Let’s be real – losing customers stinks. As a SaaS company, high customer churn is the ultimate revenue killer, destroying growth no matter how many new customers you acquire. In a nutshell, if you’re looking to be profitable fast, reducing churn should be a top priority. Hence the need for top-tier retention strategies…
But with the right retention strategies, you can craft long-term relationships and reap the benefits of recurring revenue.
SaaS retention, especially B2B SaaS customer retention, hinges upon solid partnerships with customers. The 10 strategies in this article will lead to solid partnerships that’ll be sure to generate consistent, sustainable growth.
They'll lead to engaged customers who provide stability and profitability month after month. Each of these steps is designed to establish a solid bedrock of trust between customers and orgs.
Ready to turn customer retention into your competitive advantage, and give your users the first-class customer experience they deserve? Let’s get started!
But before we get into some strategies, let’s have a quick refresher on what exactly makes up a good customer retention strategy.
What is B2B SaaS customer retention?
Customer retention is all about how many folks stick around and keep doing business with you for a certain period.
When it comes to figuring out customer retention rates, there's a simple formula you can use.
How to calculate your SaaS customer retention rate
Calculating your customer retention rate (CRR) is a breeze! You just need to plug some numbers into this simple formula, which involves the customers you had at the beginning, the ones you have at the end, and those you gained during the time you're checking. It goes like this:
But there’s a major debate that still rages on in the world of SaaS: should you be focusing more on customer conversion or customer retention? But before we answer that question, let’s dig into the key distinctions between the two.
Acquisition vs retention
Besides keeping your current customers happy, snagging new ones is also a big deal for business success. More customers mean more cash flowing in, which sets the stage for some serious growth in your target market.
But here's the thing: Some companies get so caught up in the thrill of chasing new customers that they forget about the ones they already have. At first glance, it seems like a no-brainer, especially for those SaaS folks. You think, 'If our current customers are paying their usual bills, and we add 10, 20, or 50 shiny new clients, our overall revenue will skyrocket!'
But getting those new customers on board is a pricey affair— 6 to 7 times more expensive than keeping the old gang happy.
You've got to put in a ton of effort to woo and win over those newbies, and the customers you hang onto often dig deeper into their wallets because they know your service is top-notch and they trust what you offer.
Plus, here's the kicker: A tiny 5% boost in your retention rates can pump up your company's revenue by a jaw-dropping 25% to 95%.
The straight-up truth for businesses looking to grow: While grabbing new customers can give your revenue a bit of a boost, it comes with a hefty price tag in terms of sales and marketing expenses. On the flip side, keeping your existing customers happy offers more value and costs you less in the long run.
What is a good customer retention rate for your SaaS business?
Over 41% of SaaS hotshots raking in more than 500 bucks per month per customer are rocking a net retention rate that soars past the 100% mark.
The sweet spot for net revenue retention isn't one-size-fits-all. It's all about your Average Revenue Per Account (ARPA). If you're in the B2B SaaS game, playing in the midmarket and enterprise space, you're aiming for a sizzling 115% to 125% range.
In this article we’re going in-depth on the kind of strategies needed to really ace your customer retention. But in case you’re short on time...
TLDR; How to improve your B2B SaaS customer retention rate
Many SaaS companies struggle with a leaky bucket org, meaning they’re so concerned with growing fast, and converting as many new customers as possible they neglect their existing customers.
As a result, as customers are coming in, they’re leaving simultaneously. But bad retention isn’t just something you can patch up when it all starts to go wrong, it needs to be part of your strategy at your org and product’s inception.
It’s a tricky beast to tame, but as a general rule of thumb, here are the steps you should consider:
Get in sync around retention: There needs to be a company-wide commitment to retention strategies.
Tighten up your onboarding: First impressions count, and your onboarding flow is your first impression. Let’s get it right.
Master customer success: A reactive approach to onboarding just won’t cut it these days– be proactive, don’t wait for customers to come to you.
Deliver exceptional support: Additionally, customers need to feel like you’re there to guide them when they run into a hurdle. If you neglect a concern raised, you’re going to see churn.
Offer enhancements : You can’t expect your customer needs to remain static; they’re going to change over time, so make sure your product can keep up with their demands.
Remove friction: With so many software solutions on the market these days you can't afford to create any problems for your customers. The journey to the ‘aha’ moment should be all plain sailing.
Leverage metrics : it’s a no-brainer, but you can’t fix retention if you’re not tracking it adequately. Similarly, you need to be able to track the exact behavioral causes behind the shortcomings.
So, if you're still with us, let's get super granular with these strategies. It's time for our deep dive into top 10 customer retention strategies for your B2B SaaS org!
1. Set the foundation with first-class onboarding
A customer's first impression of your product often dictates whether they'll stick around. That's why thoughtful onboarding is mission critical!
Appoint a customer success manager to personally guide them through onboarding and answer every little question. Create a logical onboarding flow that gets users active fast.
You should also send how-to emails and quickstart guides. Give them free access to a live onboarding webinar where they can get a tour of your product’s best features. Character limit? Twitter limit? Something to help them get up and running pronto!
The more frictionless and supportive the onboarding, the quicker customers experience that magical “a-ha!” moment where the value clicks. Smooth onboarding sets the trajectory for ongoing retention, so don’t drop the ball early!
2. Incentivize the whole company to focus on retention
Here’s a secret - different departments often have mismatched goals that seriously cut into your customer retention rate.
