Steps and Strategies for Improved SaaS Retention

What is Saas Retention? Saas retention is a key metric that focuses on your customers’ use of your product, essentially a proxy for customer satisfaction, the higher your retention, the higher your revenue growth and lifetime value will be.
  1. Align team incentives around retention. …
  2. Make onboarding your top priority. …
  3. Engage with customers to help them succeed. …
  4. Deliver exceptional customer support. …
  5. Optimize your pricing to promote retention. …
  6. Know your metrics and choose the right tools.

7 Proven Strategies to Reduce SaaS Churn and Give Your Retention Rate a Boost with Verifone’s VP,…

Why is SaaS retention important?

For businesses utilizing the SaaS model, retention is crucial because it can assist businesses in retaining clients over the long term. Customer retention aids SaaS businesses in lowering their churn rate, or the rate at which they lose clients. Here are a few more benefits of customer retention:

What is SaaS?

Software as a service, or SaaS, is a business model where an organization provides cloud-based software that customers can access from a variety of devices and locations. SaaS companies can sell software for businesses and individuals. A customer might be able to access a SaaS product from their computer, tablet, and cellphone, for instance.

How to improve SaaS retention

The following actions can be taken to increase customer retention for a SaaS company:

1. Identify what customers need from your software

Evaluating the advantages the software offers to customers is the first step you can take to raise the customer retention rate for a SaaS business. This can assist you in comprehending why users choose to use the software and creating incentives for them to do so.

For instance, the provider of software as a service could make sure every aspect of the software experience encourages customers to be productive and efficient if productivity is the main benefit a task management software offers its users. Streamlining the registration process and adding new features to the software based on user feedback are possible methods to accomplish this goal.

2. Define what retention means for the business

The next step is to clarify what the business means when it refers to customer retention. For instance, the business might collect customer feedback to learn what users want from the software if it wants to increase the number of regular users who actively use the software. However, the approaches for enhancing this metric may differ if the company counts the number of customers who regularly pay for the software.

3. Identify relevant metrics to monitor

Choosing which metrics to monitor is the next step in the process of improving customer retention for SaaS companies. Companies must establish and track metrics during this process to assess the effectiveness of particular strategies. For businesses concentrating on customer retention, the following metrics are pertinent:

4. Set a goal

Next, you can define a goal for customer retention using the metrics you identified in the previous step. To increase your chances of achieving or exceeding your goal, you can set SMART goals. These goals are those that are specific, measurable, achievable, relevant, and time-based.

As an illustration, reduce churn by 15% by the end of the quarter by streamlining the onboarding process and implementing efficient customer support techniques.

5. Evaluate results

Following the implementation of a customer retention strategy and setting a goal, you can assess the success of your efforts. If your goal was accomplished, you can continue to increase customer retention using the same method. Alternately, if you made progress toward the goal but fell short of it, you can examine the data to identify the reason and set a new objective.

Customer retention strategies for Saas businesses

The following are some tactics you can employ to increase SaaS retention:

Ask for customer feedback

Asking for customer feedback is one tactic SaaS companies can use to increase customer retention. Customers may then rate the software’s level of satisfaction and suggest changes as a result. Businesses can use this feedback to change their offerings and raise customer satisfaction, which will help keep customers coming back.

Create a strategy for communicating with customers

Making a plan for customer communications is another method for SaaS companies to increase customer retention. For instance, implementing an email marketing campaign can assist businesses in increasing customer retention through engagement.

Create a tailored onboarding process

You can send new customers information that focuses on how to use the company’s software and resources for customer support services rather than sending all customers the same communications on a regular basis. In onboarding communications, you can also highlight the software’s value to help clients understand what they’ll receive from the service. This can lower churn rates after onboarding and guarantee that clients feel supported by the business.

Improve the softwares scalability

Software’s capacity to expand its features or applications with further development is referred to as scalability. Scalability is a crucial component of the SaaS business model as it enables businesses to provide software updates in response to customer feedback. Scalability also means that the software can accommodate businesses of various sizes and needs, which is especially true when SaaS companies concentrate on selling software to businesses.

Offer tips for using the software

Giving customers advice on how to use the software is another way to convey the value of the software to them. On your website, you can post instructions for using the software, and you can program emails to be sent when a customer completes particular actions. This can ensure users have the confidence they need to take full advantage of the software.

Create a community for customers

For SaaS businesses, setting up an interactive community for users of the software, like a message board, can have a number of benefits that help with customer retention.

Emphasize why your product is the best on the market

Customers can better understand the outcomes they can expect from the software when SaaS companies focus on the qualities that set their product apart from rivals. Companies can be confident that their customers will find this emphasis easy to read. Reminding clients of the advantages of using the service and its worth can boost client retention and lower churn.

Additionally, it’s critical for SaaS providers to fulfill their commitment to providing customers with the best product possible. To help ensure businesses offer the best features and prices, this may require routine market research into competitors’ offerings.

Provide a convenient customer service experience

Focusing on providing customers with responsive and convenient service is another method SaaS businesses can use to increase customer retention. For instance, a business could expand the size of its customer support department and implement virtual help desk software to meet the demands of its clientele. This can increase the likelihood that customers will remain engaged with a service for a longer period of time by making them feel valued by the company.

Upsell to customers

A business can upsell to customers after proving the value of its service to them in order to boost customer retention. Companies have the chance to offer customers better services in exchange for a higher price through upselling. By proving their value to their clientele, this can help businesses improve their customer relationships.

Implement a rewards program

By implementing a rewards program, SaaS companies can encourage devoted customers to stick around. The value of the software for the user can be increased by rewarding customer loyalty, which will also help with customer retention. For instance, a business might provide a subscriber with a free month of software or a discount on services after a year. This may encourage clients to utilize a service over the long term.

Survey customers who unsubscribe from the service

Although losing subscribers isn’t ideal, businesses can benefit from the experience by having departing customers complete a brief exit survey. This could assist SaaS companies in identifying areas for service improvement or addressing particular customer churn. Additionally, it can enable businesses to monitor the number of clients who leave for various causes, enabling them to set objectives for client retention.


How is SaaS retention measured?

If you’re unsure of what a good customer retention rate is, you can look at industry averages to get an idea. Given that SaaS companies typically experience a 3-8% monthly churn rate, the average retention rate should fall between 92 and 97%.

How do SaaS companies retain customers?

The traditional retention rate is calculated as follows: users on Day N / users on Day 0. Range retention rate is equal to the number of users over a given period of time divided by the number of users over the same period of time initially.

Why is retention important in SaaS?

Customer retention in SaaS is all about respecting the users’ time and issues and making it worthwhile for them to use your service. People will always be happy to pay to have someone who understands them solve their problems.

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