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Avoiding customer churn and retaining a core customer base is a tricky proposition for just about any organization. It becomes even more complicated, and more vital, for companies offering software-as-a-service (SaaS (News - Alert)) as their revenues are largely based on recurring expenditures from customers.

Very simply, companies using the SaaS model provide software licenses and associated bandwidth, storage and other add-ons on a subscription basis. This operational model brings in recurring revenue each month, and relies heavily on keeping customers happy so they will continue to return. The standard means of providing sales and customer service support don’t really cut it in the SaaS world, and companies that want to stay competitive and avoid customer churn need to utilize technology tools and data to be successful.

Most SaaS companies already have data on hand to evaluate the rate of customer churn; they just need to understand how to use it. Examining the churn rate goes well beyond knowing how many customers you kept and how many you lost during a given time period, and adding other parameters can help businesses understand why they are losing customers, and what they can fix to retain them.

There are a few key factors SaaS companies can study to determine the likelihood of retaining a customer. The first is whether the customer completed the SaaS on-boarding process. If your customer never made it to this point then they aren’t using your service and you need to find out why and get them on board. Another important factor is the value-added data you are providing to customers. If your clients are regularly receiving reporting and analytics, they are deriving added value from your business and are far more likely to keep returning.

Another important variable that may be easily tracked to gauge customer churn rates is whether your customers are using updates and new functionality. This offers important feedback on whether changes to your service are being well received or whether customers are actually defecting due to frustration or lack of understanding about a new feature. Finally, customer engagement provides vast insight on how customers are interacting with your platform and apps, how often they are using services and communicating and whether they are pleased or frustrated with your services.

SaaS providers have the data and tools at their disposal to get a handle on customer churn and reverse negative trends. It’s simply a matter of making the most of data and staying on top of the entire customer experience. The result will be happy and satisfied customers who feel your organization is present and engaged. And, they will continue to return to your platform and services.