In SaaS, customer retention is everything.
In order to be truly successful, a SaaS must have steady customer acquisition and successful customer retention. But since retention is less expensive than acquisition, you’re most cost effective strategy is to…you guessed it…hang on to those customers!
Existing customers are where the big spending happens. According to Groove, there’s a 5-20% chance of selling to a new prospect. What about your existing customers? You have a 60-70% chance of a successful sale!
Existing customers are a lifeline of cash, value, money, and everything nice.
Retention is your number-one strategy for profitability. Churn is public enemy number one. So, the question, is, how do you retain customers?
Thankfully, I have a bunch of strategies to share with you. These strategies truly work. Why? Because I’m not giving you mere gimmicks.
I’m giving you real business-altering approaches that transform you from a customer-in/customer-out churn machine, and into a customer retention unicorn.
27 SaaS Customer Retention Strategies You Need to Be Using Today – by @neilpatel
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1. Raise your price.
A higher price creates a perception of greater value. Such a perception turns into a reality once the customer spends the money. They have committed to a cost, and that cost is reflected on their balance sheet.
Now that they’ve made the expenditure, the customer is far more likely to use the product (engagement). Engagement is the number-one predictor of customer retention. You’ve effectively sparked engagement and reduced the likelihood of that customer canceling.
2. Reconsider your value proposition.
Why did your customer become a customer in the first place? You may not know the exact reason for every customer, but you can get a good sense of the reasons why by understanding your value proposition or unique selling proposition.
I suggest that you take a look at that value proposition, because it forms of the core reason the customer started with you. Very likely, the reason they are still with you is because of the value you offer.
If you’ve somehow gotten off center from your value proposition, make whatever changes are necessary to continue to offer that same great value to your client.
3. Reassert your value proposition.
And just in case the customer has forgotten, remind them of it. A value proposition that was successful in attracting a client should be the same value proposition that is successful in retaining the client.
You can use email marketing and regular touch points with the client to keep making your value proposition stand out in their mind. The more you prove your value, the more they will believe it, experience it, and stay devoted.
4. Re-analyze the onboarding process.
Anything that got the customer to become a customer in the first place should also serve to retain the customer for the long term.
Look at your onboarding process to see what features of your service are appealing, compelling, and motivating to a potential customer. These are the same traits that will keep customers happy for the long term.
5. Follow up on every interaction with the customer.
I’m not talking here about service requests. I’m talking about going the extra mile after the customer’s problem has been solved.
A typical service request and solution looks like this:
- Customer: We have a problem.
- Support Team: I’ve helped you. Have a nice day.
I recommend that you add another layer of follow-up to this process:
- Customer: We have a problem.
- Support Team: I’ve helped you. Have a nice day.
- Bonus Follow-Up: Hey, we helped you a couple weeks ago. How are things going now? Anything else we can help with?
How’s that for customer care? Not only are you ensuring that the problem is solved, but you’re also making sure that the customer is satisfied. In the customer retention game, solving problems is just as important as satisfied customers.
6. Avoid customer satisfaction surveys, or any unnecessary surveys for that matter.
Let me piggyback on the point above by discussing a common scenario.
Often, this is the situation that I see.
- Customer: We have a problem.
- Support Team: I’ve helped you. Have a nice day.
- Annoying Follow-Up: Hey, please fill out this survey. We know you’re miffed about the problem, but now that it’s fixed, please fill out the survey. Please. Please. Please.
- Customer: (Ignores the dang survey.)
- Bonus Annoying Follow-up: Didya fill it out?! Huh?! Why not?! Come on!
What’s the result of this exchange? The customer is not happy anymore. Sure, their problem is fixed, but are they happy about it? No. They’re annoyed. From their perspective, you care more about your survey then you do about their productivity and well-being.
Surveys are a double-edged sword. On the one hand, you might get important and valuable data. On the other hand, you might tick some people off. I would much rather gain data automatically through customer usage then going the survey route.
Another way to gain valuable data is through phone calls. When you’re making your rounds, calling clients to check on their status, ask them a few diagnostic questions to assess the performance of the SaaS and their experience.
Are customer satisfaction surveys universally evil? No, not always. But they are risky. The very fact that a customer receives a survey can reduce their satisfaction level.
A SaaS upsell is the process of engaging an existing customer at a deeper level. You raise the level of service and they pay you more. Upsells improve your profits (as long as you’re pricing them correctly).
Upselling accomplishes three very good things: 1) deepens relationships, 2) raises the value that the customer receives, 3) increases the customer’s customer lifetime value (CLV).
We shouldn’t view upselling as a dirty word, or some underhanded technique to filch extra cash from gullible customers. Upselling is a win-win. Customers get better stuff. You get more cash. And here’s the kicker: The customer is going to stay around longer.
It’s time to start viewing upsells as a retention strategy.
8. Emphasize engagement as soon as possible.
The most important way to improve your churn rate is to drive engagement. Here’s how Lincoln Murphy defines engagement: “Engagement is when your customer is realizing value from your SaaS.”
