The numbers don’t lie: acquiring a new customer costs 5-25x more than keeping an existing one. And yet, companies keep letting customers go, losing profits with every churn.
That’s the silent revenue killer. While you are busy acquiring new customers, your hard-earned customers are slipping out of the back door unnoticed.
What’s the point of landing more customers if you cannot keep them on board? That’s just a waste of precious time and money.
This guide aims to help you close the back door and keep your customers, while simultaneously making them loyal to your product and solution. Let’s dive into the nine proven strategies for improving customer retention for your SaaS!
As a SaaS business owner, customer acquisition should be one of your top priorities. Don’t forget to retain the customers you already have, which many SaaS business owners overlook.
Prioritizing customer retention can save money and increase revenue as you bolster your brand loyalty and reduce the cyclical costs of customer acquisition. Just a 5% increase can boost profits by up to 75%.
Customer retention is vital to sustain the growth and profitability of any SaaS business.
With that in mind, let’s dive into nine proven strategies for SaaS companies to focus on that can dramatically improve customer retention.
Understand your customers
To provide an exceptional customer experience, you must deeply understand your customers–primarily their needs, motivations, and challenges.
Here are a couple of tactics to gather data from your customers:
- Conduct surveys: Surveys are a great way to find out the pain points and goals of your customers, and their satisfaction with your product or service.
- Analyze heatmaps and scroll maps: These tools can showcase how a specific user navigates and interacts with your product. With more users comes a more extensive data set, which can help spot user patterns.
- Monitor feedback across different channels: Your product will get some opinions and coverage on various platforms. Collect that data and analyze what your customers like and don’t–then address the data accordingly.
Slack ditches the commonly used number-scale customer satisfaction survey and takes on a more specific approach. With such an approach, they can determine customer issues or praise more precisely.
Run a well-executed email marketing
Email marketing remains one of the most powerful touchpoints for nurturing customer relationships and improving retention, with 89% of marketers preferring it for customer retention.
It keeps your product and brand on top of the minds of your existing customers and allows you to nurture relationships with them.
Here are a couple of tips on how to make your email marketing more effective:
- Identify customers likely to churn: Those might be inactive customers or someone who still hasn’t switched to your paid plan. The idea is to isolate such customers and send out personalized retention emails to help them understand your product’s value.
- Clearly communicate product value: Let your customers know which pain points you can help them solve. Outline what makes you different from the competition, and where can they find resources to get the most out of your product.
- Use the positive customer feedback to your advantage: Your satisfied customers are the ideal point to gain knowledge of the most valuable features of your product. Take note of the features and aspects of your product that your customers like the most.
Zapier has a brilliantly structured email sequence that reminds you that your premium product features are coming to an end, but they follow up with a highly discounted offer to continue enjoying the benefits. This portrays Zapier as a product owner who cares about its customers using their valuable premium features for less.
Start a loyalty program
75% of customers favor a brand if there is a loyalty program, and that’s no wonder. Everyone likes feeling appreciated, especially your best customers.
A loyalty or rewards program allows you to formally recognize and provide extra value to your most engaged customers.
Here are a couple of tips to help kickstart your loyalty program:
- Provide early access to features: To showcase that you care about your most loyal customers, provide early access to new features, products, or beta programs. This is also a great way to collect constructive feedback on your product.
- Upgraded customer support: You could make your customers feel more valued by offering a premium support service with a drastically shorter response time than the regular one.
- Introduce a useful referral program: Make sure your users benefit from introducing a new customer to your program so that you can turn that into a snowball that keeps on rolling. It can be something as simple as an x-amount of additional credits, which can make all the difference.
Dropbox is a prime example of a loyalty program done right with its referral program. It clearly communicates the benefit–a customer gets free storage if he manages to refer someone to the product.
In this manner, everybody wins – the customer enjoys a larger slice of the product, and the product owner gains more users. This tactic helped Dropbox grow from 100K users to 33.9 million users in 9 years.
Build an active community
An active community creates a web of human connections that cultivates emotional investment in your product.
It provides a self-serving support system that decreases churn risk while creating a goldmine of product feedback and customers primed to become advocates.
Here are some tips on how to kickstart a vibrant community for your SaaS:
- Integrate it into your product: Relentlessly promote your community everywhere–in-app, on your website, with your sales efforts. It has to be inescapable for new users to discover and join. A well-designed landing page can help you land new community members.
- Host members-only webinars: Once your customers get comfortable with your product, they might want to learn how to become a power user. Host member-only educative webinars to hook non-members to join the community, as loyal customers might be hungry to learn.
- Add gamification to reward engagement: To motivate engagement, you need to set up a reward mechanism. Implement upvoting, community badges, and leaderboard challenges to engage your audience with your product further.
We love how Taplio uses gamification to motivate customers to use their product further to optimize their LinkedIn posts while rewarding them with fancy rankings and even monetary rewards. This keeps their community growing and engaged with the product.
