We’ve said it before and we’ll say it again: any business that wants to scale both rapidly and sustainably has to put customer retention front and center. Far too many companies focus their efforts solely on acquisition, without realizing that it costs five times more to acquire a new customer than to retain an existing one.
But customer retention is hard. It’s widely acknowledged to be one of the biggest challenges for any business, but especially those in the SaaS industry, where fierce competition means that customers are much more likely to jump ship and use a competitor than to stick around if they are not satisfied with what you’re offering.
What is customer retention?
We’ve covered what customer retention rate is and how to calculate it before, but here is a quick refresher: Customer retention rate or CRR is the percentage of customers who stay with a company over a period of time. It’s typically measured annually, but you can change that to suit your particular business objectives.
Not sure what your CRR is? Here is a formula you can use to calculate it:
Retention rate = ((E-N)/S) x 100
N stands for the number of customers gained during a specific time period
E stands for the number of customers at the end of that specific time period
S is the number of customers you had at the beginning of that specific time period
The best ways to increase retention
Any viable business depends on keeping their retention rate high and their churn rate low, so here are 10 strategies you can implement to do just that.
- Master your onboarding
- Personalize your customer experiences
- Make proactive support a habit
- Build trust and loyalty
- Always seek and implement customer feedback
- Start a loyalty program
- Provide value
- Use the right tools
- Offer the right incentives to customers who are churning
- Measure your performance and improve it
Master onboarding
Have you ever wondered at what points a customer is most likely to churn? One of the major ones is if they sign up for your product and don’t immediately get a sense of what it is, how to use it, or how it can benefit them. You have to demonstrate value from the minute they log on or you risk losing them. The best way to do this is to design a simple but effective onboarding sequence that hooks them immediately. If yours is a particularly complex product, design your onboarding sequence in stages and make sure there is a clear CTA at each one – even if it is as simple as prompting them to add a team member.
Personalize your customer experiences
No one likes feeling like just another number on a spreadsheet. It’s crucial to remember that those retention targets you are trying to achieve represent real human beings. One of the best ways to retain a customer is to reach out personally when they sign up. You don’t have to do this for every customer (for example, those on your free plan may not be relevant), but there are certain segments you should absolutely make it a point to develop relationships with. This is also one of the best ways to foster a sense of loyalty in your customer base.
Offer proactive as opposed to reactive support
If a customer is reaching out to you with a problem, it’s likely that they have spent at least some time trying to figure it out on their own before giving up. This means that, when they reach out, they are already feeling a sense of frustration and helplessness. This is why it is so crucial to offer proactive support rather than waiting for customers to reach out to you once they have already encountered a problem.
The best way to do this is to invest in a session replays tool that records user sessions in your product. You can then monitor these sessions on an ongoing basis to scan for issues.
Fullview Replays is the best of these kinds of tools for customer support teams because it is built around customer identification. What that means is that user session data is not anonymized. Once you install Fullview, all your customers sync to your Fullview dashboard. All their sessions are recorded and listed under that customer’s profile for you to review. Sessions where users encountered errors or bugs are also clearly labeled, so you can identify the most crucial ones and reach out to those users directly.
If necessary, you can then escalate the ticket by starting a cobrowsing call with your user in your app to easily and quickly solve issues with screen control.
Build trust and loyalty
Like every good relationship, your relationship with your customers should be built on a foundation of trust if you want to inspire any brand loyalty. SaaS customers have a lot of choice these days, so your brand reputation counts for a lot. One of the best ways to build this trust is to be completely transparent with your customers and take steps to make sure their data and privacy are protected. At Fullview, for example, we are fully GDPR compliant and secure our user data with the highest levels of encryption, and we communicate this often. Another way to build trust is through social proof in the form of testimonials and reviews.
Always seek and implement customer feedback
Customer feedback should form the bedrock of any good product. After all, if you aren’t building it with your customers in mind, who are you trying to build it for? It’s a good idea to make it a point to solicit their feedback at relevant points in their customer journey. You can build it into your onboarding sequence, send a short CSAT survey after a customer support interaction or email particularly active users with a longer product survey.
Start a loyalty program
Another great way to ensure that your customers stick with you for the long haul is to incentivize that longevity with a loyalty program. Loyalty programs can take many different forms, so you’ll have to design yours around your particular business. You could, for example, give customers who stick around for a particular amount of time discounts on plans or items. You could start a point-based loyalty program, where customers earn points for every dollar spent. Or you could offer a tiered loyalty program and give customers discounts based on the amount they spend on your platform — the more the spend, the bigger the discount. Again, it all depends on your business model.
Provide value
This one should be evident, but it bears repeating: if you don’t demonstrate value to your customers from the moment they sign up, they are likely to leave and never return. One of the most likely moments for customers to churn is during onboarding and then within the first few days or weeks of signing up for your platform. If you can hold their attention and demonstrate immediate value in that time, they will stick around. However, if you don’t demonstrate any value or make it difficult for them to realize this value, they will likely churn.
Use the right tools
In order to prevent as much churn as possible, it is essential to get your tech stack right and make sure you are investing in the right kinds of software. From customer relationship management software, to customer support software, to your MarTech stack, investing in the right kinds of tools for your business can help you create the best customer experiences.
Offer the right incentives to customers who are churning
Most CRM platforms these days have mechanisms in place to alert you when a customer is likely to churn. How do they measure this? With product usage benchmarks that you can customize. To do that, you’ll need to think about what constitutes churn for your business and then monitor that in your CRM. So, for example, if your software is something that people typically use daily and a user has not signed in for a few days, you could define that as them being likely to churn. Once you identify which customers are about to churn, tempt them back with discount codes or other incentives to continue using your product.
Measure your performance and improve it
Preventing customer churn is an ongoing process and it is something that you will have to perfect over time. Because this is something that you will be dealing with for the entire lifecycle of your product, the most important thing is to measure your performance and then constantly seek to improve it. We’ve already put together a list of the most important customer support metrics to track, which is a good place to start. But you will also need to track commercial metrics and marketing metrics to see how optimized your pipelines are and how sticky your product is.
Conclusion
Customers are the lifeblood of any business and a lot of time, effort and money goes into acquiring them. But what good is that if you can’t get any of them to stick around after they’ve signed up for your product? Customer retention is key to sustainable growth, so it is worth it to dedicate some time and resources to making sure that you give your customers a reason to keep coming back for more.
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