Customer Lifecycle Stages for SaaS Customer Success

Customer Lifecycle Stages for SaaS Customer Success

The pattern of behaviour that a customer has with your SaaS product is cyclical – that means there is a recurring pattern to the interactions that a customer has with your brand. SaaS companies are interested in tracking the customer lifecycle because it tells you what actions are needed at each stage, and enables you to cross-sell and upsell to your customers.

The SaaS customer lifecycle is unique because there are more stages to this process than you might have in other industries. It’s the job of SaaS companies to carefully nurture their customers from the beginning of the cycle to the end.

Naturally, some customers will drop off along the journey because they have decided that your product isn’t right for them, or some other reason. Nevertheless, you must attempt to keep churn under control and ensure more customers reach the end of the lifecycle.

What is the SaaS Customer Lifecycle?

The SaaS customer lifecycle covers customer behavior from the beginning when they first have an awareness of a problem your business can solve, through to buying your product and finally being retained over time. The customer lifecycle tracks every single interaction that a customer has with your brand, with the ultimate goal of increasing customer lifetime value for your business.

If a customer gets stuck at a particular stage, this is bad news for your SaaS business because it results in a lost lead or a churned customer. It’s imperative that you keep customers moving and consider what it would take for them to reach the next stage of the lifecycle.

The SaaS customer lifecycle can be broken down into three main stages: acquisition, engagement, and retention. Each stage has unique behaviors and interactions that define it and forms part of the overall relationship that the customer has with your brand. The three stages are then divided into nine substages.

The 9 SaaS Customer Lifecycle Stages

Acquisition stages

During acquisition, SaaS companies should be focusing on the problems customers have and how their solution is what it takes to solve it. Without a customer problem, there would be no need for your SaaS product, so your focus during this stage of the lifecycle should revolve around educating customers about how your product can help them.

1. Awareness

The awareness stage is when customers first realize they have a problem and start thinking about solutions that could help. They are unlikely to have heard of your company at this stage but they will be ripe for targeted marketing messages. Companies should revolve at this stage around attracting as many customers as possible.

Action to move customers towards the next stage: Reach out to as many potential customers as possible by introducing them to your brand. Consider all possible platforms such as social media, SEM, and even display advertising.

SaaS Customer Success

2. Consideration

During the consideration stage, customers have identified several possible SaaS solutions they might choose, with your product being one of them. You’ve made it onto the shortlist and customers want to know what makes your SaaS stand out from its competitors. Customers are evaluating your product against the competition.

Action to move customers towards the next stage: Help customers consider your software through lead-generation forms and product comparisons that show how you stand out from the competition.

3. Qualification

During qualification, leads become “qualified” fits for your software and are ready to start reaching out to your sales team. They might take advantage of free trials or product demos to help them work out whether your product is right for them. Customers are comparing your product against the competition to understand its pros and cons.

Action to move customers towards the next stage: Focus on product experience to ensure that customers get a positive first impression of your software, and ensure your sales team is well-equipped to field customer questions.

Engagement stages

During the engagement stage, leads are ready to become paying customers of your software. SaaS companies need to make sure they provide solid value for customers in this stage to convince them that the product is worth the money. This is when you back up the claims you made during the acquisition stage.

4. Evaluation

Evaluation is the final phase of the decision-making process, when customers are almost but not quite ready to make their purchase. They will be approaching your sales team with very specific questions about how the product works, and want iron-clad confirmation that your product will help their business.

Action to move customers towards the next stage: Give customers solid use cases or testimonials that show how your product provides ROI. Your business might offer proposals that give detailed information about how your product will serve the customer.

5. Purchase

Customers are finally ready to part with their credit card information, which is the culmination of the efforts of your marketing and sales teams. These customers should ideally be great fits for your product and ready to start realizing value as soon as they sign up.

Action to move customers towards the next stage: Make it ridiculously simple and easy for customers to sign up for your product, and ensure customers don’t drop off at this critical stage. Customers should be assured that their credit card information should be going to a good cause.

6. Activation

Customers are already using your product and moving through the onboarding process. During the activation stage, it’s time for the handoff to your customer success and customer support teams, who need to ensure that customers have everything they need to be successful.

Action to move customers towards the next stage: Focus on optimizing your onboarding process so that customers quickly realize their time to first value, and their “Aha” moment. Make sure customers don’t experience buyer’s remorse.

Retention stages

The retention stage is a little different because now you are focusing on deepening your relationship with your customers and ensuring their customer satisfaction level remains high. The object is to avoid customer churn by doing everything you can to guarantee that customer needs are met, and they have no cause to start considering other options.

7. Expansion

During expansion, customers are convinced of the value of your product and might start considering upgrading their package for extra features or seats, for example. These customers are ripe for upsells and cross-sells because they have already become highly engaged users of your product.

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Action to move customers towards the next stage: Take advantage of customer success software like Churn360 which automatically tells you which customers are ideal candidates for expansion. Empower your customer success team to reach out to these customers and show them where they might gain additional value.

8. Renewal

Your customer’s contracted period has come to an end and it is time for them to decide if they want to renew. Hopefully your product has delivered everything that was promised and has now become an indispensable part of their workflow. Small problems and bugs have been worked out for your customer support team and your customers have become loyal to your brand.

Action to move customers towards the next stage: Make the most of every opportunity to assure customers that your business cares about them, after the sale. Proactive and reactive customer communication is essential to ensure they are realizing the full value of the product.

9. Referral

If customers have reached the referral stage it means they have become happy and engaged users of your product. This is where the customer lifecycle comes full circle because they start referring new customers to your SaaS. Customer testimonials, reviews, and recommendations are a powerful and cost-effective way to acquire new customers and ensure the wheels of the customer lifecycle keep turning.

Action to move customers towards the next stage: Surveys like the Net Promoter Score can identify loyal customers who are likely to consider recommending your brand. Find your promoters and don’t hesitate to ask them for referrals, if they are happy with your service.

Wrapping Up

Moving customers steadily through the customer lifecycle is essential for SaaS businesses that want to experience ongoing customer success. Each stage requires unique actions, and dedicated care and attention, to ensure customers keep progressing and engaging with your SaaS brand.

If you focus on one stage to the detriment of the others, your business will lose valuable revenue. It can be tempting to over-emphasize the acquisition because this gives a false impression that your business is growing. It’s during the retention stage, actually, that gives the most opportunity for expanded revenue.

When customers finally reach the referral stage, your business has confirmation that it has been successful. Organic word-of-mouth marketing ensures a steady supply of new leads to your business, who are already open to your messaging and ready to try your product.

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