Three major impacts all companies should leverage.
SaaS is a hefty $152 billion market, partly because tech stacks are growing. Companies use an average of 75 technologies to manage everything from business intelligence to web conferencing and gathering e-signatures. However, not all SaaS companies know how their business customers use their products, let alone how to increase engagement to make customers more successful.
Aligning a product with customer expectations means digging deep into how customers use a product and then using that information to improve the customer experience. The reward is an increase in Net Revenue Retention (NRR). NRR represents the percentage of revenue a company retains from its existing customers over a certain time period.
In addition to revenue, this measurement of financial success incorporates churn, expansion, and downgrades. It offers a complete understanding of growth over a specific period. An NRR of over 100% indicates a company gained revenue from expansions and upsells at a greater rate than it lost from downgrades and churn.
To increase NRR, companies need data on how and why customers use products. So let’s look at what product experience (PX) includes and how it connects with revenue.
What Is Product Experience?
PX is a way of looking at the customer journey through a specific product, from onboarding to retention, expansion, and advocacy. It’s a subcategory of user experience (UX) that involves monitoring customer behavior within the product, using engagement, feedback, and analytics.
The goal of PX is to get granular about where and how customers succeed (and sometimes give up on) using your product. PX professionals might bring together data from surveys, demographics, factors associated with high engagement, bottlenecks, and actions taken to understand user behavior.
Ultimately, PX creates a roadmap for product improvement. It also allows for more individualized support, providing a better experience at every step. For companies, PX benefits include increased trial conversions, faster onboarding with less time to value, increased stickiness, and higher retention rates. Companies see greater profitability and can concentrate on making new products to serve customers’ needs rather than trying to intuit why users are getting frustrated with the current ones.
3 Major Impacts of PX on Net Revenue Retention
Because NRR depends on customer success, improving how a product works is crucial to identifying where a company can engage to keep more users. Here are three core ways PX impacts NRR.
1. It helps companies target support.
Get a handle on customer experience over multiple personas to personalize guidance. By learning which customer groups are churning, companies can address friction points with contextualized support. PX can give it to them through segmented onboarding or individualized e-mail campaigns that highlight features to promote awareness.
2. It drives expansion
Besides providing valuable insight into users, PX also includes data about events. Bringing the two together can help clarify opportunities to grow usage among existing customers, lowering customer acquisition cost. One way is through personalized upselling and cross-selling recommendations based on data about actions a user takes within the product. For example, educational articles on how to use additional tools to augment users’ favorite features can show the value they’ll get by upgrading to a premium level of service.
3. It lowers churn and downgrades.
Customers leave a company after having even a single bad experience, in fact, 80% would leave after having two. Insulate users from poor experiences by proactively working to identify and eliminate friction points. Employ surveys to find out why customers churn. Pinpoint patterns to determine who is most likely to throw in the towel, then respond with product upgrades or support to ensure current users never reach their breaking point.
Increase Your NRR with Gainsight
Unless they focus on product experience, companies will have insufficient data to keep users happy. They’ll struggle to improve customers’ core frustrations. They’ll fail to differentiate user needs across a variety of personas. And, as a result, they’ll be unable to stem the tide of churn before it happens. That blinds companies to tangible growth opportunities.
Harnessing the power of data can help companies understand their users better. No one understands customer success data like Gainsight PX, which we designed to help companies get the information they need to make better decisions.To learn more about product experience and how to deploy it for improved NRR, download our e-book, What Is Product Experience?