I lead the operations for two SaaS companies internally labeled “Earners” by our holding company. What that means is that we are strategically more focused on customer retention than on acquisition. Makes sense for us and also a lot of other SaaS businesses. Why?

1. Increasing customer retention by 5% can boost profitability by 25-95%.
2. Acquiring a new customer can be about 5 times more expensive than retaining one in a SaaS business.

In this article, I’m sharing my top 8 customer retention and churn reduction techniques and the tools we use to implement them.

5 critical takeaways on improving customer retention:

• For SaaS companies, keeping customers is crucial. It leads to long-term success, stable revenue, and a robust customer base.
• To boost customer retention and lower churn rates, implement loyalty programs, personalize experiences, and prioritize customer success.
• Use data-driven insights and optimize onboarding to create custom retention strategies.
• Ask for and act on feedback, communicate effectively, and optimize pricing and billing strategies to improve customer satisfaction and minimize churn.
• Win-back strategies can re-engage churned customers, demonstrating a commitment to customer needs and building long-term relationships.

Table of Contents

1. Frequently Asked Questions
2. Improve Customer Loyalty
3. Focus on Customer Success (CS) Initiatives
4. Enhance Onboarding Processes
5. Solicit and Act on Customer Feedback
6. Develop a Robust Customer Communication Strategy
7. Monitor and Optimize Pricing and Billing
8. Identify and Nurture High-Value Customers
9. Implement a Win-Back Strategy
10. Conclusion

Frequently Asked Questions

What is customer retention? Customer retention refers to the ability of a business to keep its customers over time, maintaining long-term relationships and maximizing customer lifetime value.

What is churn? Churn refers to the number of customers who stop using a product or service within a given period, often resulting in lost revenue for the business.

What is a loyalty program? A loyalty program is a marketing strategy that offers rewards and incentives to customers for their continued use of a product or service.

What is customer success? Customer success is a proactive approach to ensuring that customers achieve their desired outcomes with a product or service. This increases satisfaction and reduces churn.

What is onboarding? Onboarding introduces new customers to a product or service, helping them understand its value and use it confidently. It sets the stage for a positive and long-term relationship.

1. Improve Customer Loyalty

A customer who feels valued is encouraged to continue using the service. What’s more? They may end up writing a good G2 or Capterra review for you! Here’s what we do to improve customer loyalty:

• Enhance customer support: Exceptional customer support makes users feel valued and heard. We use Intercom to streamline our support processes and ensure a positive experience.
• Implement loyalty programs: We design loyalty programs that include offers such as loyalty discounts for long-term commitments (for example, annual) or free credits for writing reviews.
• Send holiday gifts: Come every holiday season, it’s a good idea to send holiday gifts to our high-value customers. They love it! We use Printfection to create the ‘gift baskets’.
• Foster a sense of community: Celebrating your customers’ successes publicly can enrich your relationship with them. Shoutouts on social media and creating a space for customers to engage with your brand and each other can strengthen their connection to your community.

2. Focus on Customer Success (CS) Initiatives

As a company, we place a strong emphasis on customer success. To help our users achieve their desired outcomes, here are some things we do:

• Assign dedicated account managers: Although there are common use cases for your SaaS business, some customers have unique requirements. Assigning a point-of-contact for high-value customers ensures a better understanding of their requirements and helps with CS. I am the account manager for several of our Enterprise customers. Love checking in on them and solving any issues they face. This brings me to our next initiative.
• 30-60-90 check-in cadence: I schedule three check-ins or business reviews every quarter with our customers using Calendly and Zoom to assess their satisfaction and address any concerns. We create the check-in emails using MailChimp or Intercom. Not everyone schedules a call, but regular communication is never bad for business.
• Offer proactive support and resources: Our documentation can be accessed on our own Dev Centers, Github, publicly shared Notion pages, YouTube, and so on. We target different personas, developers, and managers separately in these resources.

3. Enhance Onboarding Processes

Our internal data taught me that a smooth and effective onboarding process is not only highly effective for getting Product Qualified Leads (PQLs) but also for a long-lasting customer relationship:

• Create product tours: I created engaging product tours using Intercom that guide the users through all the necessary steps to start using the product. You must identify the steps with high drop rates and make them easier to navigate.
• Simplify the sign-up process: Streamline the sign-up process, and make it as easy as possible for new users to get started. This includes minimizing the number of required fields and providing clear instructions.
• Provide timely support: Our customer support team is highly available during onboarding to answer questions and concerns. We use group emails (G-Suite) and chat (Intercom) to direct customer queries to the right team members.

4. Solicit and Act on Customer Feedback

Listening to customers and incorporating their feedback has been instrumental in reducing churn and retaining customers. Here’s how I’ve approached this:

• Conduct surveys: As you might have observed, we use Intercom a lot. We use it for sending surveys as well to measure NPS, customer satisfaction, valuable feedback, product improvement ideas, and so on. Alternative tools are SurveyMonkey and Typeform.
• Offer gift coupons: To incentivize users to fill out the survey forms or write reviews, we offer redeemable gift coupons, free credits, or other freebies such as one-on-one calls with our dev team.
• Monitor social media and reviews: I keep a close eye on our social media channels and review platforms to track customer sentiments and address any issues promptly.
• Implement a feedback loop: We’ve established a process for sharing customer feedback with our dev team, to ensure the product roadmap is updated. For tracking team tasks, we’ve recently switched to Notion from Asana.

5. Develop a Robust Customer Communication Strategy

Effective communication has been key to building lasting customer relationships:

• Send regular product updates: We use Mailchimp/Intercom to share product updates, feature releases, and company news.
• Offer valuable content: I write blog posts hosted on WordPress to provide our users with helpful tips and best practices related to our product and industry.
• Establish a multi-channel approach: Right from onboarding, we engage with customers through various channels – email, phone, social media, and in-app messaging – to cater to their preferences.

6. Monitor and Optimize Pricing and Billing

I’ve found that optimizing our pricing and billing strategies can significantly impact customer retention:

• Evaluate pricing models: We regularly review our pricing to ensure it is competitive and fair. User feedback and industry standards affect our decisions. But at the end of the day, as my ex-boss told me, “Pricing is more of an art than science.” See what works and adapt accordingly.
• Offer flexible billing options: We use Stripe for payment processing. It provides our customers with multiple billing options and payment methods, accommodating their individual preferences.

7. Identify and Nurture High-Value Customers

As I wrote above, retaining high-value customers is key to the profitability of our businesses:

• Analyze customer segments: I use Baremetrics to identify customer segments and track changes in KPIs.
• Build strong relationships: I prioritize developing personal connections with key customers through regular check-ins, account reviews, and attentive support.

8. Implement a Win-Back Strategy

Even when customers churn, a well-executed win-back strategy can bring them back:

• Analyze churn reasons: I use good-old spreadsheets to identify the most common reasons for churn and categorize them.
• Craft targeted win-back offers: I create compelling offers, such as discounts or feature upgrades, to entice churned customers to return.
• Track win-back success: I use a combination of the spreadsheet records and our database (with SQL queries) to monitor the success of our win-back campaigns.

Conclusion

Customer retention is all about building and nurturing relationships with your customers. If they like you and your team, know that all is well. By using the above retention and churn reduction techniques, I improved customer loyalty and retention at our SaaS companies. I recommend implementing these strategies and using the tools I’ve mentioned to boost retention rates.

Do not hesitate to reach out if you have any questions.