Do you remember the old computer game SkiFree? The concept was to ski down a hill while avoiding rocks, tree stumps, and trees. Inevitably, you would end up being caught by a terrifying yeti.

I remember spending a lot of hours trying to outrun the ravenous beast only to fail every time. But every time I would come up with a strategy that would get me a little bit further in the game.

Combating Churn and Optimizing Retention

Churn is inevitable- every client will abandon your product eventually. In SkiFree, there is way more fun in avoiding the yeti than restarting the game. In the same way, boosting your retention is way more valuable and fun than acquiring new customers.

Keeping your customers interested as long as humanly possible is the key to running any subscription-based business. In this industry, customer and revenue churn is public enemy number one.

Today, we shall be taking a look at some customer retention strategies that can boost your bottom line. Here are seven strategies that will keep your SaaS business sustainable for the long-term.

1. Align Team Incentives Around Retention

Different departments measure success differently within SaaS companies.

The sales team will want to track the dollars in the bank at the end of each month. The marketing department likes to measure qualified leads. The product team will be checking the number of features they have delivered, and the story points that they have completed.

Every team has different incentives, and it is a mess. What is more unfortunate is that none of the metrics mentioned above have anything to do with retention.

At his talk at the SaaS Fest 2015, David Cancel, founder, and CEO of Drift, shared his thoughts on how to improve customer retention: design the internal metrics of each department to incentivize customer retention. 

How can you achieve this?

  • Sales Team: Limit by industry or geographic area the number of prospects that each salesperson handles. Also, modify the commission structure to support bonuses for customers who stick around. This change should keep the sales staff from quickly running through leads.
  • Marketing Teams: Prioritize lead quality over volume. Track the number of sales-qualified leads instead of marketing-qualified leads as a success metric. Also, integrate the marketing department closer to the sales team. Embed business development reps to qualify leads better.
  • Product Teams: Ensure that product managers have direct and open access to customers. Immediate feedback is essential to product improvement.

2. Prioritize Onboarding

Effective onboarding can make or break customer decisions. If your software is not intuitive and the client can not see the value in it, you are facing a possible cancellation.

Most companies make improving long-term retention a priority. What is the value of long-term retention if a customer is going to drop your application within the first week? Installing better onboarding cascades into the customer's life cycle can create early retention gains.

How can you improve onboarding to improve your SaaS?

  • Know Your Customer: What problem is your product solving? Frame your onboarding to achieve this goal.
  • Identify Your "Aha" Moment: Flatten the learning curves of your products.
  • Map out the Users' Journey: Design a path to guide the customer through key features.
  • Continue Educating the User After Onboarding: Provide tips, education, and training features so that the user can get the most out of the product.

3. Engage With the Customer to Promote Success

Customer success is what you achieve when a consumer gets the desired outcome from interacting with your company.

Persistent feedback and customer engagement are essential in combating churn. With the sheer number of interaction tools available today, it is easy to get started.

Here is a strategy to follow:

  • Make sure you use multiple communication channels. In-app notifications are quite effective. The message reaches its target directly. Phone calls are critical in maintaining large enterprise-level customers. Text messages are effective for customers who are nearing contract expiration dates.
  • Work to give the customer a personalized experience. By sending personalized welcome messages, videos, etc., you could reduce churn rates.
  • Invite the customer to provide feedback. Support team members have the inside scoop into how customers are using our products. Customer success managers and support agents are the best sources of information on product feedback. Use the data to improve the product and user experience.

4. Deliver Exceptional Customer Support

Customer expectation is higher than ever. A 2018 report by NewVoiceMedia estimated that poor customer service cost American companies $75 billion in lost business.

What is the best way of combating churn through exceptional customer service? Look for patterns That might indicate customer distress. These could be recurring support tickets for the same query or lots of unresolved tickets. Be proactive, identify these problems, and address them as fast as possible.

Building trust with the customer is crucial to combating churn. You will need that trust during unplanned outages.

5. Optimize Your Prizing to Promote Customer Retention

Optimizing prices to balance profit and value can have a significant impact on a company's success. Unfortunately, companies spend less time on pricing strategy, yet; pricing is a key to improve retention.

How do you optimize pricing?

  • Do Not Give Discounts: Hefty discounts may juice up your numbers in the initial stages, but the victory is short-lived. Discounts can reduce SaaS LTV by over 30%. To make things worse, discounted customers are likely to churn once the offer expires. Discounts do not guarantee loyalty.
  • Charge More Automatically: Loyalty comes from excellent products and services that the consumer cannot find in any other source. By charging more automatically, you raise the perceived value of the product. Raising prices allows more allocation for customer success programs.

6. Know Your Metrics and Choose the Right Tools

It is hard to improve what you are not measuring. Without any knowledge of your churn rate, it is near impossible to grasp the severity of the situation.

Metrics and tools will not solve the problem for you, but they will handle the heavy lifting:

  • Tools like Zendesk and Delighted can measure customer satisfaction
  • Profitwell will take care of the revenue and retention metrics.
  • Intercom and Wootic allow you to keep in touch with customers while collecting qualitative feedback.

While tools like these will give you the information you need, you also have to learn how to pull insights from raw data.

7. Consider Reward Programs

A customer that stays by you through the thick and thin deserves some reward. Let your clients know your appreciation for their loyalty. If executed well, loyalty programs can be mutually beneficial to the customer and the company.

Loyalty rewards do not have to be complicated. A simple upgrade, discount, or freebie could work to reduce churn rates.

Retention is Pivotal to Sustainable Growth

This statement does not mean that customer acquisition is less important. Every business needs a healthy stream of new customers. Without a solid plan to retain the new acquisitions, the churn yeti is likely to eat up your retention rates. Invest in a sustainable strategy for maintaining the customers that you have already won. If you heed to this advice, your efforts will pay dividends for decades to come.



Author Information

Insivia is a Strategic Growth Consultancy helping software & technology companies scale through research, brand strategy, integrated marketing, web design, and retention.