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From software to soft furnishings, customer retention is vital. But for software and tech companies, it’s a particularly acute problem: the prevalence of the subscription-based business model means many software tools can be switched on and off with a few clicks. Customers can come and go as they please. That’s great for customers, but not so good for your bottom line.
Long term success therefore depends on the ability to retain customers, minimise churn (customers leaving), and grow revenue. However, the landscape is shifting.
So, what can software companies do to address customer churn and tap into new opportunities?
Following on from our recent post on reducing onboarding churn, this article dives into the challenges posed by the current market saturation and highlights how software companies can win by offering distinct, personalized experiences at scale.
The challenge of churn
Churn, or the rate at which customers stop subscribing to a service, is rising across the software industry.
Market saturation is one of the primary reasons for this uptick. With more software solutions available than ever before, customers are less tied down to a specific vendor and are more open to exploring alternatives.
This dynamic has created a low barrier for customers to leave, meaning companies must constantly innovate to retain them.
Lower switching costs are another key factor in the churn challenge.
Today’s software tools are often cloud-based, making it easier for businesses to transition from one provider to another without the expensive overhead once associated with changing vendors.
As a result, the customer experience has become a critical differentiator. Software companies that fail to offer seamless, personalized experiences risk seeing higher churn rates.
Combatting churn
To reduce churn, personalization and innovation are no longer optional—they’re essential.
By tailoring the product experience to meet individual customer needs, companies can create more meaningful engagements that lead to stronger relationships.
Innovation also plays a critical role in customer retention.
Regular updates, the addition of new features, and staying ahead of industry trends signal to customers that their provider is invested in their success.
Do it well: Tapping into emerging markets for growth
While customer retention is critical in saturated markets, emerging markets present massive growth opportunities for software companies.
Regions like Southeast Asia, Latin America, and Africa are experiencing a significant increase in demand for cloud-based solutions. For example, the SaaS sector is growing at 18% CAGR in Africa – comparable to major markets like Germany and the UK.
However, entering these new regions requires more than just a one-size-fits-all approach.
To succeed, software companies must adapt their offerings to suit the specific needs of each market. Localized pricing models, culturally relevant user interfaces, and multilingual support are just a few ways software and technology providers can create customized experiences that resonate with diverse audiences.
Localize, localize, localize
To offer the level of personalization needed to succeed in both existing and emerging markets, software companies must leverage the right technology. Several innovations can help achieve this, including localization tools, hyperautomation, and AI-driven analytics.
- Localization technology: To succeed in global markets, software companies must offer products and services that feel natural to the local user. Localization involves adapting everything from language and currency to UI/UX elements, ensuring the product aligns with regional cultural norms and preferences. Localization technology make this process easier by automating many aspects of translating and customizing content for different regions, while maintaining quality.
- Hyperautomation: Hyperautomation goes beyond simple automation by integrating advanced technologies like AI, machine learning, and robotic process automation (RPA) to handle tasks at scale. This allows software companies to deliver personalized experiences efficiently and at lower costs. For example, hyperautomation can tailor communications, support, and onboarding processes for individual users based on their unique behaviours and needs.
- AI and Analytics: AI-driven tools can help software providers better understand their customer base by analysing usage patterns and predicting customer needs. By identifying potential churn risks or user pain points early, software companies can intervene with targeted strategies to retain those customers.
What next? What actions can you take?
For software companies, reducing churn and boosting customer retention is critical to thriving in a highly competitive market.
Good retention can have a big impact on company finances. Companies that prioritize customer retention over customer acquisition are 60% more profitable.
As competition intensifies and switching costs fall, the importance of personalization and innovation cannot be overstated.
Adapting products and pricing models for emerging markets like Southeast Asia, Latin America, and Africa offers growth opportunities that shouldn’t be ignored.
By leveraging technology that enable localization and hyperautomation, software companies can not only offer personalized, culturally relevant experiences, they can also position themselves to scale at speed across global markets.
Don’t forget loyalty programs too: loyalty programs enhance customer retention by rewarding continued usage and engagement, creating an incentive for users to stick with your platform or service. Of course, your loyalty program will also need efficient localization to resonate with your customers.
In the current saturated software landscape, companies that make great experiences that work beautifully for all customers – no matter where they are – will be the ones that win in the long term.
Speak with an expert
Want to learn how our solutions can help you unlock global opportunity? We’d be happy to show you around the Phrase Localization Platform and answer any questions you may have.