7 Most Effective SaaS Customer Retention Strategies

We’ve already mentioned in our larger article the five-times-greater efficiency of keeping a loyal customer compared to engaging a new one. Yet, the value of SaaS customer retention strategies goes far beyond just monetary benefits.

The customer retention rate is perhaps the most solid indicator of the credibility and integrity of your brand. As one of the business’s key metrics, it shows the number of clients staying with you for years and generating recurring revenue despite all the industry and market winds and rains.

How to determine who is your loyal customer and who is not? The criterion is simple: a truly dedicated customer continues to buy from your brand despite pricing strategy fluctuations, marketing intensity, and purchasing convenience. In one word, they value the product above all the peripheral issues of its promotion and delivery.

Then, does it mean the lasting engagement of a customer just requires your product to be really good and effectively satisfy a user’s needs? 

Well, maybe such a paradigm could work if only there would be no such infamously known thing as competition. Modern users almost always have numerous similar options. And they are constantly marketed with all those “killers” of your product. That is why additional practices are needed to retain even the most faithful clients.

And these practices should be strikingly strong, no less. The article gives you clues for picking up those that mostly fit your business at a moderate cost of time and money.

The difference between customer retention and reactivation

You may wonder how customer retention differs from customer reactivation which was discussed in the previous article. Indeed, these subjects are related as they both aim to keep a user engaged with your product for a long, preferably forever, and have no reason to leave.

However, the difference exists.

User reactivation takes place when the churn has already happened, and reducing the churn rate means you try to save most of your clients regardless of the duration of their collaboration with your brand. At the same time, the customer retention strategies in SaaS focus on creating loyal clients with the highest LTV.

That is why, although the methods for reducing customer churn similarly apply to retention, the latter prioritizes more profound issues underlying your product development and marketing. Simple monitoring and resolving ongoing challenges is not enough — the retention policy aims to create values, traditions, and ties that no user would ever want to break.

Thus, it focuses 1) on the product itself and 2) on strategic realms of the branding and market positioning in the first place. This means you must ensure a correlation between the value you promise and the value you actually deliver to avoid even a hint of frustrated expectations.

For the product, to go hand in hand with the pace of continuous technological developments, your team would be obliged to test, iterate, and update the platform in line with new trends and requirements of the industry.

For marketing, adjusting the market positioning according to changes in the market environment is essential to keep afloat among your competitors that never sleep to take a bite out of your client base and revenue infrastructure. To do this, you not only need to keep tabs on your clients’ expectations but proactively manage them, instead of waiting until other companies do it for their own benefit.

7 best practices on SaaS customer retention

To achieve the necessary level of influence and engagement of your target users, you have to:

• further market a product to your clients all the time, not only at the entry stage;
• explore changes in their needs and behavioral patterns and respond timely and effectively.

Let’s see how these customer retention tactics can be incorporated into your product design/development/marketing process without spending five-digit sums on costly promotion programs.

Provide adaptive onboarding over as long as required

Continuous onboarding is challenging. It should find an intricate balance between educating users about the newest features and not disturbing them with constant pop-ups and tutorials. That is why no such point exists where you can say to a customer, “Welcome aboard! Now do what you think is right; we can get out of your way”.

To keep your client yours, even after taking your customers on board, you must continue holding their hand and giving careful support at any point where they may get stuck with something new or unclear. The following customer retention tips can help you to get some insight into the nature of such “lifetime onboarding”:

• Don’t just inform users about new product releases, updates, and services. Suggest interactive and amusing “go-through” demos.

• Diversify channels for informing about changes in terms of users and encourage a user to contact the support on any concerns.

• Remind users about the value. Value reminders that you used during the primary onboarding stage were wearing off the heads of your long-standing clients long ago. Don’t go thinking they still remember and emotionally sympathize with your compelling slogans after weeks and months of work. That is why be creative and find new forms and channels of showing the value delivered. Targeted marketing campaigns are the most convenient approach to start off with.

Make UX improvement your top priority

We never get tired of reminding you that investing every extra dollar in UX design will pay off with thousands of dollars of extra revenue in the long run.

If a customer has been using your platform for a long time, it does not always mean its user experience is flawless; maybe they are just patient enough to tolerate inconveniences while waiting for a better solution to come to market.

That is why never stop improving UX, even after your first-phase product development is accomplished and the quality assurance stage is passed. In particular:

• Look for ways to make the user experience even more intuitive, simple, and immune to a user’s slip-ups. Regularly test and troubleshoot for any inconveniences.

The significance of such perseverance is evidenced by several cases from our own experience when a SaaS product faced the problem of high customer churn even after a long time of its usage. In almost all the cases, the reason was some sort of bug that a user did not know how to fix or whom to address.

• Elaborate on the “aha” moment for every new feature, modification, and product version. “Aha” moment is an instance of insight when a user fully realizes the merit and virtue of your product for their needs.

