Customer Retention Strategies for SaaS

Customer Retention Strategies for SaaS

The SaaS market is filled with impeccably designed and developed tools that can resolve almost any problem. However, presenting your customers with a great tool and service is not enough to keep them coming back.

To reduce churn and build a network of loyal customers, you must have a set of well-thought-out and properly implemented customer retention strategies. This is especially vital in the SaaS world, where software is regularly updated. Successful product adoption and contract expansion are heavily dependent on your building and executing well-thought-out retention plans. You will need to build retention plans that target each specific customer segment if you want to positively move the needle on key retention metrics.  

In this article, we’ll dive deep into some essential SaaS customer retention strategies, break down their purpose and intended upside, and look at how to implement them as part of your overall customer retention strategy.  

What Is the Customer Retention Rate?

The customer retention rate shows the percentage of customers that a company managed to retain over a certain period of time. The churn rate, on the other hand, is the percentage of customers that have left the company. 

To be able to figure out ways to improve customer retention in SaaS, it is crucial to first learn how to calculate the retention rate. The customers you retain have a higher lifetime value, and loyal customers are more likely to refer additional customers to your business. Therefore, customer loyalty and positive experiences can significantly improve customer retention. 

So, how can you calculate the retention rate? Follow these steps:

  1. Decide on the span you wish to consider — annually, monthly, or any other.
  2. Calculate the number of customers you had at the end of the given period.
  3. Then, subtract the number of new customers for the period.
  4. Now, divide the obtained result by the number of customers your business had at the start of the period.
  5. Finally, multiply the result by 100.

The percentage you get from this calculation is the customer retention rate. What comes next is customer retention analysis, where you get a deep insight into customer behavior. This allows you to understand why some customers churn and when exactly, but most importantly, how to prevent it!

SaaS Customer Retention Strategies

To ensure stable revenue growth and build long-term customer relationships, companies must combine multiple strategies to create a comprehensive SaaS customer retention plan. Satisfied customers stick with the given company, upgrade their subscriptions, and spread the good word. Therefore, let’s present you with the most effective B2B SaaS customer retention strategies.

  • Create an impeccable onboarding experience

To set the stage for an excellent user experience, a SaaS business must implement a well-designed onboarding process. Besides a proper welcome, it is crucial to provide guidance that clearly demonstrates how to navigate the platform and experience its benefits in record time. Include walkthroughs, tutorials, and dedicated support to avoid any friction. Also, make sure to personalize and adjust the process by analyzing the customer data. The quicker the customers comprehend your product’s value, the better chance they will stay engaged and adopt it. This is what makes onboarding one of the most important customer retention strategies for SaaS.

  • Communicate with customers regularly

To make sure that your customers stay aware of new features and updates, share relevant content, newsletters, and product updates with them. By analyzing customer data, you can target a specific group that shares a similar interest. Target those who show interest in a new feature and share useful how-to guides and other special content.

  • Leverage personalization

Personalization in SaaS goes beyond sending birthday wishes or a first name tag to an email. To do it right, you need to truly understand the customer journey and behavior. The key is to help customers achieve each milestone quicker and without any hassle. Avoid sending generic emails and instead create unique content that addresses each customer’s needs and preferences. Use customer success platforms like Akita to segment your customers into groups based on their common interests and traits, track their activities, and get the visualized data. By streamlining all customer data into one platform, you can understand your customers to the core and optimize customer relationships to improve retention.

  • Deliver outstanding customer support

There is no better way to show your customers that their trust is appreciated than by treating them to outstanding customer support. Help your customers resolve the issues proactively and rapidly to eliminate any friction as soon as possible. Go a step further and provide guidance for those users who are not using a certain feature they should be using (you can get this information from customer data analysis). Also, include self-service solutions like community forums or knowledge bases if the customers want to resolve the issue on their own.

  • Solicit and collect feedback

Don’t hesitate to ask your customers about their experience via surveys. Still, make sure to do so only at key stages to avoid annoying them. The best timing for a survey could be after a recent upsell, conversion, or churn. Knowing which aspects of your product are satisfying and which aren’t allows you to improve it and reduce churn.

  • Offer loyalty programs

Reward your loyal customers by offering loyalty programs. It can be anything from a simple discount or upgrade to a partnership program with exclusive benefits.

  • Incentivize SaaS renewals

Late renewals mean delayed billing to the company. On the other hand, super-early renewals increase the number of sales cycles over the customer’s lifetime. To encourage early renewals, provide discounts or a longer subscription.

  • Include upselling options

To bring a long-term relationship to a whole new level where both sides win, upselling is certainly a great option. Customers get more benefits and better service, and you get more revenue!

