5 ways to improve customer retention rates in SaaS

5 ways to improve customer retention rates in SaaS

Adopting an effective customer retention strategy is the key to reducing customer churn and maximizing profit in Saas.

To achieve long-term customer retention success, you must understand your customers and ensure user satisfaction. In this article, we will look at five effective ways to improve customer retention rates in Saas.

What is customer retention?

Customer retention refers to a business’s ability to retain customers. It reflects the quality of your service and brand-to-customer relationship, which directly impacts consumers’ repurchase behavior.

As a subscription-based brand, customer retention directly affects the profitability of your business.

Why is customer retention important in Saas?

Repeat customers easily become advocates and even the lifeline of your brand. There are many reasons why customer retention is important in Saas, which include the following:

Customer acquisition is expensive

Research shows that acquiring a new customer is five times more costly than retaining an existing one. In context, customer acquisition covers everything from lead generation to trial upgrades and user onboarding. You have to convince prospects to trust you and upgrade to paying customers. Eventually, only a small percentage of them become purchasers, making acquisition costs expensive.

Retention increases Customer Lifetime Value

A customer’s lifetime value (LTV) is the projected value of that customer to a business throughout their relationship. Loyal customers are more invested in your business and are 33% more likely to purchase than one-time customers. Understanding how to improve customer satisfaction guarantees you higher retention rates and thus, more rewarding customer lifetime values.

Customer retention has better ROI

The higher your monthly recurring revenue (MRR), the higher your return on investment (ROI). Repeating customers not only account for 63% of your profits but also make the most of your recurring income stream.

An effective customer retention strategy that strengthens your customer relationships gives you the edge in terms of revenue. The longer you can retain customers, the more ROI you realize.

How to Calculate Customer Retention Rate

Customer retention rate (CRR) is the measure of the number of repeat customers a company has over a period.

The customer retention rate formula is given as:
CRR = [(E-N)/S] x 100

E is the number of customers at the end of the period,
N is the number of new customers acquired within the period, and
S is the number of customers at the beginning of the period.

How to improve customer retention rates

Customers churn for various reasons– some personal to them, and some, as a result of negative impact from your business. To achieve customer success, you must improve their experience with you by the most effective means possible. Below are some of the ways to improve customer retention rates:

Can your customers easily reach you?

According to Oberlo, 81% of customers are likely to repurchase from a business after a positive customer experience.

Poor customer service is one of the highest contributors to churn; when your consumers find you inaccessible. Simplify accessibility for your customers using the following tips:

  • Set up call routing. Ensure your inbound calls are forwarded whenever you’re not available.
  • Invest in social customer service to provide quick responses on social media.
  • Set up instant automated email responders that keep your customers updated.
  • Pay attention and respond to reviews (positive and negative) of your business online
  • Use centralized software to visit all messages and conversations related to your business from one dashboard

Is your onboarding good enough?

When your customers can’t phantom the value of your Saas product soon enough, they churn. You must take your user to the Aha! moment quickly with the least steps possible. Here are some tips to improve your user onboarding:

Eliminate friction

The smoother your onboarding, the better it is for your users. Focus on a seamless, straightforward experience for your prospects, from their first point of contact. Eliminate frizz and unnecessary copy, and avoid asking for information you don’t need!

login screen

Hubspot uses a simple form to get users started.

Personalize onboarding

Users nowadays want stuff that’s for them- else, it doesn’t make sense. Integrating micro surveys in your onboarding can help you obtain information to segment your users and create a personalized experience.

Personalize onboarding

Quickbooks uses microsurvey to segment users in early onboarding.

Use welcome screens and tooltips to shorten time to value

The essence of good onboarding is to show users your product value fast. You can use checklists and progress bars to guide users for faster, more effective onboarding.

onboarding checklist

Image source

Are you paying attention to your customers?

You need to know if your customers are unsatisfied with your product. Customer analytics can be used to improve retention rates, and you can obtain such feedback through surveys.

Churn 360 provides three types of customer feedback surveys:

NPS (Net promoter score): NPS measures how users feel about your overall brand and how likely they will promote it.

Net promoter score

Image source

CSAT (Customer satisfaction score): CSAT survey measures customers’ satisfaction after interacting with a product or feature.

User experience feedback

Glassdoor collects user experience feedback with CSAT survey.

CES (Customer effort score): The CES survey measures your product’s ease of use by asking how much effort a user put into using it.

Customer effort score

Image source

With user feedback, you can improve your customer retention rates in the following wyas:

  • Reward loyalty with incentives, offers, etc., via email or app interactions.
  • Respond to unhappy customers. Reaching out to unsatisfied consumers can be a last-minute save for you in the form of messages addressing their issues.
  • Make technical fixes with CES feedback to improve your product experience.

Personalization is key

Consumers no longer desire personalization- they demand it. When you’re creating personalization for your customers, you want to tailor their experiences based on their past activities, needs, and segments.

Here are a few tips for customer personalization:

Use onboarding emails early. During the first few stages of contact, your welcome emails and the subsequent ones should provide ease and value to users

Slack welcome screen

Slack sends welcome emails to onboard users

  • Segment your customers using microsurveys.
  • Remind customers of your value and the ways you have made their lives easier.
  • Involve your loyal customers in the process. Run Beta tests and have a small group of testers use the feature before launch.

Schedule a demo with one of our experts to take a deeper dive into Churn360

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No one resists a good Ol’ customer loyalty program

People are more inclined to stick with a brand when they feel rewarded for it. Adopting a customer loyalty program in Saas can be as easy as rewarding customers for purchases and activity level.

You can start with small tasks such as creating an account or referring a friend to get discounts, free features, or loyalty points. Users will become excited to use your product and advocate it to even more prospects.


Understanding what your customers want can help you improve retention, increase your revenue, and build advocates for your brand. A customer retention software by Churn360 gives you a grasp of your user behavior and customer pattern to create effective customer retention strategies. With advancement in your customer retention and good user understanding, you can enhance customer success and, thus, your overall company growth.

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