Encourage reviews and testimonials
Positive reviews, case studies, and testimonials not only assist acquisition efforts, but they promote loyalty and retention among existing customers.
Actually, companies that showcase testimonials see a 34% increase in their conversions.
Here are a few tips to encourage your customers to leave reviews and testimonials:
- Design feedback flows: The easiest way is to embed a custom form for testimonials that will pop up when users trigger a goal your product aims to accomplish. Make it as simple as adding a star rating and a text field for the review.
- Target the satisfied customers: Don’t just focus on the number of reviews–focus on getting good reviews. You could send out satisfaction surveys to your customers every quarter, and then ask the satisfied customers to leave a review for your SaaS product.
- Engage with existing reviews: When you give feedback or reply to both positive and negative reviews, you will encourage the people who usually don’t leave reviews to give you one.
Ahrefs takes a great approach to showcasing its testimonials–essentially placing it as a prominent section on its landing page; attracting both new and existing customers due to the amount of positive feedback from industry leaders.
Improve customer support
95% of consumers believe that customer service is essential for brand loyalty, which explains its importance for customer retention.
If your customers struggle to adopt your product or run into frustrating issues without adequate help, they will churn fast.
The essential goal of your business should be to nail consistent and responsive customer support.
Here are some low-hanging fruits for improving your customer support:
- Improve response times: Nobody likes waiting for days to get a customer support response. Ensure all your channels have fast response times, from chat and phone to email,social media, and your contact center software
- Build a robust self-serving resource: A comprehensive knowledge base and documentation along with tutorials to explain and solve the most common customer pain points can eliminate the need for customers to contact you in the first place.
- Implement 24/7 support: Use chatbots and dynamic FAQs that can fetch information from your documentation to solve common issues for your users before forwarding them to real humans.
Asana is a great example of customer support done right. They offer a robust self-serving resource base and an experimental AI chatbot that aims to help you out without a human support agent. If things go wrong, a human support agent will then come in to save the day.
Personalize customer experience
Customers expect a fully customized experience tailored to their unique needs, context, and circumstances.
Generic, static experiences make them feel like numbers, not individuals, which can increase churn rates.
Here are some ways how you can create a personalized product experience:
- Personalize sign-ups: While this adds friction, you can collect useful data to personalize the experience, such as use cases, company roles, and user goals.
- Allow product customization: Make your users personalize their experience for themselves by enabling them to customize their experience and save preferences and workflows.
- Personalize the in-app recommendations: Use predictive intelligence to show contextually relevant content or guidance to your users. This can be in the form of workflows tailored to the most common use cases for a specific user.
Encharge provides personalization right from the start of the signup process. They ask you for your company website, generate emails based on your company’s nature, and help you further with their marketing automation platform.
Educate customers (don’t just sell)
Amazing SaaS companies differentiate themselves from the rest of the pack by not only offering a valuable product but also providing robust educative resources around the main pain points that the product solves.
Here is how to educate your customers efficiently:
- Present industry data and findings in different formats: Kick things off with a blog that provides unique perspectives on industry topics. Once you start building your blog, expand to ebooks, whitepapers, and research papers with original data that provides value with a hefty dose of authority.
- Provide tutorials and courses: Cover the most common use cases for your product with easily digestible tutorial videos. For potential power users, you can add courses that will teach them how to use your product in advanced scenarios.
- Host webinars: You can tailor your webinars to focus on a certain product function and its different use cases to engage your customers and educate them simultaneously.
Hunter, while mainly being a cold email platform, also has a robust knowledge base around everything related to cold email outreach, which is exactly the niche of Hunter’s customers.
It works well because it offers creative ways of solving certain pain points from the general and product perspectives.
Create a helpful onboarding experience
76% of customers who felt welcomed by an onboarding experience are most likely to continue using a service or a product.
This goes on to show that first impressions are king. They set the tone for the customer’s trust in the product.
So, making your onboarding thoughtful will prevent churn even before it starts.
Here are some tips to implement a helpful onboarding experience in your SaaS:
- Break down the core features clearly. Guide your customers through each phase with clear instructions and goals.
- Use interactive and contextual walkthroughs: Sometimes, simple text instructions aren’t enough. Use interactive product tours, tooltips, and context-sensitive pop-ups to guide users actively.
- Continuously educate: Onboarding isn’t a one-and-done process. As new features drop, introduce them organically and contextually to your users.
Notion provides users with a simple, task-based onboarding process. It encourages the user to experiment with the different functions it offers and helps customers build more confidence in using their product.
Final words
Implementing even a couple of these customer retention strategies ensures your hard-earned customers remain onboard for the long run.
The ability to retain those loyal customers is what separates an amazing SaaS business from the rest.
But that’s just half the battle. Use the strategies outlined to refine and enhance the customer experience continuously. Don’t be afraid to experiment as well!
