It has been proven time and time again that retaining a customer is more profitable than acquiring a new one. There is no doubt about it. They are cheaper to maintain than the acquisition cost of a new customer. What more, once they become your loyal customer, they tend to spend more on your business for buying new products and upgrading to higher versions.
If you are into SaaS business for long, then you would have realized that every customer gets churned eventually. It is a matter of how long you can prevent a churn from happening. The longer you retain the customer, the higher goes your customer lifetime value (LTV).
LTV has a way more impact on your business than you can realize. It not only shoots up your recurring revenues but also attracts more investors. Any investor would look at the average LTV of a business to measure its health. Based on that, they decide how much is worth investing in that business.
For most of the companies, it is not a luxury to have long-term customers. It is paramount for their business to sustain. Companies recover their customer acquisition cost on an average period of between five to seven months. And for the early stage companies, it can go beyond twelve months. So, that’s how important retaining customers is. If you can’t hold them for more than a year, you would be on a negative graph by spending more on their acquisition than generating ROI from them.
Sure, there are some common ways to retain your customers for long like giving better service. But here I am giving you some of the best strategies to implement towards the same objective.
Retention Strategies for SaaS
1.Choosing the right customer
When it comes to customer retention, it all starts from the first stage itself. Your marketing and sales team must be committed towards selecting the right audience. When I say right audience, it means selecting the right fit customer whose needs are directly dependent on your product.
You must refrain from selling to the bad customer only to reach your sales target. It has a negative impact on your business if the customer leaves unsatisfied in the initial stage itself. You can also implement incentives to the sales and marketing team for a long-term customer, to encourage them towards finding the right customer.
Onboarding is the stage when the customer’s expectations and sales team’s promises are brought to test. This is the time when all your customer’s apprehensions about their purchase decision surface. Your onboarding is a deciding factor for them to either leave or continue with your business. In a survey, it was found that over 90% of customers feel that onboarding must be a priority for the business they buy the solution from.
Make sure your learning process is easy for them to grasp and you maintain a right balance of automated and manual assistance during the onboarding of the customer.
3.Select the right engagement model
Although it is not possible for a CSM (Customer success manager) to keep every customer engaged manually, you can choose the right mix of tech-touch and high-touch engagement model. It is important to keep your customer engaged in your product, especially when the renewal time is near.
This would help you stay at the top of their mind to consider subscription renewal. But just a reminder is not enough, you must also deliver value at every engagement so that it helps them succeed in their business.
4.Use right metrics
Metrics form an essential part of your business processes. You must know the right metrics to measure your performance and progress so that you can take corrective measures towards the same. Another important point with respect to metrics is that you must refrain using vanity metrics.
For example, to know the engagement level of your customer in your product, instead of checking for the number of logins, you must check the duration of their logged in hours. Metrics like Daily Active Users (DAU) or Monthly Active Users would help you know your business more thoroughly.
5.Automate your customer success
You must use the right tool to automate your customer success efforts. You cannot afford to remain in the dark when it comes to knowing your customer’s usage. You must know what features they are using more or less.
Also, there has to be clear information about how they are using your software, and to which end it is helpful in resolving their issues. Based on this you can suggest them tips and recommendations to improve their user experience. All this information can be made available to you only by using a customer success platform.
6.Expand your business with existing customers
When it comes to retaining customers, product adoption must be your first goal. It is when customers have got habituated to your product by finding continuous value from it. And once this is done, you must approach customers for more business opportunities. This is done through upselling higher versions of products and cross-selling related products.
By selling more products to your customers, you are not only expanding your business but also increasing their footprint in your organization. The more products they use of your brand, the more likely they would stay with you in the business.
7.Take regular feedback
You must always be aware of the customer’s current thought process and opinions about your brand. If there is any dissatisfaction with your product, it must be brought out immediately. Hence, in every interaction, make sure you bring out customer’s feedback. Monthly or quarterly feedback must also be gained on a regular basis.
Once you get those feedback, the job is only half-done. The next part of feedback exercise is to actually act upon them. Do they face issues with service or product? Do they have difficulty while understanding the complexity of the product? All these issues must be addressed by a CSM with the right actions without any delay.
Customer retention is no doubt the dire need of any growing organization. It not only builds your business but also creates a reputation of your brand in your niche. A loyal customer is one of the greatest assets for any organization. By sharing their experience with others, they can help bring more customers to your sales funnel.
Once you have got a hang of these customer retention strategies, you can refine them within your context to better suit your needs. But no matter which retention strategy you implement, keeping a customer-centric mindset and taking actions accordingly is a must towards retaining a long-term customer.