This month, the global SaaS industry ushered in the announcement of the first major award of the year: the SaaS Industry Global Customer Satisfaction Award (CSAT Award) issued by the internationally renowned research institution IDC.
The award is based on IDC SaaSPath's survey of about 2,000 middle-level and senior organizations around the world, comprehensively more than 30 customer satisfaction indicators, and finally selected the suppliers with the highest global customer satisfaction scores in each SaaS segment application market. Kingdee, a leading Chinese SaaS company, ranks among the world's highest-scoring SaaS ERP application market suppliers, and becomes the only Chinese SaaS vendor to win the IDC 2020 SaaS Customer Satisfaction Award.
Winning this award has extraordinary significance for Kingdee, a company in the process of cloud transformation, and even for the Chinese SaaS industry that has entered a breakthrough period.
Customer retention rate has become the winner of the competition
For any SaaS vendor, customer satisfaction is the "lifeline" of the enterprise. Because higher customer satisfaction not only shows that its products and services themselves are more competitive, but to a certain extent, it also represents a higher customer retention rate-that is, continuing to use the product (renewal) for a period of time The proportion of customers.
The customer retention rate is surpassing the growth rate of subscriptions and has become the most important indicator for many SaaS vendors, especially the leading companies entering the growth stage. This is because, as a subscription service model, SaaS service has a high customer retention rate, which often means that the subscription business has a stable, predictable and high-quality cash flow, as well as a relatively higher customer lifetime value (LTV) and Profit margin.
Conversely, if a SaaS company has a low customer retention rate, that is, a large number of old customers are lost, it means that the high cost of acquiring customers in the early stage will become a sunk cost, which will seriously affect the company's profit margin and cash flow. Therefore, if a SaaS company wants to prove that its business model is healthy enough and get a higher valuation, a higher customer retention rate is necessary.
In the global SaaS industry, due to factors such as first-mover advantage, informatization level, technical level, market maturity and other factors, the customer retention rate of outstanding SaaS companies in the United States can basically reach more than 90%. Among them, the customer retention rate of American SaaS giant Salesforce is 90%, Workday is 95%, and ServiceNow's customer retention rate is even as high as 98%, far ahead of similar companies in China.
Chinese SaaS companies have the opportunity to "Late come first"
Compared with leading SaaS companies in the United States, customer retention has always been a shortcoming of Chinese SaaS companies, and customer retention also represents customer satisfaction and stickiness.
As one of the leading SaaS vendors in China, UFIDA’s 2020Q3 financial report shows that the renewal rate of its large and medium-sized enterprise customers is only 61.1%, and the renewal rate of small and micro enterprise customers is only 54.1%. These figures all reflect the comparison of the loss of its old customers. Serious; Kingdee’s situation is relatively better. The renewal rate of its SaaS business brand Kingdee Cloud·Xingkong in 2019 is 76%, and the amount renewal rate is 90%, which is 14 percentage points higher than the renewal rate, indicating that among the renewed customers Many have purchased more modules. According to the semi-annual financial report released by Kingdee in August 2020, the cumulative number of Kingdee Cloud·Xingkong customers has reached 15,700, with a customer renewal rate of 87% and a contract renewal rate of 82%.
The relatively low customer retention rate also reflects from the side that the competitiveness of Chinese SaaS vendors needs to be strengthened. Although China's leading SaaS vendors such as Kingdee and UFIDA have used intensive enterprise transformation, business restructuring and other means to strive for the upper reaches of the industry, due to latecomer disadvantages, overall low market maturity, and customer group differences Large and other innate factors have left Chinese SaaS vendors with considerable room for improvement in terms of product competitiveness and customer retention.
Although Chinese SaaS companies are late, they are not without first-coming opportunities. Looking at it from another perspective, relative to some core technical thresholds or service standards, improving customer retention is a breakthrough in the era of global competition for overtaking on a curve and first-come first.
This time, Kingdee won the first place in customer satisfaction in China’s SaaS market and ranked among the world’s highest-scoring SaaS ERP application market suppliers. This is a very positive signal, not only reflecting the competitiveness of Chinese manufacturers in certain product categories. The ability to compete with international industry giants also shows that the efforts of Chinese SaaS companies to improve customer retention rates have begun to bear fruit.
"Kingdee will take this as a new starting point, adhering to the philosophy of'customer-centered, struggling-oriented, and long-term professionalism', and practice leading technology, high-quality products and services, and innovative management to achieve direct results. Customers." said Xu Shaochun, Chairman and CEO of Kingdee Group.
The turning point has come, it is time to catch up
At present, the domestic SaaS industry is still in the early stages of development. According to data calculations released by the China Academy of Information and Communications Technology, in 2019, the global SaaS and IaaS markets accounted for 58.15% and 23.31% of the overall cloud computing market, respectively. However, in the Chinese market, the structure has been inverted. SaaS and IaaS The proportion of IaaS is 28.26% and 65.66% respectively.
In addition, the total market share of the top five vendors in China's SaaS market accounts for only 18.7%, and the concentration is very low. This is also one of the characteristics of the industry in its early stages of development. During the same period, the total market share of the top five SaaS vendors in the United States reached 26.1%.
An in-depth report on the cloud computing industry released by Guojin Securities in 2020 believes that in terms of market size, the domestic SaaS market as a whole lags behind the United States by 5-10 years. However, the report also pointed out that since the domestic SaaS market is undergoing a cloud transformation period, the growth rate is about twice that of the global market, and rapid growth has brought broad room for development. Domestic SaaS companies represented by Kingdee and UFIDA are in a cloud transformation period, which is roughly equivalent to the stage of Salesforce 5-6 years ago.
Although there is still a gap compared with the highest international level, with the increasing maturity of the domestic SaaS industry's market education, coupled with the blessing of domestic substitution policies, the Chinese SaaS industry has ushered in an unprecedented development opportunity, and it is time to catch up.
On the one hand, after nearly a decade of popularization of education, the overall market maturity of the domestic SaaS industry has been greatly improved compared to previous years. Whether it is independent controllable concepts, localized substitution needs, related incentives and support policies, or the digital transformation and upgrading needs of a large number of companies themselves, and the increasingly complete technical reserve conditions, all of these provide rare opportunities for domestic SaaS companies to rapidly expand market share.
On the other hand, with the deepening of cloud transformation of leading SaaS vendors such as Kingdee, their relative first-mover advantages will gradually be amplified, and then the industry-wide external trends will be superimposed, and the advantages will be further accelerated. Many analysis institutions have already given a judgment: domestic SaaS companies will enter a performance exchange period in the next five years, and SaaS vendors with obvious product advantages such as Kingdee deserve special attention.