Which does your business focus on more: acquiring new customers or retaining existing customers? While both are important, true growth for a SaaS business only happens when your current customer base continues to renew their subscription for the long-term. When customers are happy, they see the value in continuing to pay for your service and regularly use your product to achieve their goals.
It’s not easy to retain your existing customers. There’s constant competition from competitors and challenges when customers continue to review whether your software is worth it. It takes effort to acquire a new customer and then you can lose them in a moment. If you don’t meet customer expectations then they’ll soon be taking their business elsewhere.
Unfortunately, 44% of businesses focus on customer acquisition whilst only 18% emphasize customer retention. This article will explain why focusing on your existing customers is critical to overall business growth and share 10 retention strategies that work.
What is customer retention?
Customer retention is the practice of keeping your customers in the long-term. They continue to renew their subscriptions and seek out your service, feeling a sense of brand loyalty. When your customer retention rate is high, customers continue to be committed to your services and choose your product over your competitors.
Maintaining your customer retention rate means reducing customer churn. You increase customer lifetime value (LTV) and raise overall profits. Businesses will utilize various tactics to keep customers coming back and improve their overall loyalty to the business. When it comes to customer retention, nothing beats providing a superior product and service.
When customers truly appreciate your software and feel supported in their endeavors, they will no doubt choose your business over all others. Nevertheless, there are certain strategies that businesses can implement to improve their overall retention rate.
Why is customer retention important?
In case you need persuading, here’s why customer retention is critical for your SaaS business.
Retaining customers is cheaper than acquiring new ones
It costs five times as much to attract a new customer than it is to keep an existing one. You can spend less resources nurturing your existing customers than you would on marketing and sales to acquire a new one.
Every time you acquire a new customer, you have to spend money on training them and educating them on how to use your products. Existing customers are good to go, and have money to spend on upgrades if you can persuade them to stay.
Higher profits in the long-term
When you retain your existing customers you have the potential to gain more profits in the long-term. Loyal customers are responsible for recurring subscriptions and they don’t cost anything to keep beyond customer support when problems arise.
The probability of selling to an existing customer is between 60% and 70% while the chance of selling to a new customer is between 5% and 20%. When you focus on your existing customers, you know you’re on to a winner.
Results in brand advocacy
Customers who are loyal to your brand are willing to advocate for your business. When they have a deep commitment to your brand, they will share their experiences with family and friends, exposing your business to a large pool of potential new customers.
Recommendations from peers are trusted more than those from strangers, and increases the likelihood of your business acquiring more customers.
Building a Successful Customer Retention Strategy
With fierce competition from every other SaaS business out there, companies need to find ways to keep their customers loyal. When customers have an almost infinite number of options, your business has to stand out from the crowd and offer personalization and a sense of trust.
Customer retention requires a purposeful application of strategies that are designed to keep customers feeling loyal. If you don’t invest in your customer retention strategies, then customers are likely to be lured away by your competitors.
That’s why it’s important to put a lot of thought into your customer retention strategy. Next, we’ve got 10 strategies that work to help you retain customers.
10 customer retention strategies that work
1. Find out what customers think with surveys
One of the best ways to retain your existing customers is to find out what they think with surveys. When you gather important feedback from your customers, you can understand what they like and don’t like. NPS (Net Promoter Score) surveys tell you which customers feel the most loyal to your brand and why.
Customers feel happy when companies proactively ask for their feedback, and implement any changes they suggest. Businesses that listen to their customer’s opinions stand a better chance of developing products and services that customers actually want. Consider a solution like Churn360 which allows you to send NPS, CSAT and CES surveys to customers during the customer journey.
2. Treat customers like people
A relationship between customers and a business can only be developed between people. You need to treat customers like human beings before you can build loyalty and trust. The ways you can treat customers like people include humanizing the way you communicate with them through casual language, rather than speaking to people like robots. In order to increase customer satisfaction, humane interactions need to happen more often.
Customers who feel like people receive a personalized service from your business. They are more than just a number as you remember their birthdays, and the anniversary of when they first signed up to your service. Deepening the relationship with your customers creates a warm sense of reciprocity and assures that they continue their commitment to your business
3. Improve your onboarding process
When your customers first become acquainted with your software is the most crucial time for building the foundation for customer retention. When they’re first learning how to use your product, you have a chance to show them the value of your software. If you don’t take the opportunity to make customers sticky with your product in the beginning, they’re unlikely to stick around for the long-term. It is possible to improve and accelerate the onboarding process by implementing various strategies.
