5 Best Practices to Improve SaaS Customer Retention

Loyal customers bring steady revenue streams that sustain the business. These customers have high brand affinity and the cost of retaining them is lower than acquiring a new customer.

The SaaS customer health score is a powerful indicator of a customer’s commitment to a firm. This metric allows marketers to analyze customer satisfaction with SaaS products and services and their risk of churning. Besides, it empowers companies to make informed decisions and create upselling or cross-selling strategies for revenue generation. 

Therefore, companies must do more than the bare minimum to attain a good SaaS customer health score. The most effective way to achieve this goal is to build solid SaaS customer retention strategies. 

In this post, we will share the five best practices to improve SaaS customer retention.

1. Address Product Challenges

Customer expectations are ever-evolving. 

In fact, a Salesforce survey revealed that 66% of customers want businesses to understand their expectations and unique needs. So, keep customer expectations at the core and make consistent product improvements.

The journey doesn’t end here. Addressing product-related challenges that your customers face is equally imperative.

Here’s a quick example.

A small-scale business deploys CPQ software to streamline its sales process. 

Despite implementing the best CPQ software for small businesses, it’s challenging for the team to configure it to match their pricing structure. 

The company needs prompt assistance. So, the CPQ provider should connect with the SMB or share resources, such as product configuration tutorials or guides.

Ignoring poor user experience can lead to frustration and customer churn. 

2. Provide Exceptional Customer Service

Customer service allows brands to help customers, thus strengthening relationships and building credibility.

Here are a few tips to consider:

  • Train your customer service team to communicate and gauge customer pain points. Offer personalized assistance via chats, emails, or calls.
  • Share prompt responses to your customer inquiries and complaints. Ensure your team resolved their issues. 
  • Provide helpful resources, such as product tutorials and how-to guides, to help your customers implement your SaaS product.
  • Create a FAQ section on your website to help customers self-serve and identify solutions quickly. 

Observe how Multicollab, a WordPress editorial collaboration tool for publishers, leverages the above-shared tactics.

They offer prompt login-level assistance to identify and resolve customers’ issues. You also can find a FAQ section and several helpful how-to guides on their website to enable customer self-service. 

3. Request for Feedback at Optimal Moments

Customer feedback can help gauge their satisfaction with SaaS products and services. It can help you analyze and address customer challenges, thus preventing churn and building loyalty. 

Katie Cort, a senior customer onboarding specialist at HubSpot, says:

“If the company does not have a way of knowing whether or not their customers are happy – things like retention will not improve!”

That said, you should identify the right time to ask customers for their feedback. Frequently nudging the customers for feedback might backfire or negatively impact their experience.

Here are a few tips for requesting feedback at optimal moments:

  • Request customer feedback at crucial touchpoints, such as after a SaaS feature update, post-interaction with your customer support team, or after onboarding.
  • Send feedback requests in transactional emails, such as SaaS service completion notifications. 
  • Include net promoter score (NPS) surveys once the customer completes a specific time using your SaaS product (after six months or a year).
  • Deploy in-app feedback popups to capture real-time feedback.

Using customer feedback to create a revenue marketing strategy can work wonders. For instance, you can include positive feedback while creating use cases, testimonials, blogs, and other marketing materials. 

The genuine user-generated content can improve your brand’s trustworthiness and positively impact customers’ buying decisions. The outcome? Improved customer experience and conversions.

4. Prompt Inactive Users With Triggers

Using triggers to prompt inactive users is a highly underrated yet powerful practice to boost SaaS customer retention.

Inactive users are at the highest risk of churning because their inactivity reflects they’ve lost interest in your service. Ignoring them can negatively impact retention rates and revenue in the long term.

Nudging them with triggers can help rekindle their lost interest. Triggers can include personalized emails, messages, and app notifications.

Say you are a sales tool provider. Your internal dashboard depicts 800 users who haven’t logged in to your sales software for over three months. 

As a dedicated SaaS software provider, having 800 inactive users for over three months is a major red flag. This can negatively impact your reputation, leading to poor customer experience and retention.

Here, you can send a triggered email to all inactive users, offering them a free-of-cost service or discount on upgrading their software. 

This enticing offer can grab the attention of inactive users and rekindle their interest, thus encouraging them to use your software again. This strategy can boost user engagement and satisfaction.

5. Implement a Loyalty Reward Initiative

Did you know that 78% of customers will stay loyal if a brand rewards them?

However, a loyalty reward initiative goes beyond just offering monetary or non-monetary profits to customers. It creates a sense of connection between brands and customers by appreciating their loyalty to the business. 

Moreover, it can significantly boost engagement and SaaS customer retention rates.

However, it can be tricky to identify and track loyal customers and their milestones from your vast customer base.

Pro Tip: Invest in a state-of-the-art tool like Loyalty Leaderboard by MailChimp.

This leading SaaS company offers a comprehensive tool to help you track customer engagement and their purchase history.The leaderboard ranks customers based on their engagement levels. This makes it hassle-free to identify and reward the loyal audience.

Example of a SaaS Customer Retention Strategy

1. Customer Segmentation

  • Divide your customer base into segments based on usage patterns, demographics, or industry. For example, you may have segments like “New Users,” “Power Users,” and “Enterprise Clients.”

2. Customer Onboarding

  • Create customized onboarding experiences for each segment. New users may need comprehensive tutorials, while power users might benefit from advanced feature workshops.

3. Regular Communication

  • Personalized Emails: Send personalized emails at key touchpoints. For instance, welcome emails for new users, milestone celebrations for long-term customers, and feature updates tailored to each segment’s needs.
  • In-App Messaging: Use in-app notifications to guide users to relevant features or offer assistance when they face common challenges.

4. Customer Support

  • 24/7 Support: Offer round-the-clock customer support for critical issues, ensuring customers can reach out whenever they need help.
  • Dedicated Account Managers: Assign dedicated account managers to high-value customers, providing a direct point of contact for assistance and feedback.

5. User Education

  • Knowledge Base and Tutorials: Maintain a comprehensive knowledge base with articles and tutorials covering a wide range of topics. Make it easily accessible within your app.
  • Webinars and Workshops: Host webinars and workshops to educate users on advanced features and best practices.

6. Customer Feedback Loop

  • Feedback Surveys: Regularly collect feedback through surveys to understand customer needs and pain points. Act on this feedback to improve your product and services.
  • User Forums: Create a user forum where customers can share tips, ask questions, and interact with each other.

7. Rewards and Loyalty Programs

  • Tiered Rewards: Implement a tiered loyalty program where customers earn points or rewards based on their usage and tenure. Offer exclusive benefits to long-term customers.
  • Referral Program: Encourage existing customers to refer new ones by offering incentives such as discounts or extended trial periods.

Improve Your Customer Retention

Achieving a high SaaS customer retention rate takes effort and time, and the journey begins with your SaaS product. Leveraging the best practices and tools can ensure you keep your customers at the center of everything you do.

About the Author

Carl Torrence is a Content Marketer at Marketing Digest. His core expertise lies in developing data-driven content for brands, SaaS businesses, and agencies. In his free time, he enjoys binge-watching time-travel movies and listening to Linkin Park and Coldplay albums. You can find him on Twitter and LinkedIn.