How does a customer realize value from your SaaS? By using it. Whatever you can do to and for the customer to get them to use your product, do it. Emails, questions, phone calls, encouragements, bribery: get the customer to use your service.
The sooner they use it, the quicker they realize value. The quicker they realize value, the less likely they are to quit.
9. Develop a regular interaction schedule.
Interact with your customers as frequently as is realistic. This depends, of course, on the nature and size of your SaaS. If you offer enterprise-level services at thousands of dollars per month, you need to have a stick-close-to-them approach to interacting with your customers.
Don’t just call them for upsells. Don’t just call them about billing problems. Call them to be awesome. Call them to say “hi.” Call them so they can vent if they need to. Create a partner approach, and you’ll lose way fewer clients.
10. Send targeted tips.
When a customer completes a significant action in the SaaS, create an automatic email to send to them.
For example, if a customer creates an invoice on your bookkeeping software, automate an email saying “Hey, that was easy, wasn’t it? Want to get more tips, like creating invoice templates?” Show them your YouTube video on the topic, or point them to an article where they can learn even more.
With simple techniques like that, you can add more value and lose fewer customers.
11. Provide free training.
The more complex your software, the more users will want to learn about its power. Provide free webinars or training sessions to coach users on how to get more value out of the SaaS.
There are several advantages to such an approach. First, you’re increasing the value of the SaaS to the customer. Second, you’re creating a deeper relationship between you and the customer. Both of these features can help to reduce churn.
12. Invite feedback.
When customers suggest improvements, they are investing themselves in the life and existence of the company. They feel a sense of ownership.
Since this is true, make feedback a significant part of your retention strategy. I’m not simply referring to some “suggestion box” tucked away in a dark corner of your website. Instead, create overt invitations for improvements on your pricing page, a link from your monthly invoice, or some other place where customers will see it.
“Make feedback a significant part of your retention strategy” @neilpatel
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13. Respond instantly to customer needs.
Make it your goal to respond to all customer inquiries in 24 hours or less. If it’s during the workday, shave that time down to two hours. Customers deserve your immediate attention.
14. Follow your customers on social media.
If your customers follow you on social media, follow them back. This serves two purposes. First, you make them feel good — like they are a valued part of your social circles. Second, you can listen to them and respond to their feedback.
One VentureBeat article puts the issue plainly:
By constantly monitoring the social web, the customer success team ensures that they quickly reply to all inquiries or feedback. In fact, many users have lauded companies for their quick responses on Facebook and Twitter.
15. Build out social profiles to develop multiple ways of interacting.
The more touch points you have with your customers, the more likely they are to stay highly engaged. Be sure to create a robust social presence so your customers will both see you and be able to reach out to you on whatever forum they prefer.
Obviously, social media is not strictly a retention strategy, but it does encourage awareness of your SaaS in front of the customer. This awareness, in turn, can improve engagement. And engagement, as you’ve learned, is the number-one way to reduce churn rate.
16. Consider a loyalty program.
Loyalty programs work. You’ll find that a simple loyalty program can keep customers coming back and sticking with you.
A loyalty program doesn’t need to be expensive or complicated to be effective. Often, simple rewards like an occasional discount or gift card can help users understand that they are recognized and valued.
17. Create progress towards a goal.
Psychologists have discovered that when people progress towards a goal, they feel much happier and fulfilled.
You can apply this truth to your life as a whole, and you can apply it to the microcosm of SaaS. When SaaS users work towards a goal, they develop an eagerness and intensity to have more interaction with the SaaS.
The most obvious place we see this is with games, in which users attain new levels and rankings. But the same holds true for non-game applications. LinkedIn, for example, indicates a user’s progress towards filling out their profile. The Audible App gives users badges for listening to their audiobooks at a certain time or with certain patterns.
If you can delight your customers with simple goal-focused actions, you can retain them better and reduce church.
18. Create a retention team.
If you create a retention team, it proves that you’re serious about customer retention.
Plus, a retention team provides you with a dedicated resource for engaging with clients. Here’s what your retention team can do:
The more aggressively you tackle the problem of turnover, the better you’ll succeed in retaining your customers.
19. Measure customer engagement.
As explained above, customer engagement is the number one predictor of retention.
Since this is true, it’s important not only to encourage engagement, but also to measure engagement. Whether you develop a customer success map, or perform cohort analysis, it’s important that you get the data that tells a story.
20. Set customer expectations.
Let’s just ask a simple question that gets at the heart of this article. Why would a customer leave?
One blanket reason goes like this: Their expectations were not met.
How can you affect that factor? The customer’s expectation is their problem, right? Wrong. It’s your problem. Who is responsible for setting the customer’s expectation? You are.
Before a customer signs on the dotted line or downloads a free trial, tell them what to expect if they become a customer.
Pro tip: Make sure that you set the customer’s expectations lower than you can realistically achieve. Remember to under-promise and over-deliver. But whatever you do, set expectations. As you meet those expectations, customers will be satisfied, and you’ll keep them around for a long time.
21. Brand yourself as a service, not a software.
SaaS providers live in a tricky world. They have to be both a service and software. They can’t fake it on either front or just pretend that they’re a software or a service. They have to truly be both.
