Top 10 B2B SaaS Retention Strategies You Should Know
Did you know that acquiring a new customer costs 5 to 10 times more than retaining an existing one?
How about this: did you know that long-term customers tend to spend more than new customers do?
When it comes to the SaaS business model, the battle is not just in amassing new customers. The real challenge is customer retention.
And it’s not hard to see why. What makes SaaS businesses profitable is their subscription-based pricing, which generates recurring revenues.
Recurring revenues mean that you have long-term relationships with your customers.
Winning them over doesn’t stop when they finally become your customers. You keep winning them over so that they will continue using your SaaS product for as long as possible.
And that is called customer retention.
In this article, we will talk about B2B SaaS retention strategies. We will discuss what customer retention is and why it’s important. We will also give you some of the most common strategies that you can use for your business.
But before we jump into that, let’s first understand what customer retention is and why it matters.
What Is Customer Retention?
Customer retention refers to the activities and initiatives undertaken by a company to keep its customers loyal and engaged with its product or service.
It’s the opposite of customer churn, which is when customers stop using a product or service.
Churn is a big problem for SaaS businesses because it represents lost revenues.
When customers churn, they stop paying for the subscription, which means less recurring revenue for the SaaS company.
Customer retention, on the other hand, is crucial for SaaS businesses because it leads to increased recurring revenue.
The goal of customer retention strategies is to keep your customers satisfied and engaged with your product or service so that they would continue using it and paying for it in the long run.
Why Is Customer Retention Important?
There are several reasons why customer retention is important. But perhaps the most important reason is that it’s more cost-effective to retain existing customers than to acquire new ones.
In fact, studies have shown that increasing customer retention rates by 5% can increase profits by 25% to 95%.
Furthermore, loyal and satisfied customers are also more likely to refer your product or service to others. They can be your best advocates and help you acquire new customers through word-of-mouth marketing.
All of these underscore the importance of customer retention for SaaS businesses.
This is especially true for B2B SaaS companies. Customer acquisition costs (CAC) in the B2B market are generally higher and the sales cycles are longer.
In other words, customer acquisition in the B2B market takes a lot more time and resources. You’ll need to keep them as customers for as long as possible in order to get a significant return on investment (ROI) on your CAC.
Now that we know why customer retention is important, let’s move on to the SaaS retention strategies that you can use for your business.
1) Optimize Your Customer Onboarding Process
One of the most effective SaaS retention strategies is to optimize your customer onboarding process.
Customer onboarding is the process of helping new customers get started with your product or service.
Its goal is to help new customers understand how to use your product or service and get the most value out of it. What’s more, it’s your chance to make a good first impression on your new customers.
According to Wyzowl, 86% of customers say that they will likely be more loyal to a business if it invests in customer onboarding.
There are a few ways to optimize your customer onboarding process:
One way is to create a self-service onboarding program that new customers can access on their own. This could be in the form of an online course, video tutorial, or e-book.
The advantage of having a self-service onboarding program is that it’s available 24/7 and can be accessed at the customer’s own pace.
It’s also a great way to scale your customer onboarding process because you don’t have to rely on your support team to help every new user.
However, a self-service portal can be very limited in terms of the help and support that it can provide. This is where live customer onboarding comes in.
Live Customer Onboarding
Another way to optimize your customer onboarding process is to offer live customer onboarding sessions. This could be in the form of a webinar, group coaching call, or one-on-one call.
Live customer onboarding has several advantages over self-service onboarding.
First, it’s more personal because the new users get to interact with a real person. Second, it’s more flexible because you can tailor the session according to the needs of the new customer.
Third, it’s more effective because you can answer the new users’ questions on the spot and help them overcome any challenges they’re facing.
The downside of live customer onboarding is that it can be very time-consuming and resource-intensive. It’s also not available 24/7 like self-service onboarding.
2) Implement a Customer Success Program
A customer success program is a set of processes and best practices that are designed to help customers get the most value out of your SaaS product.
The goal of a customer success program is to reduce customer churn and increase retention by helping customers achieve their desired outcomes.
There are several benefits to implementing a customer success program:
- It helps you proactively address the needs of your customers.
- It allows you to build deeper relationships with your customers.
- It increases customer lifetime value (CLV).
- It reduces churn and increases retention.
Aside from onboarding, customer success also includes efforts like training, customer success live chat, and creating a knowledge base.
Let’s talk about them one by one.
Training & Coaching
Training is the process of teaching customers how to use and navigate your SaaS platform. The goal of training is to help customers get the most value out of your product.
There are several ways to perform this training.
One way is to create how-to guides, video tutorials, and other educational materials that show customers how to use your product or service.
You can also offer customer success coaching to help customers overcome any challenges they’re facing.
Now, we understand that offering personalized training and coaching sessions for each customer takes a lot of time, effort, and resources. That’s why a lot of SaaS companies offer these as paid add-on services.
