Customer churn is a major challenge for B2B SaaS businesses. The 2022 KBCM Technology Group Private Company SaaS Survey indicates that the average churn rate of B2B SaaS companies is 13%. It also shows that the average annual non-renewal rate is 10%.
While there are several ways to improve retention, marketing automation is one of the best strategies. The effectiveness of marketing automation for customer retention is evident in the fact that 36% of marketers use it to build loyalty and drive repeat purchases.
Marketing automation for customer retention combines technology and human expertise to keep customers engaged. It allows you to nurture customer relationships at scale and deliver content that resonates with each customer’s needs and preferences.
Let’s understand what marketing automation is, its importance, and how to use it to boost customer retention.
Understanding what is a marketing automation
Marketing automation is a technology-driven strategy that automates repetitive marketing tasks, such as sending welcome email series and running surveys. It allows you to deliver personalized content that helps build customer trust and positions you as an authority in the industry.
Marketing automation uses customer data to inform marketing strategies and boost engagement. It also involves coordinating marketing efforts across various platforms and touchpoints.
The importance of customer retention
Retaining existing customers is cost-effective, increases word-of-mouth recommendations, improves market share, and offers stability (in terms of revenue). Let’s understand the benefits of customer retention in detail.
1. Ensures cost-effective growth
The average SaaS customer acquisition cost has increased by over 65% in the last few years. An average B2B SaaS startup spends 92% of its first-year revenue on customer acquisition. On the other hand, a 5% increase in retention could lead to a 25-95% boost in profits.
2. Improves customer lifetime value
When you retain customers, your customer lifetime value will grow exponentially. Besides, it’s easier to upsell and cross-sell to existing customers than acquire a new one, as they already trust you. For example, Slack spends $7,700 to acquire new customers, and 80% of customers stay for more than five years. The average CLV for Slack is $99,000, generating a 1200% return on investment.
Read more: 11 Tips to Boost Your Revenue With Upsell Emails
3. Gets referrals and word-of-mouth marketing
Happy customers are more likely to refer to their colleagues and peers. These word-of-mouth referrals are highly valuable as they come from trusted sources and often result in higher conversions. Besides, it reduces marketing costs and increases brand reputation. For example, in 2021, HubSpot made $1 billion in ARR, 33% of which came from word-of-mouth.
4. Offers stability and predictable revenue
Retaining customers provides a stable and predictable long-term planning and investment revenue stream. It allows companies to make informed decisions regarding resource allocation, expansion plans, and product development.
How marketing automation enhances customer retention
There are several ways you can use marketing automation for customer retention. However, the most common applications include personalized communication, consistent engagement, customer segmentation, and conducting surveys. Let’s understand them in detail.
1. Personalized communication
Marketing automation enables hyper-personalization at scale. It analyzes customer data to personalize messages based on behavior and preferences. These personalized touchpoints, triggered by specific actions within the product, help users derive more value and reduce churn.
2. Consistent engagement
Marketing automation ensures regular, relevant interactions throughout the customer lifecycle. Customers get timely onboarding sequences, feature adoption nudges, and renewal reminders.
3. Customer segmentation
Automation software analyzes product usage patterns, account characteristics, and engagement metrics to group customers into meaningful segments. This allows you to run more targeted retention strategies, such as feature education for low-usage accounts or upsell campaigns for high-potential users.
4. Feedback and surveys
You can set up automated triggers to send surveys at key points in the customer journey, such as after onboarding or before renewal. These timely feedback requests show customers that their opinions are valued and provide valuable insights to improve your processes.
Semrush takes it one step further by offering early access to their tool in exchange for taking a survey:
6 key strategies for using marketing automation in customer retention
1. Welcome series emails
A well-crafted welcome series sets the tone for the entire customer relationship. These automated email sequences introduce new users to your product, guide them through key features, and establish a strong foundation for long-term engagement. Moreover, a good welcome series can improve user activation and reduce churn.
Follow these tips when automating welcome series emails.
- Segment your audience based on their role, company size, or specific needs.
- Include step-by-step guides for initial setup and configuration.
- Highlight key features that align with the user’s goals and pain points.
- Provide easy access to support resources and customer success teams.
- Gradually introduce more advanced features as users become familiar with the basics.
For example, Loom sends educational emails on how to get started with it. The subject line addresses pain points (save time) and mentions Slack integration (most likely used for personalization). It then gives a step-by-step guide on how to use it.
Pro Tip: Consider sending SMS text Messages as well as emails as part of your welcome sequence. Texts are easy to personalize and they’re a great way to encourage onboarding and product activation. Please keep in mind that SMS marketing is subject to strict regulations. Failure to comply with marketing communication laws or sending fake SMS can lead to legal issues and damage your brand’s reputation.
2. Re-engagement campaigns
Re-engagement campaigns target users who have become inactive or are at risk of churning. These automated sequences regenerate interest in your product by educating them on new features, showcasing value, or offering personalized assistance.
Here are some tips to create effective re-engagement campaigns.
- Use product usage data to identify at-risk users early
- Segment inactive users based on their historical engagement
- Highlight new features or improvements that address their previous pain point
- Offer personalized incentives or extended trials of freemium features
- Showcase case studies that align with the user’s original goals
Venmo is a great example of a company running re-engagement campaigns. It highlights the top changes in the product since the customer last visited. It also has a QR code to encourage customers to download the latest version of the tool.