Can Customer Success Platforms (CSPs) Help Optimize Customer Retention?

Yes! 

CSPs like Akita are specifically designed for this purpose. Built to facilitate the centralization of all of your customer data, CSPs can monitor for changes in your customers’ profile, behavior, or lifecycle stage. You will then receive alerts or trigger playbooks to intervene with your customers if required to maximize your retention rates.

Below, you can see a segment of at-risk customers in the Akita CSP. A combination of filters, specific to the user’s business, identifies any customers that may be in need of attention.

Conclusion

The key points of customer retention for SaaS businesses include understanding your customers and coming up with proactive solutions and strategies that enhance their overall experience. By ensuring that your SaaS product provides long-term value to existing customers, you are building a foundation for a stable and sustainable SaaS business’s growth. Although creating and implementing SaaS customer retention strategies may seem like a daunting task at the beginning, all the hard work and dedication pay off once those metrics start to improve!

Frequently Asked Questions

Why is customer retention important for SaaS?

Customer retention is important for SaaS because it helps companies decrease churn, improve customer loyalty, satisfaction, and lifetime value, and increase revenue.

Is customer retention important for SaaS startups?

Absolutely! Customer retention increases customer lifetime value and is more cost-effective than customer acquisition.

What are the key challenges in customer retention for Saas?

First and foremost: competition. Also, customer needs are constantly changing, and finally, there are concerns about data security.

Related Articles

Best Customer Success Software Best Customer Success Software for Your CS Department in 2024

If you are reading this, you are faced with a real challenge. Either you already manage a customer success function and your existing toolset is not fit for purpose, or you have decided to start a customer success department and want to implement the right software as a solid foundation for your Customer Success Managers […]

Read more
Customer retention metrics Important Customer Retention Metrics and How to Interpret Them

A laser focus on retention is at the heart of any sustainably successful SaaS business. The ability to keep existing customers coming back year after year while at the same time continuing to add new customers has a profound and compounding effect on your revenues. In order to achieve an elite level of retention, you […]

Read more
What is the difference between customer satisfaction and customer retention What is the Difference Between Customer Satisfaction and Customer Retention?

Simply put, while measurable, customer satisfaction is subjective and experiential. Retention, however, is an objective, observable, and measurable phenomenon. You either retain a customer or you don’t. It’s clear. The satisfaction a customer feels, however, can change due to a real issue with the software or how that customer is being supported, but it can […]

Read more
The Correlation Between Customer Satisfaction and Retention

Customer satisfaction and retention are intrinsically linked. If you fail to maintain high levels of customer satisfaction, your retention levels will suffer, reducing revenues and profitability and forcing you to invest even more heavily in attracting new business. Conversely, driving up customer satisfaction makes life significantly easier for any SaaS business, with improved revenues, referrals […]

Read more
Customer Retention Software Tools

Figuring out the right software stack to help manage your Customer Retention goals can be tricky. It really comes down to what your specific goals are, what type of market you serve, the customer data you retain and where that data resides. There are some specific types of tools you should consider. Customer Relationship Management […]

Read more
How to Calculate customer retention rate How to Calculate Customer Retention Rate? (+ Benefits)

In SaaS, customer retention stands as a key indicator of sustained success. When you understand how to measure and improve customer retention rates, you can secure your business lasting customer loyalty, sustained growth, and a better market position.

Read more
what is retention rate What is Retention Rate and How to Calculate it?

SaaS thrives on ongoing relationships, where delivering value and ensuring continuously high levels of satisfaction are vital for revenue growth and sustainability. Ultimately, when it comes to long-term success, holding onto your customers can be more important than acquiring them. For that reason, you should know what is the retention rate so you can be on […]

Read more
Customer Retention Analysis Customer Retention Analysis: A Guide for SaaS Businesses

The ability to sustainably grow revenues from your existing customer base is essential to thesurvival of SaaS companies in 2024.  To do this, you first need to retain your customers. This requires a deep understanding of what it is about your product, service, or brand that drives customers to continue investing over time.Customer retention analysis […]

Read more
What is customer retention cost What is Customer Retention Cost and How to Reduce It?

It can take time for a SaaS or subscription company to achieve profitability with a customer. As only part of the revenue is realized up front, much effort is required to ensure sufficient future revenue is earned. You may wonder “What is Customer Retention Cost (CRC)?” — It’s the associated cost of serving the customer […]

Read more
Customer success onboarding process How to Create a Solid Customer Success Onboarding Process?

It’s a SaaS industry truism that customers who experience positive and successful onboardings are much less likely to churn and are more likely to invest more in your solution over time. The converse applies for customers whose onboarding experience is sub-optimal. So how do we define what a successful onboarding process looks like and effectively […]

Read more