9 SaaS Retention Strategies to Reduce Customer Churn

Remember the old video game called Pac-Man? The idea was to eat as many treats as possible before getting hunted down. You also needed to be the last Pac-Man standing and to be able to achieve that, you were supposed to know your way around the maze. Most players would spend hours trying to outrun the ghosts, and eventually, everything failed. 

But every now and then, you would discover a strategy to outrun and move a little bit farther to the next level. And by putting those strategies together, you would eventually make your way to the top.

Even though we haven’t played Pac-Man in ages, after collaborating with various SaaS companies worldwide, we have realized that the same strategy applies to customer retention. 

Even though churn is inevitable, and every customer has a journey, just like defeating the ghost is way more fun than restarting the game, boosting your retention is more fun and way more valuable than acquiring more customers. 

Keeping one’s customers for as long as possible is ultimately the key to running a successful business. According to Bain & Company, it is easier and more cost-effective to retain more customers than acquire new ones. Often returning customers will spend more and pass referrals to their friends and families. Only a 5% increase in customer retention can increase company revenue by 25-95%. 

The numbers don’t lie: Retaining customers will bring organizations a ton of ROI.

Customer retention is all about keeping more of your customers engaged with you for a longer period of time. It is about keeping the loyal ones rather than just acquiring new ones. 

It takes more than acquisition alone to grow your business sustainably, and without the ability to retain and engage customers over time, your business is bound to a flatline.

When it comes to a subscription model, retention starts from the first contact with a customer, when they find the “aha moment”, and spans throughout the lifetime with your product.

So, let us take a look at some of the most influential and concrete customer retention strategies that could keep your SaaS sustainable in the long run. 

As we all know, retention is multifaceted, and there is no one solution to reduce the churn. Hence, you will need multiple strategies like the ones we have listed below.

You might think that the maximum number of customers churn at the renewal stage or when they assess their budgets, but facts suggest that it is at the stage of first starting to use the product. 

Most customers are busy people, and they generally don’t have the time or patience to learn new software. They start looking for value from the start. If the product fails to provide value fast, they end up looking at alternatives. 

The challenge you will face here is to help customers reach their goals quickly. Streamlining the onboarding process by explaining how to use the product and highlighting the value upfront. If the customer starts using the product without the knowledge, that’s definitely a recipe for frustration and churn. 

For example, you should create a customer success team that follows up with new users right after they’ve purchased the product. During this time, your team can answer any questions they have and help them get the most from their purchase.

Irrespective of the type of operations, your onboarding process, and email communications can help you keep more people invested in your brand. 

One of the important steps in customer retention is understanding why your customers became customers in the first place. This will help you understand the value proposition better and make changes if any. 

You will need to examine your value proposition and check if you have moved from it in any way, and if you have, you could always move back to the same value proposition when they initially signed up. 

And just in case if your customer has forgotten about it, try reminding them. So basically, a value proposition that was successful in attracting a client should be the same in retaining them. 

An “Aha” moment is when the customer starts seeing the value and new possibilities opening up. So, from the time the user signs up, the goal has to be able to help him reach this moment as smoothly as possible. 

A couple of tips for this could be:

Optimize your onboarding experience. Keep sending instructions to help customers get familiar with the product and its features. In the case of more complex products, you could always give them free training and create training goals by including gamification. 

When your clients stay with you for a long time, it is important to start rewarding them for their loyalty. Everyone knows that having loyal customers makes sense for your business. Hence it becomes very important to keep them engaged for as long as possible. 

For example, OnePlus - a Chinese consumer electronics manufacturer - provides a loyalty card called “Red Cable Club,” which entitles its customers to rewards on every purchase and discount coupons every month. It has become vital for companies to maintain their loyal customers, as various options are available at their disposal. 

When implementing your own rewards program, some questions you could ask is

What expectations do your customers set for your product? What are the common pain points? What are they exactly concerned about?

One of the easiest ways to interact with your customers who might have stopped using your product or service is to send them communication through email marketing or Social Media. Some researches suggest that email marketing provides the best ROI with a 4400% increase in ROI or $44 for every $1 spent through email campaigns. In fact, 80% of businesses say that they rely on email marketing for customer retention. 

When you engage your customers, they eventually start to notice that you are willing to go the extra mile. Rather than just answering their questions and fulfilling your obligations, you should follow up with them to ensure everything is running smoothly. 

With customer service being the hot topic in SaaS, your support undoubtedly needs to be EPIC. B2B customers cannot afford to muddle through bad experiences. If they cannot find a solution to their problems, they are not going to stay. 

If your customer support tickets generally take longer to close, and if the pattern is repeated, the customers are at a high risk of churning. Some of the best practices could be to have a support team and have SLAs for every ticket raised. This will also help to establish if there are any recurring issues, which need to be addressed. 

If one has the resources, they should have a team throughout the clock as most SaaS companies have clients all over the world. It could look like a big investment initially, but it will become a major step in reducing churn. 

For SaaS companies, a great way to engage customers is by sending milestone emails or messages. It makes them come back and eventually keeps them hooked on the tool for longer. 

Customers can get detailed information regarding their usage statistics. Once the user starts getting badges and rewards for their progress, it automatically makes them come back and work hard to avoid breaking a streak. 

High levels of customer engagement eventually lead to higher levels of customer loyalty, which makes this a great strategy for reducing churn. 

SaaS companies are always under a lot of pressure to improve their tools and update them for their customers for the primary reason of reducing their churn to competitor products. SaaS companies have to always be top of their game as the list of competitors only seems to grow as you venture into newer segments. 

A key strategy to customer retention is to roll out updates and bug fixes using customer feedback. This might keep the existing users hooked for longer and not get bored. Using the right channels of communication, you can keep your customers in the loop with the latest advancements and allow them to guess what’s coming next. 

Last but not least, we ask SaaS companies to pay close attention to customer feedback as any good or bad feedback from existing customers can help in retention. 

Getting feedback is easy as you can add a feedback form to your website, or add it to your social media or use it through email marketing. Any feedback needs to be taken seriously as it might determine future churn. 

You could always ask your customers to leave feedback on public platforms as it could help to identify and resolve issues quickly, and it could also help in customer acquisition. Approximately 70% of people have accepted that they only buy products that have reviews. Hence you can understand the importance of customer feedback in the success of your business. 

At the end of the day, even though customer acquisition is a sign of your business growing, but at the same time, losing customers is far more expensive and impactful to your business. Retaining customers is way more important and cheaper than acquiring new ones. 

Your existing customers can increase your overall profits. To make sure that happens, you need to pay close attention to organizing strategies and engaging them to provide a more fruitful relationship.