Lessons from WPC 2013: Retaining Microsoft Dynamics customers in the cloud

(Editor's note: Guus Krabbenborg's tenth annual Business Report from WPC is available now! You can view the 2013 table of contents for the WPC 2013 Business Report and download the 2012 report here. This article is adapted from the 2013 report.)

The IT industry has been busy for some time now with the transition from the traditional on-premise model to the cloud delivery model. In the cloud, the customer is no longer the owner of the hardware, the infrastructure and/or the user rights to his licenses. Instead, the customer becomes a buyer of a service that gets settled on a subscription basis. In this new setting, the financial risks shift from the customer to the vendor and the customer has more power. This shift from a capital investment (CapEx) to an operational expense (OpEx) has already had a significant impact on customer loyalty and retention. After all, in a cloud model, it's a lot easier for a customer to say goodbye to his supplier.

During this WPC, it was remarkable that - of the many hundreds of sessions - only two had customer retention in their titles! Both focused on Microsoft Dynamics, by the way. Winning new customers is apparently far more popular than retaining existing customers. However, if you analyze the business models, you discover that customer retention, or churn management, is one of the most important indicators of profitability.

Let's start with the definition. Churn can be described as the situation in which an existing customer stops buying products and services from a given company. In the traditional world of on-premise and CapEx, all the risk was for the customer. After all, he had ...