Show customers how to use your software with in-app tutorials, tooltips and self-service content. Don’t skimp when it comes to investing in the education of your customers because this will ensure that they stay with your product in the future.
4. Invest in customer support
When you entice your customers to become users of your software, they need to know that they will be supported whenever they have problems or issues. Customer support has to be fast, helpful and relevant for customers to feel like you have their best interests at heart. It’s the best way you can invest in your existing customers and make them successful with your software.
If customers encounter hurdles with your software, the way you can help them overcome this is through exceptional customer support. It should be provided across channels including live chat, email and phone support, so your customer can use the channel that is the most convenient for them.
5. Reach out to lapsed customers
Software like Churn360 can tell you when customers have lapsed with your software. If they haven’t logged in for a while, or are failing to use vital features, you can get notifications that help your customer success managers intervene with customers who might be at risk of churn.
When customers are losing interest in your software, there is a period when you can recover them and remind them of the value that your product has to offer. Many customers who are potentially going to churn just need reminding of exactly why they need your software and how it can benefit them.
6. Continue delivering value
Retaining customers is easy when your product continues to deliver value to their lives. New features in your software should be shared with your customers to show them that the product roadmap is continuing to be developed. When you expect customers to keep paying your subscription, you should consistently offer more ways for them to solve business problems.
You can show your customers case studies of how other customers have achieved value with your company’s software. When customers appreciate how powerful your software is, they are more likely to keep renewing their subscription.
7. Educate your customers with self-service
Customers who are becoming familiar with your software deserve to be taught through self-service materials such as a knowledge base or community forum. Customers shouldn’t have to get in touch with your customer support team in order to understand how to use your software.
When customers don’t have to contact your support team to get help, they will be more satisfied with the experience they have with your software. Self-service content is virtually instant and there is no wait time for your customers to obtain help. It helps you save costs on customer support and ensures the customers find the support that they need.
8. Surprise your customers and create delight
When you surprise your customers with exceptional service, you create moments that enable customers to view your business in a more positive light. Moments of surprise can include handwritten notes to your customers, or messages on their birthdays. It shows your customers that you view them as more than just a number.
Customers who are surprised will feel a sense of reciprocity. Customers who are treated well will respond in kind. It doesn’t take much to convince your customers that your business is worthy of their good sentiments. You are creating a deeper relationship with customers that will result in more loyalty and commitment.
9. Acquire the right customers
Customers who are not a good fit for your product will never be retained in the long-term. If they have no use for your software, they are highly likely to churn and refuse to come back. It’s down to your marketing and sales teams to attract appropriate customers who understand what your product is supposed to do and how it can help them.
Retention works best when you have customers who appreciate what you are trying to do and actually have a good use for your software. Customers who find value in what you are trying to do are more likely to renew their subscription and become loyal fans in the future.
10. Reward your loyal customers
Customers who are loyal to your business are more likely to continue with their subscriptions. When you have loyal customers, you need to reward them and show them they are important to your business. Ways you can show appreciation for their loyalty is developing a customer loyalty program with points and discounts for customers who continue to stick around.
Customers who are part of a loyalty program need to feel like they are part of an elite group of customers who get superior discounts and benefits and perks compared to others. When customers experience rewards for being part of your business, they are much more likely to continue their subscription.
Retaining customers is a balancing act
When you focus your efforts on retaining your existing customers, you need to balance this against acquiring new ones. New customers are important for reassuring investors that your product is appealing, while existing customers are vital to sustainable growth. For SaaS businesses especially, customers who repeatedly renew their subscriptions show that your product has long-term stickiness.
Retaining customers is not easy, but if you put effort into the process you are likely to keep more customers. There’s no replacement for providing an exceptional product or service, but you can tip the scales in your favor when it comes to customer retention.
Customers who continue to patronize your business are a valuable source of income and they can also provide powerful recommendations for your business. You should not neglect your existing customers in favor of new ones, or you’ll definitely regret it.