Rethink Commerce Blog

Ways To Make Your Customer Feel Valued With Promotions

Posted on June 4th, 2015 by

The promotional offer has become a key tool for SaaS businesses and is now used at every stage of the digital commerce lifecycle, from acquisition to renewal. Promotions are powerful and persuasive. They can be the final nudge that drives a new trial subscription or turns a free subscriber into a paying customer. But, if used indiscriminately, they can also undermine your revenue strategy and value of your product.

With promotions, there’s a fine line that separates adding value to the customer experience and removing the levers that generate revenue.

How can SaaS companies find balance between the two? Consider these two effective ways to drive deeper customer engagement while retaining the full value of your products.

  1. Think Beyond Renewal Discounts

The first promotional strategy that is usually recommended by SaaS marketers is to offer a discount to customers that renew, in the interest of adding value to their existing clients. However, this often creates a vicious cycle in which you find yourself continually having to offer discounts for renewals because existing customers have come to expect them and will not renew without them.

Ultimately, these become price-sensitive customers who don’t appreciate the value of your product and will eventually churn out. To compensate, you offer more promotional discounts and end up continuing the cycle of decreased revenue.

While rewarding customers for their loyalty is a legitimate strategy, a more sustainable way to do it is by embedding the renewal promotion into your pricing structure. By offering monthly and annual pricing models, instead, you reward customers who are loyal without eroding the value of your products, and ability to generate revenue from them.

One effective tactic is to send monthly subscribers an email that promotes an offer to upgrade to a yearly subscription at a discount. You can also increase the urgency by making the offer time-sensitive.

  1. Get Creative

Each business is different. Think about creative promotions that add value to both the customer your company. For example, if you are launching a new add-on or feature to your current software, you can  offer a discount to beta users. Send your valued customers a personal email describing why this add-on would be useful to them and how much you would value their input. As a thank you for their help, offer a discount on the final product or a promotional subscription price.

You have accomplished two things by doing this. First, the company gets valuable feedback about a new product, and secondly, the customer feels like you not only value their business, but also their opinion.

Another creative but simple way to add value without devaluing your product is to implement a “refer-a-friend” program. Referral promotions are a great way to increase acquisitions and reward and deepen engagement with loyal customers, which is a win-win for everyone.

In a way, SaaS companies are the kings of promotion. Not many other business models offer products on a free-trial basis. Effectively offering promotions to your free subscribers is a challenging transition to make. However, with a strategic plan in place, it can be done successfully.

Avangate powers modern Digital Commerce, solving the complexity of online commerce, subscription billing, and global payments for Software, SaaS and Online Services companies. Backed by a proven cloud platform, unmatched expertise and a depth of digital commerce services, Avangate helps digital business leaders drive the fastest path to revenue, maximize the value of every customer, and expand global reach. Contact us for more information about how our digital commerce services can help you grow your business.

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Raj Badarinath

VP, WW Product Marketing and Alliances

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