As with a value proposition — one of the ways to optimize conversion, this issue is cherished during the primary onboarding but often obscured later. Yet, as one of the most fateful instances in the customer journey, it has to be clear and fresh in a user’s mind and heart. For this purpose, you can:

• Clearly state a problem or a need that a new release resolves;
• Use graphics/animation visually showing how exactly this is done;

Add some emotional triggers to create an empathic connection with a user.

Then, instead of the mere power of the habit, they will be guided by an authentic, always vibrant feeling that a product is indispensable for their purposes.

• Apply gamification techniques wherever possible.

Do you like playing games? Most people do. When you integrate engrossing gaming elements into the UX of your app, a client’s adherence to working with it expands from the conscious to the subconscious level. As the very process of interaction is amusing, a customer develops a specific emotional (or sometimes even sensory-motor) addiction on the biochemical level that keeps them within your interfaces stronger than any form of deliberate choice.

Gamification for modern SaaS takes a thousand forms, on which you can get expert guidance from our thematic article. To mention a few, for better retention, you may use the following:

• Achievements scores and badges; 
• Leaderboards; 
• Creativity boosters;
• Funny contests and challenges;

Everything else that adds a precious bit of excitement to the indolent urban life of a modern user.

Educate your clients

By working on customers’ expertise and proficiency in your product, you may gain much more than higher usability convenience and the removal of friction points.

In such a way, you nurture a refined culture and a particular “sense of fashion” among your target users. This is when they do not just know “how” to work with your SaaS — they know “why” to do it. We start loving what we have grasped deeply. This is the nature of human consciousness.

Therefore, organize the all-around education of your customers on an ongoing basis. This may take the form of:

• Tooltips and microcopies unobtrusively enlightening users right during their in-app operations;
• Cost-free training, e.g., webinars or online courses aimed to enhance skills in interaction with your platform and knowledge of its functionality;
• Step-by-step interactive tutorials and demos accompanying new feature releases and updates;
• The FAQ section on technical issues with answers as a way to help customers ask the right questions about their user experience;
• Regular email communication, e.g., newsletters with stories and articles related to your product and channeling a user’s attention towards the “aha” moment;
• A special knowledge base available on your website and promoted to clients via social media and direct messages.

Educated customers are much more likely to appreciate your product properly and stay with it for years, being fully aware of what they are paying for.

Provide consistently great customer support

Everyone realizes the importance of high-grade customer service for the commercial success of SaaS. But nowhere else does it have such critical value and definitive consequences as in software customer retention. 73% of users are likely to switch to a competitor after experiencing poor customer support. That is why, if you have not already given this issue the most careful attention at your company, here are some valuable tips to consider.

A perfect system of SaaS customer support is:

• Quick. A customer may have an urgent task or get stuck amid some operation, so if they cannot get in touch with the support team within minutes, it can distress and frustrate them with a long-lasting aftertaste.

• Adjusted to expectations. The client naturally expects their problem to be resolved most conveniently, so your team has to research and foresee the most typical issues and challenges that your users may encounter and design comprehensive action strategies beforehand.

• Adapted to the socio-cultural profile of a client. If your SaaS is a large globalized platform with outreach to markets on several continents, cultural sensitivity matters.

• Visible and easy to access. A user must not intentionally look at how to contact the support; rather, this option has to stand out as something that cannot be missed.

• Unified. This means that a user always deals with one person all the time while resolving their problem.

• Qualified. Support specialists can be most effective and helpful for customers when they are properly trained.

• Multi-channel. One convenient point of access to support is good, but several ones are better.

• Customized. For every premium client with a high LTV and a proven commercial record, it is a “must-have” to assign a personal manager who will not simply support but will be supportive as a close assistant and friend.

• Discerning. Monitoring and analyzing a user’s interactions with the support team can clarify more substantial issues critical for their retention.

Reward loyal customers

Your regular customers stay with you because you deliver decent value — okay.

But this does not mean you cannot additionally instigate their faithfulness with financial preferences, gifts, and beneficial treatment, especially those clients staying longer than the average customer lifespan.

While this would cost you little, the dividends of such incentives in the form of appreciation, gratitude, and good mood can solidify your client base more than any expensive marketing campaign. Such bonus SaaS retention strategies may take different forms related to both product benefits and loyalty discounts.

As to the former, you may reward your regular customers with expanded access to additional features and tools of SaaS, unavailable for fresh users. It is even more valuable if some of these preferences are not available via credit card payments.

For example, this is what the sales team of DataForSEO successfully implemented for subscribers with a 2+ years track record. Their exclusive package was not even introduced to the general public on the website but intimately delivered personally to each loyal client to emphasize the company’s respect and appreciation.