3. Loyalty programs
While often associated with B2C companies, loyalty programs can also benefit B2B SaaS businesses. Automated loyalty programs reward customers for their continued usage, referrals, or other actions. This can build a sense of investment in your product and encourage long-term retention.
Follow these best practices when creating loyalty programs for your company.
- Create tiered rewards based on product usage levels or contract value
- Offer exclusive access to beta features or priority support as higher-tier perks
- Implement a points system for product usage, feature adoption, and community participation
- Automate milestone notifications with reward emails to keep users engaged and aware of their progress
4. Celebrate milestones
Congratulating people on the milestones they’ve achieved can have a lasting impression. Send personalized messages to customers to celebrate their founding dates, product adoption anniversaries, major investments, and project completions. Additionally, follow these tips to further strengthen your relationship.
- Highlight key metrics or achievements based on the customer’s history with your product. Grammarly does this exceptionally well. It sends weekly achievements and highlights mistakes
- Offer a special perk or temporary feature upgrade as a celebration
- Ensure the tone is professional and encouraging
- Use their responses to gather feedback and optimize your messaging
5. Setting win-back campaigns
Win-back campaigns target customers who have recently canceled their subscriptions or are at risk of churn. Marketing automation for customer retention addresses their reasons for leaving and highlights new value propositions to make them stay.
Follow these best practices when setting up automated win-back campaigns.
- Segment churned customers based on their reasons for leaving
- Offer a special comeback deal or extended trial of freemium features
- Share case studies of similar companies who have successfully re-adopted your solution
- Include easy ways to reconnect with sales or customer success teams
For example, Typeform goes out of the way to use a little humor to capture user feedback on why they’re not using the tool. They also encourage customers to try it again and see the latest updates in the app.
6. Customer feedback and surveys
Collecting feedback allows you to continuously improve your product and address customers’ concerns before it’s too late. Moreover, surveys at key points in the customer journey provide valuable insights into how they move down the pipeline while showing them that their opinions matter.
Here are some tips to implement effective feedback automation.
- Trigger surveys at crucial touchpoints like post-onboarding, after-support interactions, and pre-renewal.
- Use net promoter score surveys to understand how satisfied customers are and identify promoters.
- Implement quick-in-app surveys to gather feedback on different features.
- Automate follow-ups for negative feedback to address issues promptly.
Choosing the right marketing automation tool
With so many marketing automation tools out there, choosing the right one can be challenging. However, if your tool has these factors, you can consider giving it a try.
1. Advanced user segmentation
Look for a platform that allows you to segment users based on a wide range of factors. It could include product usage, email engagement, and other data from integrated tools. This will allow you to create targeted and effective marketing campaigns.
2. Behavior-based automation
The tool should be able to trigger actions based on specific user behaviors within your product and website. For instance, Encharge allows you to send personalized emails when customers perform (or do not perform) specific actions in your SaaS product.
3. Visual flow builder
A visual flow builder allows you to create and manage complex user journeys without coding. Encharge offers an intuitive flow builder to help you design entire user journeys by visually connecting steps. You can also measure their performance and optimize the flows for better results.
4. A/B testing
Choose a platform that lets you test and optimize your marketing campaigns. For instance, Encharge offers A/B testing for broadcast emails and automated flows. This enables you to experiment with different subject lines, content, sending times, and more.
5. Lead scoring
Look for a marketing automation tool that helps you identify and prioritize the most promising leads based on their behavior and engagement. It should allow you to assign points based on website visits, email interactions, product usage, and more.
Read more: Lead Scoring: How to Separate the Good from the Bad Leads
6. Account-based marketing
B2B marketing requires more personalization than B2C. Therefore, choose a platform that supports ABM strategies. Encharge offers comprehensive company profiles that allow you to view all individuals associated with an account, track company-level data, and create targeted campaigns for entire teams. This is important for retaining enterprise accounts with high contract values.
7. Third-party integrations
Select a tool that offers deep, native integrations with other SaaS tools, such as CRM systems, payment processors, and analytics platforms. This will ensure seamless data flows and reduce the need for custom development.
Conclusion
Marketing automation is important for customer retention in the SaaS industry. It ensures cost-effective growth, improves customer lifetime value, and provides predictable revenue. To leverage marketing automation for customer retention, set up welcome series emails, re-engagement campaigns, and loyalty programs. Additionally, celebrate customer milestones and capture feedback regularly. And don’t forget to choose the right marketing automation tool by ensuring it allows you to segment users, automate campaigns based on triggers, and integrate with existing tools.
Frequently Asked Questions
1. What is marketing automation in CRM?
Marketing automation in CRM refers to using the software to automate marketing tasks like email campaigns, social media posts, and ad management. It reduces manual involvement, improves efficiency, and allows you to reach the right person at the right time. Moreover, it empowers you to personalize the messaging based on CRM data.
2. Does marketing automation really work?
Yes, when done right, marketing automation can be highly effective. It saves time, ensures consistent messaging, and enhances targeting by using data-driven insights. Businesses often see an increase in lead generation, conversion rates, and customer retention with marketing automation.
3. Can marketing automation work for small businesses?
Marketing automation allows small businesses to track customer behavior, manage large-scale campaigns, and personalize communications. Moreover, the scalable nature of automation tools allows them to grow with the company’s requirements.
4. What is the best way to retain customers?
While there is no one-size-fits-all way to retain customers, providing excellent customer service and personalized experiences is essential. Regularly engage with customers through targeted messages, offer loyalty programs, celebrate milestones, and gather feedback.
