is not using it and be proactive.

For your other question most of the people either don't answer or just say that they liked it and will resubscribe later.
C. Stark Send private email
Sunday, October 05, 2014
 
 
> For your other question most of the people either don't answer

Does this mean you send a follow up email asking why?  Or an uninstall pop-up asking them to fill in a reason?

I the above aren't working, and because this is such a critical problem, I would pick up the phone and call 50 ex-customers and ask them why.
Doug Send private email
Monday, October 06, 2014
 
 
Most developers will do anything not to pick up the phone. ;0)
Andy Brice Send private email
Monday, October 06, 2014
 
 
These two quotes:

"Our product is something that users in our niche will need all of the time it is not a one time use thing."

"Our customer feedback has been generally positive.  But we get a lot of people that cancel their subscription."

don't add up. Either your product fulfills a non-essential need, or using it vs not using it does not make a big difference.

What you can try to do:

- Improve the product so that it becomes painful to stop using it. You'd need to ask your customers, including those who cancel, for directions. I'd try one open-ended question, such as "If you could add one feature or make one improvement to our product, what would that be?"

- Better demonstrate ROI if it is not clear. For instance, Akismet tells me how many spam messages it has caught to date each time I log in to my Wordpress dashboard.

- Raise monthly prices and offer discounted annual plans.

- Offer a pay-per-use option.

Regarding the latter, when I shopped for a bulk e-mail service a few years ago, I went with one of the few that offered pay-per-use, because we were sending to our main list less than once a month and without a regular schedule. (Though I have just checked our provider's current plans and it seems that with our list size it would be cheaper to pay monthly even if we skip a month sometimes.)
Dmitry Leskov Send private email
Tuesday, October 07, 2014
 
 
thanks guys.  I think I am going to try these 3 suggestions and see what happens.

1.  Try to proactively contact people that aren't using it
2.  Raise the monthly price
3.  Pick up the phone and call some of the people that cancel

It should give me some better insight.

C.
C. Stark Send private email
Tuesday, October 07, 2014
 
 
OK, that sounds good.

I did devote much thought to your predicament but was not able to come up with actionable advice given the information presented.

I do believe you are smart and insightful enough though that contemplating more on the details raised may bring additional insights, without breaking your cover.
Scott Send private email
Tuesday, October 07, 2014
 
 

This topic is archived. No further replies will be accepted.

Other recent topics Other recent topics
 
Powered by FogBugz