If your SaaS product is based on a subscription model then retention rate is one of your most important metrics.

You could have the best salespeople in the world, but if you’re losing users faster than you can acquire them, your growth targets will start to disappear over the horizon.

Here are three things you can do to help improve your SaaS retention rate and increase average customer lifetime value.

Build relationships

The quality and usefulness of your SaaS product is essential in retaining customers, but do you know what else is? Your relationship with that customer.

One of the biggest mistakes companies in all sectors make (not just SaaS, by the way) is taking their customers for granted. Whether it’s by only rewarding new customers (*cough*, Sky TV, *cough*) or failing to improve their product over time, not enough SaaS providers give existing users a reason to stick around.

So what can you do to help facilitate better relationships with your users?

Have dedicated account managers

This won’t be appropriate for every SaaS organisation, and is probably better suited to B2B verticals, but having a dedicated point-of-call for user questions, complaints and other comms can make a huge difference. After all, it’s much easier to build a relationship with a human than it is a piece of software.

If you don’t have the capacity for account managers, or if it’s not appropriate for your business, make sure your customer support is on-point in other ways. People are increasingly expecting live chat functionality to be on your website, while it is expected to grow by as much as 87% in 2020. Again, if dedicated live chat agents is beyond your reach at the moment, automated chatbots can help to fill this gap.

Ask for feedback regularly

By canvassing your users’ opinions regularly you can achieve two things at once: firstly, show your users that you care about their experience (relationship building); and secondly, gain invaluable insights for improving your SaaS product.

There are a number of ways you can seek user feedback.

  1. Add a simple rating system plugin across the website

    Screenshot: HotJar

  2. Contact users by email, text or instant message and incentivise giving feedback with money off an existing / new service, or giveaway.
  3. Ask for quick feedback at the end of other customer communications.
  4. Closely monitor social media channels for feedback sent directly to you or posted about you.

Personalised comms

Your customers don’t want to feel like they’re just a number.

If you’re sending any form of marketing communication that is obviously a mass email or message it might get the message across, but it isn’t going to make them feel valued.

A CRM system and marketing automation can help with this. Something like HubSpot (our favourite, but there are plenty of other platforms out there) can combine your user database with marketing automation to send tailored messaging that includes specific information about them and their usage. These messages can also be set up to be sent at specific times or trigger points, for example the first time a user launches your product, after two weeks of inactivity or one the anniversary of their purchase.

Don’t stop selling your product to existing users

Selling to existing users? But… they’re already users!

What I mean is selling the benefits of your SaaS product.

Your marketing and / or sales team did a great job of convincing the user your product’s value, but you’ll be surprised how quickly they can forget. Let’s take mobile apps as an example:

  • 55% of users will abandon an app one month after downloading it.
  • 68% of users will abandon the app by the end of month three.
  • A staggering 21% of users will abandon the app after launching it just once.

You need to consistently remind the user why they purchased your SaaS product in the first place, whether that’s through educational content explaining how they can gain further value, highlighting functionality they aren’t currently taking advantage of (if your system can extract that data) or some sort of loyalty reward.

Identify churn warnings early

SaaS users don’t wake up one morning and realise they want to cancel their subscription. That decision is reached over time, either after a long period of inactivity or dissatisfaction with the service or product.

They key to reducing churn and increasing your retention rate is to recognise these warning signs early.

Monitor usage activity closely and set up internal alerts for when certain triggers are hit: maybe the user hasn’t opened the app for two weeks, or they have only spent 3 hours using the software this month compared with nine hours last month.

The exact warnings you have to look out for will depend on typical usage of your product, so you’ll need to have gathered some good data before you can implement this.

If your SaaS churn rate is at an unsustainable level then you need to be addressing this before pushing on with improving your lead generation. After all, there’s no point filling a leaky bucket.

We can help with every aspect of your SaaS marketing, including your retention rate. Get in touch with one of our experts today, or download our guide to SaaS lead generation below.