But why is it that your customers pay you every month? Because you’re serving them. Can they see that? Can they feel that? Do they know that? If you can provide service in tangible ways, you will become vastly more successful at retaining customers.
“Provide service in a tangible way to become more successful at retaining customers.” @neilpatel
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I recommend creating a strategy to roll out service improvements on a schedule that corresponds to your billing schedule. Every month, the customer watches a payment withdrawn for their recurring billing. They need to feel like they are getting something in return. Increase security, upgrade storage, or implement other features that make the customer feel like they’re getting additional value.
22. Add new security features.
What do your SaaS customers want most?
Thankfully, you don’t have to guess. A survey from Vormetric discovered that security is a top concern, especially for SaaS enterprise customers. SaaS is oft-criticized for its lack of security.
In reality, SaaS can be incredibly secure. You just have to prove it to your customers.
Customers want to hear that you are taking active measures to secure their data. The way that you can do this is by incrementally adding new layers of security, rolling it out, and announcing it to your clients.
With every new security iteration, you can build the confidence of your customers. Be aware, however, that this technique has diminishing returns. If you keep making things more and more secure, they may start to wonder why you’re beefing up security. Is there a threat?
Make the changes, with a full disclosure that there is no threat, but you are simply committed to the highest level of security that technology allows.
23. Release a new version.
If customers get bored, they’re going to leave.
Is boredom even a thing in SaaS? Well, maybe. Call it lack of interest or engagement if you want to. Customers who aren’t deriving value from the product will eventually wander off and find something that does provide value (in their view).
To increase the perception that your SaaS is valuable, all you need to do is release a new version. Of course, you need to make it free, and you need to make it automatic, and you need to make it truly meaningful.
You should not release a new version simply for the sake of releasing a new version. Instead, you release a new version because you want to provide more value for your customers.
24. Upgrade the customer automatically.
How would you feel is you were subscribing to, say, Buzzfeed, a content sharing analysis tool. You were plodding along at the pro level for $99/month. You used it a lot, and kind of wished you had enough in your budget to afford the agency level plan.
One day, you get an email from a BuzzSumo VP. He says, “Hey, I noticed you’ve been using Buzzfeed quite a bit. We’d like to upgrade your membership, at no charge, to the agency level subscription. You’ll get quite a bit more power out of the tool, and plenty more mentions. I hope you find it useful. The change is effective immediately.”
I’d say you’d be pretty happy about that. I’d even go on to say that you’d stick with BuzzSumo for a long time. How much did it cost BuzzSumo to upgrade your membership? Probably not much. A few pennies maybe.
How much did it increase your likelihood of remaining a customer? A whole lot.
Surprise gifts or delightful experiences are a powerful way of turning laissez faire users into passionate evangelists. Not only do you amp up your marketing, but you also improve your retention rate.
25. Make it easy for customers to leave.
Some customers are going to leave. Fact of life. Don’t make it hard for them. The harder you make it, the more loudly they’ll complain.
A SixteeenVentures article makes that point that an obvious exit is an underutilized means of retaining customers. Why? It’s all about the messaging. If you make the exit process easy, then you must also inform them of the value that they are losing.
Here’s how he explains it:
Just like you must sell them on the value of your offering upon sign-up, you must do this on exit, too. Remind them of why they signed-up, and what they’ll lose — not just the saved data but their investment in the product to this point — if they cancel. Remind them a couple of times, too, because if they actually cancel, all is lost. Make them have to re-consider whether that is the decision they want to make right then or not. But also have a big button that will let them cancel right then.
No one likes to see a customer cancel, but if they do, don’t make it hard for them. If they can’t easily get out, they’re going to make a big social stink about the experience, and you’ll be left looking stupid.
26. Conduct exit interviews.
If a customer is committed to leaving, so be it. But can you have a word with them before they walk away?
Some customers will be so disgruntled that they won’t want to have anything else to do with you. Others will be amenable to answering a few questions or chatting on the phone. Remember, your goal isn’t to get them back. Don’t even try.
Instead, make it your point to understand why they left. You can use this information to transform your process and create more value for your existing customers.
27. Assign each customer a retention specialist.
I’ve suggested that you create a customer retention team. To take this a level deeper, I also suggest that you assign each customer a retention specialist.
If you have a few clients, each paying a lot of money, this technique is extremely effective. A customer retention specialist is someone whose job it is to interact with the client on a regular basis. They may not be able to answer advanced technical questions, but they can at least keep customers happy.
If a customer goes on alert, it’s too late to form a relationship and salvage them. The care and relationship need to be happening long before that point. A customer retention specialist will keep that care and nurture in place.
Customer retention is one of the most important activities in a SaaS business. You’re not left to the winds of chance and bad luck. You can do something about churn rate.
Pick one strategy from this list. Keep your eye on the retention rates, and watch them improve.
What is your favorite customer retention strategy?
Read other Crazy Egg articles by Neil Patel.
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27 SaaS Customer Retention Strategies You Need to Be Using Today