Successfully growing your client portfolio- The Main Metric that matters

11 November 2016

Bhaskar Bose expressing views on acquiring customersEvery business varies and its growth is often dependent on characteristics such as the nature of business, organizational structure, management styles, internal and external environment etc. Acquiring customers is one of the most challenging aspects of running a business. It is essential to retain and satisfy them for continuous business momentum.

A customer wants to experience an organization that delivers a seamless journey across all touch points from inquiry right through to post sales support. The company needs to ensure the quality of experience is positive at each of these points to create a positive moment. This is the first step in building a relationship and gaining consumer trust. A customer buys a product/service mainly due to need, convenience or due to ROI. It is essential to keep all these elements in mind when acquiring your customers to be able to convert them into long lasting relationships. Therefore, Client growth in any business is a result of client acquisition and client retention with a minimum churn rate.

Being a veteran of the SaaS industry let me share two metrics that matter from a client growth perspective.

  1. Gross Churn: The number of dollars the company loses without regard for new, reactivated or expansion revenue for a time period refers to a gross churn. A low churn ensures more customers with a higher customer lifetime value and lower cost of servicing. A high churn rate on the other side can lead to negative revenue growth. Churn rate is the percentage of customers who leave the company in a given time frame, therefore making churn a pivotal number in evaluating the business.
  2. Negative Net Churn: In simple terms, negative net churn is net revenue lost post upgrades and cross sales. Negative net churn is an attractive characteristic of a SaaS company because it means that customer accounts are like high-yield saving accounts. A customer can create negative net churn if the spending of that customer increases dramatically. Higher the negative net churn, higher is the portfolio growth percentage of the client base.

Client growth can be measured by two extrapolations, a waterfall of new clients minus the lost clients and downgrades (reduced subscriptions) or on the basis of the businesses negative net churn.

To ensure client retention and negative net churns, a client success team becomes an indispensable part of the business process. Today every industry is burdened with newer businesses/start-ups entering the space leading to constant product innovation and increased competition therefore a strong client success team is a distinguishing factor when evaluating a business. With years of experience as the managing director of the client success division, we at Meltwater have recognized that “Client success is a delicate balance between managing portfolios effectively, growing client accounts while ensuring long term partnerships are forged through trust, relationship and value, leading to a final outcome of low churn and hence client growth”.

Last but not the least, a strong personal recommendation would be to always be to treat your clients like your partners. With care, patience and a bit of zing, relationships can flourish. And once relationships flourish, with the right team in place, your client portfolio is bound to grow irrespective of the size of your business. Keeping these metrics in mind will help you measure the growth of your client portfolio and hence can turn your business into a personalized and profitable enterprise.

Authored by: Bhaskar Bose, Managing Director, Meltwater India