So, you should also have customer success initiatives that are accessible to all of your customers.
Speaking of which…
Customer Success Live Chat
Another way to provide support and assistance to your customers is through customer success live chat.
This is a great SaaS retention strategy because it allows you to proactively address the needs of your customers in real-time.
It also helps you build deeper relationships with your customers by directly providing them with the help and support they need.
The downside of using live chat is that it can be very resource-intensive. You will need to have a team of dedicated customer success representatives ready to address your customers’ needs.
Creating a Knowledge Base
A knowledge base is a collection of articles, FAQs, how-to guides, and other educational materials that show customers how to use your product or service
The goal of a knowledge base is to help customers get the most value out of your product or service.
There are several benefits to creating a knowledge base:
- Your customers can access it anytime they need to
- It doesn’t require interaction with your customer success representatives
- It can build your authority in your niche
However, the downside of creating a knowledge base is that it can take a lot of time and effort to build it.
After all, a knowledge base can contain hundreds of pages of content. And I’m not just talking about the text content. You may also need to add infographics, screenshots, and screen recordings to demonstrate your tutorials.
3) Have A Top-Notch Customer Support Process
So what’s the difference between customer success and customer support?
Your customer success team focuses on making sure your customers are making the most out of your SaaS product. While your customer support team focuses on “putting out the fires”, so to speak.
Customer support, also known as customer service, is the process of providing assistance to users who are having problems with your SaaS solution.
The goal of customer support is to help users resolve any issues they’re facing so that they can continue using your SaaS product.
Addressing their problems effectively and efficiently is one of the most direct things you can do to prevent them from churning out.
There are several ways to improve your customer service process. Let’s talk about a few of them:
Offer Omnichannel Support
Omnichannel support is the process of providing customer support through multiple channels. These include email, phone, live chat, and social media.
The goal of omnichannel support is to make your customer service team more accessible.
Take Advantage Of AI & Automation
Artificial intelligence (AI) and automation are two of the most game-changing technologies in the SaaS industry right now. And that includes customer support.
You can use AI to create chatbots that can resolve simple issues automatically. You can also use it to direct users to relevant knowledge base articles. And if all else fails, you can have your chatbots direct them to your customer support representatives.
Automation, on the other hand, can streamline your customer support process. For example, you can use automation to route customer service tickets to the right team or agent.
Both AI and automation can help you improve your customer support process. However, they should be used in addition to human agents and not as a replacement for them.
Personalize Your Messaging
Personalized messages are those that are tailored for the specific customer you are talking to.
Sending personalized messages to your customers is a great way to show them that you value their business.
It also helps you build deeper relationships with your customers.
While templated responses can help you respond a lot faster, they can also sound a bit robotic and detached. And that can be pretty unappealing to your customers.
That’s why you should still personalize your messages. Sure, you can still use your templates. But make sure to input your customer’s name and mention their specific issues when necessary.
4) Pay Attention To Customer Feedback
Your customers are the best source of feedback. More than anyone else, they know your SaaS product’s good qualities and its shortcomings.
That’s why you should always pay attention to customer feedback. It can help you improve your SaaS product and prevent churn.
But how can you gather customer feedback?
It can come in different forms. It can be in the form of online reviews, social media comments, or survey responses.
One of the best ways to gather customer feedback is through user reviews.
User reviews are testimonials written by your customers about their experience with your SaaS product.
You can usually find them on review sites like G2, Capterra, and FinancesOnline.
The great thing about SaaS users posting on these sites is that they are honest with their reviews.
These reviewers understand that other potential customers will be reading these reviews. So, they are more likely to give an accurate portrayal of their experience.
This is why user reviews can be a great source of customer feedback. But you should also take them with a grain of salt since they are not always 100% objective.
Just a pro tip: you can use these sites as customer support channels.
First, you can respond to their reviews by apologizing for any inconvenience. Then if you can take care of their problem right away, you can show anyone viewing that conversation how excellent your customer support team is.
Social Media Comments
Another great way to gather customer feedback is through social media comments.
Social media platforms like Twitter and Facebook are great places to listen to your customers. You can use them to see what people are saying about your product or service.
You can also use social media to address any concerns or problems that your customers might have. Responding to them in a timely manner shows them that you care about their experience.
What’s more, it also helps to build a relationship of trust between you and your customers.
You can also use surveys to gather customer feedback.
Surveys are a great way to collect data from your customers. They allow you to get detailed feedback about their experience with your product or service.
You can send surveys through email, social media, or even in-app. Just make sure that the questions are clear and concise.
And don’t forget to offer an incentive for taking the survey. This will help increase responses and give you more accurate data.
5) Run A Rewards Program
A rewards program is a loyalty program that gives customers incentives for using your SaaS product.
The most common type of rewards program is a points system. Customers can earn points for every purchase or action they make. They can then use these points to redeem prizes or discounts.
