Ever wondered what difference a successful SaaS retention strategy can bring to your business? According to a study by Bain & Co., just a 5% increase in customer retention rates could potentially boost profit up to 95%! Yes, that’s the measure which has not only startled the traditional service companies but the modern SaaS based industry too got swept away by it. No wonder why the service based firms have been investing more time, effort and money to come up with an effective retention strategy that works.
SaaS retention strategy has become a hot topic for SaaS based firms after they realized the immense benefits of customer retention over blindly following the expensive process of acquiring new customers. The industry has seen many evolutions in this discipline in the past decade and so when a new player enters the market, they often get overwhelmed by the sea of knowledge available online. Instead of making the best out of it, they often get confused about what to choose that fits best in their organizations. Hence, to break it down to the simple and tangible methods, we have researched through many sources and concocted the best recipe that works just right for you.
Align your team incentives with retention
With the Customer Success department getting more prominence and visibility in SaaS companies, the “Customer First!” value is becoming more widespread throughout the entire organization. It is no longer a responsibility of just one department to think about the retention of the customer by providing them an outstanding customer experience but the whole organization has to be driven by this sentiment. This is the major psychological shift that most of the successful SaaS based organizations have been able to achieve.
And if that goal has to be imbibed by every individual of a company then what better approach could there be then to align their incentives with customer retention. In a SaaS based organization, the sales and marketing team, the product management team as well as the customer support team should all be brought into the agreement of availing incentives based on the SaaS retention strategy rather than their short-term and fragmented targets that twist the overall purpose of an organization in a longer run. E.g. it is detrimental to the company’s growth if the sales team achieves their sales target by somehow converting the unqualified leads who continued their usage not even for a month after the initial purchase. Similarly the Product management team should not only think about the performance of the product but also consider the adoption rate of the customers in order to design a more simple and easy-to-adapt product. So the mantra for the whole organization should be to “Think from the customer’s perspective!”.
Have an exceptional Onboarding process
Customer onboarding is the phase where the actual relationships between your company and the customers are cemented. No matter how tremendous their experience was with the sales and marketing team or how wonderful your product is, if the customer’s experience is hampered by the complexity of the onboarding process even for the slightest reason then it can have a cascading impact in their perception towards your product or service.
The idea is to prevent every loophole, right from the beginning, which can possibly cause a negative customer experience. The customer success manager (CSM) should step-in in this phase. They should be able to gauge if the automated onboarding process is easy to navigate for the customer or do they need manual intervention as well. The online content like the tutorial videos, FAQs, etc. for the orientation of a new customer towards the product should be self-explanatory and quite comprehensive. The features of the product should be introduced gradually from low to high complexity ensuring a smoother adaptability of a new user. If necessary, a product manager could also be brought into a discussion to demonstrate the value of the product in the customer’s business context.
Engage regularly with customers
Strategically engaging with your customers until the product adoption has taken place falls under the key responsibility area of a CSM. Based on the type of industry and number of customers you are serving, the CSM should design a high-touch or a low-touch engagement model for their SaaS retention strategy while connecting with them regularly either manually or through automated triggers. Customers need to be constantly reminded of the value your product is adding to their business and for doing so if a CSM possesses a bit of their domain knowledge as well then there’s nothing like it.
They should be able to demonstrate the value proposition to the decision makers of your client company and at the same time should be able to engage with the end-users to show, for instance, how their workflow has been simplified by using the product. Based on your niche, you should conduct monthly or quarterly review meetings with your clients to regularly get feedback on your services and identify any improvement areas that are needed. But make sure you don’t overdo this practice of engagement to the point that you stop adding value to your customers. As Don peppers puts it very aptly in a quote:
“Your job, if you’re a customer success manager, isn’t to make friends with your client. Your primary job is to push your client, challenge them, and get them to think, in order to make them more successful.”
You should also be able to make use of their real-time usage data to know how savvy they have become of your product. The leading indicators can easily reveal if the customer is at risk of churn or have become loyal to your service and an appropriate action to either prevent churn or to reward loyalty can be undertaken by your CS team.
SaaS retention strategy is definitely not rocket science if implemented through the right mindset. At all levels of an organization, at all stages of a customer life-cycle, it is the responsibility of CS executives to impart right values to every individual. And that is – To retain loyalty of a customer, their success becomes indispensable. Aligning your growth with that of your customer will not only widen your business ecosystem and nurture a long-term relationship but it will also empower you to conduct your business with the right ethics and transparency which is the backbone of any successful service based industry.