I'm sure you know that customer retention is essential for any SaaS business, for achieving financial stability, maximizing profitability, driving sustainable growth, and maintaining a competitive edge in the market. But usually, people do not know what is the best strategy for keeping their customers happy and glued to their product?
Answer to this may vary from industry to industry and we will provide general guidelines for the discovery path, that can be applied to any business. But, before we dive in, let's make sure we have the basics covered first:
Customer Retention Refers to activities and actions companies and organizations take to reduce the number of customer defections, where the goal is to have as many active subscribers who will continue their recurring subscription or/and to retain as many customers who are thinking or decided to leave, as possible. It's done often through customer loyalty and brand loyalty initiatives.
Churn Term Churn refers to the number of customers who end their relationship with a company within a given period and churn rate can vary depending on the app category and/or business model. In general, a lower churn rate signifies better user retention, indicating that the app is generating more revenue from new and existing users than it is losing from churned users. According to latest research, average churn varies from 13% to 19% depending of the industry, meaning situation is way past critical.
Keeping customer retention high and churn under control is vital for long-term success due to the fact that lead generating costs keep increasing.
The WHY?
Churn can occur due to many reasons. It may happen due to user inactivity, app uninstallation, personal matters, discontinuation of a subscription service due to financial problems or not getting enough ROI out of product or service (the most common reason). And all these reasons will contribute to the overall churn rate.
A high churn rate indicates that you’re spending a lot of money on customer acquisition but not getting the maximum return on investment (ROI) from the user. And customer acquisition costs are getting higher and higher every year. That is why customer retention needs to be a # 1 priority of a SaaS business! But retention teams are often overloaded with daily tasks and usually do not have the bandwidth to retain every customer that decided to leave you.
The HOW?
This is our discovery cheat sheet for boosting customer retention and annihilating churn.
Segmentation Mastery Customer segmentation is the practice of dividing a company's customers into groups that reflect similarity among them. Look into your customer base and divide it into segments based on behavior, demographics, or usage patterns and tailor retention strategies and offers to each segment's specific needs and preferences.
Proactive Engagement Proactive engagement is about finding key moments where you can drive engagement with customers and seamlessly take part in ongoing conversations, rather than being reactive, and waiting for customers to engage with you first. Reach out to at-risk customers before they churn. Utilize personalized emails, in-app messages, or targeted offers to re-engage and keep reminding them of the value your service or product provides.
Upgrade/Upsell Incentives An upsell incentive is a strategy used to encourage customers to buy additional products, services, or upgrades that complement their existing purchase. Offer attractive incentives for customers to upgrade their subscription plans. Motivate them to increase their spending by highlighting additional features, benefits, or discounts/savings they'll make by upgrading to higher tiers,
Feedback Loop Optimization The feedback loop is the process of gathering, analyzing, and acting upon feedback received from customers. Create a seamless feedback loop to gather insights from customers about their experience with your product. Use this feedback to quickly identify pain points and make improvements that enhance customer satisfaction and loyalty.
Loyalty Rewards Loyalty programs use structured initiatives to reward and motivate customers to become brand champions, and to inspire users to take actions that are not only valuable to the SaaS company but also beneficial to the customers themselves. Implement a loyalty program that rewards customers for their continued engagement, and make them kind-a your partners by turning them into brand champions and affiliates. You can offer perks such as exclusive content, discounts, or early access to new features to motivate ongoing subscription renewals.
Referral Bonanza Referral marketing strategies replicate the results of organic customer-to-customer promotion. It's simple, if you're impressed by your new espresso machine and recommend it to a friend, you've made an organic referral. Kick-start a referral program that encourages existing customers to refer new customers in exchange for rewards, commission or discounts. Leverage the power of word-of-mouth marketing to rapidly expand your customer base while rewarding loyal advocates.
Data-Driven Decisions Data-driven decision-making is defined as using facts, metrics, and data to guide strategic business decisions that align with your goals, objectives, and initiatives. That's why it's super important to harness the power of data analytics to identify churn patterns and trends. Use predictive modeling to anticipate which customers are most likely to churn and proactively intervene to prevent attrition.
Continuous Product Innovation Continuous innovation refers to the incremental improvement of existing products, services, or processes over time. It involves small, iterative changes that aim to enhance performance and functionality but do not fundamentally change the underlying product or service. Take critique stand and review your product. Fix loopholes and ensure customer can see ROI as quickly as possible. Stay ahead of the curve by continuously innovating and evolving your product offerings, keep releasing updates regularly about new features, and enhancements that excite and delight customers. This is going to keep reinforcing their decision to remain loyal subscribers.
Customer Success Focus Customer success helps companies unlock the value from their solutions and achieve a compelling ROI as a result. When customer success teams help buyers accomplish their goals, it's clear that the product or service provides value for users. Keep investing in a dedicated customer success team focused on proactively guiding customers throughout their journey. Offer personalized support, trainings, and resources to help customers achieve their desired outcomes and maximize the value they are gaining from your service.
Onboarding Optimization Customer onboarding is the first stage of the customer journey once they begin using a product or service. This stage of the customer journey often defines their relationship with a product or brand and that is why it is vital to make this experience as positive as possible. Streamline your onboarding process to ensure new customers quickly understand the value proposition of your product. Provide clear guidance, tutorials, and support to help them achieve success from the outset, reducing the likelihood of early churn. Customer retention starts with onboarding!
You don't have to follow bullets necessarily in this order, but to apply each and every one to your business and give yourself an honest answer on question:
"Am I doing anything about any of 1 to 10 bullets from above?"
YES → are the results satisfying?
NO → think about how to apply it to your business and do it asap!
By focusing on these key propositions, any SaaS business can effectively reduce churn rates, increase customer satisfaction, and drive sustainable revenue growth in a short period of time. Do, or do not! There is no try! The ChurNO Team has been fighting churn successfully for over a decade and we've crafted a game-changing product to help your business.
ChurNO removes Artificial from the Intelligence and make it human-like in the simplest way for You & ChurNO to become a symbiotic team!
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