SaaS Customer Retention

What is customer retention in business?

Customer retention refers to a metric that represents the rate at which your customers continuously use your business in a specific period. Customer retention rate is crucial data to track to keep your organization working efficiently and turning a profit.

Upselling products or services to your existing customers costs significantly less than acquiring new buyers, so creating robust retention programs is crucial for success. Customer retention also showcases the efficiency of your customer support journeys and help desk solutions.

For SaaS organizations, an efficiently run company's minimum customer retention rate is around 35%, while high performers operate around 93%. This difference can be explained by their dedication to retention programs.

Why do we place such an emphasis on customer retention?

For most organizations, the average customer retention rate is one of the most critical KPIs for long-term success. Focusing on customer retention strategies can pay off in many ways:

• On average, it can cost six to seven times more to gain a new customer, causing a significant impact on the organization's bottom line.
• A satisfied existing customer tends to spend more often and more than one-off buyers. They are also your greatest sources for word-of-mouth marketing, online reviews, and referrals, bringing you new buyers at no extra cost.
• Cross-selling or upgrading your existing customers' plan can also bring in added revenue, as 81% of customers suggest exploring broader service options with companies they are satisfied with on their first interactions.
• Maintaining high customer retention can be particularly important for small businesses. Survey results show that 61% of small businesses report that over half of their revenue comes from repeat customers. Meanwhile, SaaS organizations generate 35% of their revenue from the top 5% of their loyal buyers.

8 SaaS customer retention strategies 

So now you understand why we place such an emphasis on customer retention, but where do you start? We put together a couple of our favorite customer retention strategies so you can begin to create your ideal retention process today.

1. Perfect your customer onboarding

Your customer's first impression of your company is crucial. You should perfect your onboarding process, ensuring that your end users can learn all the details of your product or service easily and have access to easy-to-understand knowledge base articles and your customer support contact details at hand.

Likewise, setting up scheduled training sessions or recording onboarding tutorials can be a great way to get ahead of potential problems.

2. Provide exceptional customer support

Providing exceptional customer support is one of the most important factors in your retention process. Thena can turn your organization into a customer communication powerhouse straight within Slack. With our award-winning AI-powered tool, you can streamline workflows and ensure no customer request goes missing with our conversational ticketing system and smart notifications.Thena can offer instant request acknowledgment notifications to your customers so they are entirely in the loop with their estimated resolution times, avoiding confusion and frustration. With Thena's smart solutions, including an intuitive Slack Triage and categorizations, your support teams can focus on providing a next-generation customer experience.

3. Leverage customer feedback

The customer feedback rate is one of the most critical metrics in your customer retention journey. It helps you to see how your services and products perform, how effective your customer support is, and how your users feel about your organization.When used effectively, customer feedback rates can be a great tool in the hands of a seasoned business leader.Satisfaction surveys should be part of your customer journey at every step. Feedback tools can range from automated Slack feedback surveys at the end of an interaction with a support agent to an interactive feedback bar on your website.

4. Provide omnichannel support

Customers nowadays expect omnichannel support, ranging from emails and phone lines to communication platforms like Slack and social media. Your customers can quickly get frustrated when they repeat the same things over and over, lowering customer satisfaction rates and leading to unpleasant interactions with your agents.Maintaining a streamlined CRM system can be a valuable tool to resolve this problem so your support teams can access all relevant information of your customers and see previous conversation history.

5. Offer flexible pricing

Offering flexible pricing options to your buyers pays off for SaaS organizations. According to recent research, improving price optimization by only 1% can boost profits by an average of 11%! This can be a great tool in your arsenal to maximize your revenue.There are a range of SaaS pricing strategies that you can follow, from value-based pricing to competitor or cost-based pricing. You must research and identify the right pricing strategy for your business and customers.

6. Regularly update and improve your product

Asking for feedback is not enough on its own. Your customers must see that you implement their suggestions or troubleshoot common problems quickly. Business leaders should keep a close eye on customer support metrics to identify potential issues and bottlenecks so they can make the necessary adjustments.Everybody within the organization must understand the importance of this type of feedback and act accordingly with speed. Your customers will be grateful to see that their words matter.

7. Utilize data analytics for predictive churn analysis

Okay, so you ask for customer feedback; that should be enough, right? Unfortunately, no. While feedback surveys are an excellent information source, they might not be sufficient on their own. Predicting which customers are most vulnerable in your customer journey and taking action to keep them can also be an essential tool for organizations.Data analytics can help identify these users with various methods, such as decision trees and logistic regression. By exploring these areas, you can determine why your customers are considering leaving or stopping buying from your company and act fast. Implementing retention programs like discounts and rewards to tackle this can also be a great way to address the problem.

8. Create a community around your product

Creating a robust online community for your customers can significantly affect your average customer retention rate. They can interact and share their experiences with each other and your team through these spaces.They can also be a great source for users to use as self-service troubleshooting guides, freeing up capacity from your service agents. Keeping an eye on your customer communities can provide great insight into what people think of your product and correct courses quickly if needed.

Conclusion 

In the SaaS industry, prioritizing customer retention is what makes you stand out. By implementing a variety of strategies and tools that we explored in this article, you can ensure that your loyal customers continue to enjoy your products and services, leading to long-term success.

At Thena, we are dedicated to providing next-generation customer support so you can focus on the bigger picture. Book a demo to see how we can help you today.