But you can also get creative with your rewards program. You can offer exclusive access to new features or content, early bird pricing, or a temporary free upgrade.
The key is to offer something that will appeal to your existing customers.
Running a rewards program is a great way to show your customers that you value their business. It’s also an excellent way to keep them engaged with your SaaS product.
6) Introduce New Features & Updates Regularly
Customers are more likely to stick around if they see that you’re constantly improving your SaaS product. It shows them that you’re committed to providing them with the best experience possible.
You don’t have to introduce major new features all the time. Sometimes, small updates and improvements can be just as effective.
Just make sure that you’re regularly communicating these changes to your customers. They should always be in the loop about what’s going on with your SaaS product.
7) Build A User Community
A user community is a group of people who share a common interest. It’s a great place for customers to connect with each other and with you.
A user community can help reduce SaaS churn in several ways:
It Gives Your Customer A Sense Of Belongingness
Having a community helps customers feel more connected to your SaaS product. They’ll feel like they’re part of something larger and that they have a personal stake in its success.
This sense of belongingness is especially important for SaaS products that are mission-driven. Customers who feel like they’re part of a movement are more likely to stick around.
It Helps Them Connect With Other Customers
A user community can also help customers connect with other people who use your SaaS product. This can be a great way for them to get answers to their questions or find new ways to use your SaaS product.
It Can Grow Advocacy Among Your Customers
A user community can also help turn your customers into advocates for your SaaS product. When customers feel connected to your SaaS product, they’ll be more likely to spread the word about it to their friends and followers.
What’s more, they can simply add their referrals to the group. You may even choose to reward them whenever they help you gain a new customer. That would make them even happier about your SaaS product.
8) Track Customer Engagement Metrics
Customer engagement is the level of interaction between a customer and your SaaS product. Tracking customer engagement metrics can help you identify SaaS churn risk early on.
There are many different customer engagement metrics you can track, but here are a few of the most important ones:
Active users: This metric measures how many people are actively using your SaaS product. It’s a good way to gauge interest in your SaaS product.
Time spent: This metric measures how much time customers spend using your SaaS product. It’s a good way to see whether or not they’re finding value in your SaaS product.
Feature usage: This metric measures how often customers use specific features of your SaaS product. It’s a good way to see which features are most popular and which ones need more work.
Engagement score: This metric assigns a numerical value to each customer based on their engagement with your SaaS product. It’s a good way to get a general sense of customer engagement.
Tracking these metrics will give you a good idea of how engaged your customers are with your SaaS product. If you see a sudden drop in any of these metrics, it could be an indication that customer churn is about to happen.
9) Follow Up On Inactive Customers
Inactive customers are those who haven’t used your SaaS product in a while. You may detect them while tracking your engagement metrics.
There are several reasons why someone might become inactive. Maybe they forgot about your SaaS product. Or maybe they stopped using it because they found a better alternative.
Whatever the reason, it’s important to reach out to inactive customers and try to reactivate them.
The best way to do this is by sending them a personal email. In the email, you should:
- Thank them for being a customer
- Ask them how they’re doing and if there’s anything you can help with
- Remind them of the benefits of using your SaaS product
- Offer them a discount or other incentive to come back
It’s also a good idea to reach out to inactive customers through other channels, such as social media or your blog. This way, you can cover all bases just in case they don’t check their emails.
10) Maximize Exit Surveys
An exit survey is a survey that you send to customers after they cancel their subscription. It’s a way to collect feedback about why they’re leaving and what you can do to improve your SaaS product.
Sadly, even with the best SaaS retention strategies, churn is still inevitable. But the good news is you can still make the most out of the situation.
Ironically, exit surveys can be very helpful in reducing SaaS churn.
They give you insight into the customer’s experience with your SaaS product and why they decided to leave. This information can be invaluable in preventing other customers from experiencing the same thing.
The best exit surveys are short, to the point, and easy to fill out. They should also be sent as soon as the customer cancels their subscription. This way, you can get their feedback while it’s still fresh in their mind.
Here are a few questions you might want to include in your exit survey:
- Why are you canceling your subscription?
- What didn’t you like about our SaaS product?
- Is there anything we could have done to keep you as a customer?
- Would you recommend our SaaS product to others?
- Would you consider using our SaaS product again in the future?
Asking these questions will give you valuable insight into the customer’s experience with your SaaS product. You can use this information to improve your SaaS product and prevent SaaS churn in the future.
Final Thoughts About SaaS Retention Strategies
Customer retention strategies are essential for any B2B SaaS business. After all, it’s the recurring revenues that bring in the big bucks for SaaS businesses.
And the most pivotal factor in growing your recurring revenue is retaining your existing customers. Sure, acquiring new ones is important too.
But maximizing your customer retention and CLV is the key to the growth of a SaaS company.
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