For the latter, the most common monetary reward for loyalty is introducing the progressive pricing strategy. You may have seen the seeds of loyalty already at the start of the customer journey by offering sufficient discounts under six-month, annual, and multi-year contracts, compared to the standard subscription on a monthly basis. That is exactly why a great number of trend-setting SaaS use this method. The extra cash will always come in handy. Therefore, satisfied users will be only more motivated when they get a monetary reason to stay, along with the operational one.

Integrate a client into the space of your SaaS

Dating binds to nothing, but marriage entails obligations that are hard to dismiss.

What do you think would happen if you make your client feel like not just a software user but a part of a community with some valuable and unique legacy that cannot be reproduced somewhere else?

Exactly, they would not want to lose it.

Two things (but of course, you can invent more) come to mind when it comes to making a user “get married and have progeny” on your platform.

• Personalize a client’s user experience to the point where they would perceive it as their hard-won creation and irreplaceable asset. Then, changing a brand would be like the demolition of a house where they spent months on refurbishment, for buying a new apartment with bare walls.

To achieve this level of customization, explore particular preferences and needs of a user inside and out, generate solutions to adapt the content and service packages accordingly, and offer them for implementation incessantly.

Continue to ask your customers for feedback all the time, i.e., details and updates on their needs, because both personal circumstances and the external environment lead to adjustments in a customer’s demands, tastes, and aspirations.

For example, brief app surveys upon completion of a particular task or an exit survey at the end of a session can give you the needed information without irritating a user.

• Create a community where clients will become co-creators and co-founders of your ever-evolving technology. When a user is empowered with some proactive tools for creativity and contribution, they rise from mere consumers to authors and grantors.

The benefits of such a mindset are impossible to overestimate for customer retention activities. The studies show that acts of giving play a more decisive role in human happiness compared to acts of receiving. Therefore, by becoming a member of the community and adding value to it, a client feels more satisfied, self-sufficient, and empowered. Let alone building close personal relationships and a sense of belonging. You can send users personalized updates on features they requested or voted for.

Additionally, such a community will give you an inexhaustible source of qualitative feedback. It can be used more effectively than any targeted usability studies for product improvement, — which would, in turn, make your customers happy — and loyal.

A brilliant example of such a SaaS society is the Figma Community, where every user can share and explore plugins, templates, icons, and any other aids that simplify the workflow of this iconic digital design tool.

A slightly different yet no less interesting approach to community-building is represented by the digital marketing platform Moz. Its members may discuss core features and updates, express their wishes and recommendations on product development, initiate and conduct webinars and conferences, beta-test new concepts via exclusive access to the Moz Lab, etc.

Affiliate: let customers participate in your retention policy

The strategy of affiliate programs for the revenue growth of your SaaS is explored in-depth in a special issue that will be published in our blog shortly.

However, its particular role in customer retention should be noted. For customer loyalty, the value of referral programs consists not in engaging new clients but mainly in keeping the credit card payments of the old ones reliably and safely.

When a user is a lonely bird, they can uproot themselves from the nest easily and instantly. But it is different when a client invites friends, family members, and colleagues to subscribe, by giving them a credit of trust in your product. The immortal quote from The Little Prince, “You become responsible forever for what you’ve tamed,” still stands.

That is why, by becoming your MLM agents and business partners, the participants of an affiliate program will have an incomparably harder and longer way to quit compared to the rest of the clients.

This should surely be considered in the SaaS retention strategy. Develop a solid referral algorithm with competitive and accumulative rewards for engaging new users and building an affiliate network.

Your partners are your most loyal clients because they need to perfectly know your story and share your values to convince people about your SaaS. And vice versa, the long-term users may become your most professional sales team because they would promote a product with genuine conviction.

Conclusion

Customer loyalty is a treasure that needs to be nurtured and encouraged. It is great that you fully realize this simple truth and explore the subject so deeply. Your effort will be fully rewarded with the growing customer satisfaction converted into extra revenue.

In this article, we suggested proceeding from the point of SaaS UX/UI design in the first place, as it is both the most foundational and rather cost-effective way to retain your SaaS clients. 

The cornerstones of such a successful customer retention strategy include:

• Continuous onboarding;
• Improvement of the user experience wherever possible; 
• Ongoing efforts on customers’ education;
• Ensuring their impeccable support;
• Providing a system of loyalty benefits and rewards;
• Deeper integration of clients into the space of a brand by personalization and community building;
• Creating long-term affiliate programs.

As you might have noticed, the integral attributes for almost every of the mentioned customer retention best practices are permanence and continuity. This means it cannot be done once and for good. Once you are interested in creating a cash flow generator for your business for a long time (ideally — forever), the measures for keeping long-term customers also have to be steady and consistent.

By the way, your customers can give you the most precious insights on how to retain them effectively if you properly organize the feedback loop with them. This is what our next article is about, so you are invited!