Sales wants to book revenue. Marketing chases leads. Product pushes new features. When goals don’t align across teams, customers get lost in the cracks.
That’s why you need to incentivize customer retention company-wide. Empower sales to build trusted relationships, not just land deals!
Have marketing nurture leads for optimal LTV and ensure product teams have direct customer contact. With the entire company rallied around retention, your customers will feel the love.
3. Make your customers feel special
Everyone loves to feel special sometimes! ⭐
Surprise random users with a little gift or perk, like extending their trial or adding a premium feature. Send some branded swag their way just because. Apply a discount to their next invoice to say thanks for being a loyal customer.
Small gestures of appreciation make people smile and remind them why they dig doing business with you.
Just make sure you don’t go overboard and make it seem disingenuous or like a tacky sales gimmick.
4. Build an online community around your product
Humans are social creatures who love to mingle. Give your customers their own little hangout by creating a private online community like a forum or Facebook group.
They can chat about your product, swap tips, ask questions, and get to know fellow users.
Feeling like they’re part of an inner circle builds loyalty and gives them even more value from your company.
Just make sure to moderate it so things stay friendly and on-topic. In this way, your existing customers can be handy problem solvers for new customers who might be at risk of churning if they can’t get over the problem they’re having.
As we’re sure you’ve heard by now, SaaS companies spend a massive amount of their funds on customer acquisition.
Retention is much less costly. And there are various relatively cheap strategies you can use to ensure your customers stick around.
Online community building is a prime example of this.
5. Send ongoing educational content
Your customers want to get the very most out of your product. Help them do it by regularly sending useful tips and tricks via email or in-app messaging. Create video tutorials, handy quickstart guides, and other helpful educational resources that teach advanced techniques.
Position yourself as their go-to expert coach on maximizing your product’s potential. They’ll appreciate you taking the time to help them skill up!
6. Monitor user engagement metrics closely
You can’t improve what you don’t measure. Track key engagement metrics like login frequency, feature adoption, and activity levels.
Segment users by behavior patterns, by doing this you can identify at-risk accounts showing signs of reduced stickiness and intervene with targeted retention offers.
Advanced analytics tools like Mixpanel, Amplitude, and Indicative all make it easy to dissect user behavior and gain actionable insights to optimize retention.
7. Make customer support readily accessible
No one enjoys hassling with customer support when they need answers or get stuck. Make sure users can get timely help through multiple channels like email, chat, help desk, phone, and social media.
Also give them quality self-help resources like FAQs, knowledge bases, and documentation. The easier you make it for customers to find answers, the less likely they are to become frustrated and defect.
Customer support is truly on the frontlines of retention.
Simply put, by providing excellent customer service, you essentially reinforce that solid foundation of trust that leads to customer loyalty.
Today, where customers are truly spoilt for choice when it comes to SaaS software, it just won’t cut it to bust out a really great software solution. What will truly make customers stick around are the relationships that you’re able to establish.
Loyal customers are long-term customers. Having a customer base that’s essentially a fan club for your org is only going to make the onboarding process for new customers smoother.
8. Survey users about their experience
You can’t improve what you don’t measure.
Send out quarterly customer satisfaction surveys to get an honest pulse on how happy users are, what they like, and what areas need work. Monitor reviews and social media closely for customer feedback.
Then act on feedback quickly to fix problems and delight customers by implementing requested improvements.
Most importantly, close the loop by following up to confirm how you’re addressing concerns.
Making users feel heard will improve satisfaction and retention. Your goal is always to create a continuous feedback loop between you and your customers, so the customers you retain become a vital tool not only in retaining customers but in also converting new customers.
Pain points that go unresolved leads to churn!
9. Roll out frequent product enhancements
Nothing reinvigorates customers like regular product updates that add tangible value!
Releasing new features, upgrades, and improvements frequently will make customers eager to stick around. Just ensure you spread substantive releases out instead of dumping everything out at once!
The products and service that you’re providing might have been top notch on launch but that doesn’t mean they’ll still be any good when the competition starts to heat up and you’re falling behind the curve.
10. Make cancellation a bit of a headache
Now, this might seem counterintuitive, but hear us out!
Studies show SaaS businesses that make it tougher to cancel actually decrease churn, but of course don’t make it impossible, just slightly inconvenient.
For example, require talking to a live person to cancel or filling out an exit survey.
Use this last chance to ask why they’re leaving and convey the value of staying. A little extra effort can sway some customers to stay put.
Equally, this will give you an opportunity to find out what caused the customer to leave, fix it, and use this to ensure that this isn’t an issue that other customers are having.
There you have it - 10 proven strategies to strengthen relationships and boost long term loyalty with your existing customers!
Don't leave retention to chance. Be proactive in listening to your users, understanding their needs, and providing ongoing value.
Deliver phenomenal support, roll out frequent product enhancements, and convey to customers that they are appreciated.
Focus on continually delighting your customers, and they'll reward you with their loyalty, repeat business, referrals, and increased lifetime value. Your existing user base is your most valuable asset - treat them as such by making customer retention a top priority within your organization.
The strategies discussed will take dedication, but the long-term benefits to your bottom line will be well worth it.
Start applying a few of these tactics this quarter to strengthen bonds with customers.
Your efforts will quickly move the needle on satisfaction and retention. Get ready to watch your retention rates skyrocket and cut your churn rate down to size today!
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