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How to Master SaaS Customer Retention and Achieve Sustainable Growth

April 20, 2022

Ditzah Kampf Ditzah Kampf | Content Marketer More About This Author >

Sustain long term growth by thinking beyond customer acquisition. Start by mastering retention and turning average customers into great customers.

When considering revenue growth, most people think about customer acquisition. But a powerful key to sustained growth lies with the customer you already have.

No matter what study you look at, it's clear that attracting new customers is more expensive than keeping existing ones and just a small increase in customer retention can net an increase in profits of 25% to 95% . It's easier to upsell products and features to current customers than it is to sell those same products and features to someone who isn't familiar with your company. You have a 65% chance of closing a sale with a current customer, but only a 13% chance with a new one. On the flip side of this equation is that customer churn does serious damage to your bottom line.

If your goal is sustained growth– and unless you are just starting out, that really should be your goal – you’ve got to give a good hard look at customer retention. You want to transform average customers into super customers. Retention starts with making sure your users stay loyal to your brand. Next, you’ll need to find ways to increase the value of your existing customers. And finally, maintain two-way communications with customers to so that you are constantly learning how to delight them. To achieve that goal, continue to acquire new customers, but at the same time make sure you set time aside to develop a strategic approach to retention. To help you jump start the process, below are some of the best SaaS customer retention tactics for you to consider.

Customer Retention Strategies

1. Prioritize User Retention

First, ensure that customer retention is a company priority. If you don’t already have a customer retention team, create one. Responsibilities include analyzing churn rates, regularly reaching out to existing customers, identifying upsell and cross sell opportunities. Make sure that the company as a whole and the retention team have clear and attainable SaaS customer retention goals.

Keep in mind, that best practices dictate that your long-term customer value is higher than your customer acquisition cost. As part of your user retention strategy, you may want to consider spending more at the outset to get higher quality leads and customers who are likely to remain loyal over a longer period of time.

While retaining 100% of your customer base is probably unrealistic, ultimately growth relies on prioritizing retention. Only focusing on new customer acquisition is like trying to inflate a beach ball that has a hole in it. If you don’t patch the hole, it’s going to affect your end-game.

2. Rethink Your Pricing Model

Pricing is a tricky balance– charge too much, and users may think they aren’t getting what they pay for. Charge too little and customers may be afraid that they are getting a subpar product.

It's important to give the subject some serious consideration. In addition to knowing what you can afford and what your competitors are charging, research your customers and how they use and think about your product.

One of the more surprising aspects to take into account is the fact that you may be charging too little. Raising your prices is a way of showing your customer base that you believe in your product and its worth. When you believe in your product, so do your users. In addition, customers are more likely to engage with a product that they have paid more for. Everyone wants to get the best value for their money. We’ll look at this concept from a different angle in the “Aim For More Education and Added Value” section.

Another pricing consideration is to update your pricing models. It's always best to offer your users a variety of options in terms of price. Using a tiered pricing model gives your customers the flexibility they need to stick with you as their business grows and changes.

Even tiered pricing can be structured and restructured as your business evolves. You might choose to include different features at each tier, more or fewer users, a varying the number of interactions with the software, or a combination of all three. The goals should be to experiment and track how changes affect your bottom line. As long as you don’t hard code pricing into your product offering– keeping pricing separate from engineering– the monetization options are endless. This is certainly possible.

3. Use Data-Based Insights

User data is one of your best weapons in the battle to retain SaaS customers. Metrics will tell you who is using your products and how. They can tell you who might be converted by a special deal. Using data to hyper personalize offers to targeted customers have been shown to increase sales by 4-8%.

Another way to use customer data is to identify product advocates– users who are enthusiastic about your company and what it has to offer. Your data analysis can show you who your most consistent users are. Ask those customers if they would be willing to provide testimonials about their experiences with your products. You can also upsell them features that will enhance their user experience. In addition, finding your most enthusiastic customers allows you to gain insights into the aspects of your products that your users love. Lean into those elements.

Beyond these basics, every company's SaaS customer data has its own secrets to reveal. Look for patterns and you may start to find surprising ways to predict if a client is a churn risk or if they're ripe for upselling or cross-selling.

4. Provide Stellar Customer Support

When it comes down to it, SaaS customer retention is all about fostering good relationships with your customers, and the key to any good relationship is communication. Information about your products, such as pricing, features, and packaging, should be clear and easily accessible.

Communication is a two-way street, so invite feedback. Provide clear ways to get in touch on your product page, your pricing page, and any other place your users may have questions.

Once you have communication methods in place, make sure you follow up in a way that is comfortable for you customers. Your customer retention team should have a user communication protocol that establishes the “hows”, “whos”, and “whys” of customer communication so that issues are dealt with appropriately and immediately. Follow up on every interaction between your customer support staff and users.

You can also be proactive. As we discussed, your user data can give you a good picture of which users are having difficulties with your product and who is thriving. Don't wait for your customers to come to you with a problem– reach out to them first.

5. Aim For More Education and Added Value

Educated customers are happy customers, and the more information they receive, the happier they are. One of the best customer retention strategies is to provide your users with tips as to how to optimize their experiences using your products. This reduces the need to get in touch with your support team. For as many as 67% of customers, this step alone is's enough to improve their experience.

Customize these tips and tricks to suit your various customers and their needs. For instance, ideas about coordinating between accounts and users may be most relevant for your enterprise customers with large teams, while your solopreneur and small business customers may not have IT teams in-house and will appreciate technical guidance.

Likewise, you could use an update or change to your product as an opportunity to provide your customers with training. Every upgrade could be accompanied by a webinar, led by one of your subject-matter experts, ensuring that your users feel confident with your new and improved product. Alternatively, when a customer upgrades their subscription, you can give them exclusive access to more content so that they can get more use out of your product and feel like they've really gotten their money's worth.

But here’s the kicker. Don’t just give away valuable content and services. Monetize it.

Find the balance between adding value for free, and monetizing select aspects of your training or services. Find ways to add exclusivity to your value-add services (think access to an airline’s premium lounge), then put a price tag on the benefit your customers receive.

Information and Communication

No matter which customer retention techniques you use, the foundation of all strong customer retention strategies is information and communication.

Users want to feel like their service providers are approachable and open to feedback. You'll need to find the balance between interrupting your customers' lives vs. consistent communication that is the foundation for a strong relationship. For every company, that balance is different. But no matter how often you're reaching out, every interaction should be clear, informative, and relevant to your customers' needs.

Data is a means to meaningful communication. The more information you have about your customers’ needs and how they are using their product, the easier it is for you to help them when things go wrong or when your product is no longer suited to their needs. Likewise, data can also help you understand how things are going right for your customers, and allow you to capitalize on those insights, creating a happier, and more loyal, customer base. Each loyal customer is worth more to you than every new customer you bring in, which is what makes customer retention the key to stability and revenue growth.

Discover how Thales software monetization solutions can help your company initiate a customer retention strategy, and increase revenue