5 Real Ways to Retain Customers
For SaaS and subscription businesses, metrics like the customer retention rate and the closely related churn rate are essential for keeping track of how much revenue you’re losing and identifying trends that could be to blame.
The fact of the matter is that the key to long-term business expansion is increasing customer retention and decreasing churn.
In this post, we’ll talk about five ways to keep customers coming back to your SaaS business, as well as how to track customer retention and churn accurately.
What is retention of customers?
A metric called “customer retention” measures how many customers stay with a company for a set amount of time.
The churn rate, on the other hand, is the percentage of customers who cancel their subscription within a certain time frame. Monthly recurring revenue (MRR), arguably the most important indicator of future business success, is significantly influenced by both of these metrics.
A good rate of customer retention on a monthly basis is typically higher than 90%, though the higher the number, the better. It is obvious that you will never be able to keep every customer, but if your retention rate is very low, you will know that your company has a problem.
You can learn how your customer retention rate and other metrics stack up against those of other SaaS and subscription businesses.
Since it costs more to acquire new customers than to retain existing ones for the majority of businesses, investing in customer retention is a more sustainable growth strategy.
As a result, it’s critical to conduct an analysis of customer retention before putting into action strategies to increase it over time.
Strategies for Customer Retention
Now that we’ve discussed the effects of customer retention on SaaS and subscription businesses, let’s look at some ways to improve this metric.
1. Provide excellent customer service
The level of customer service your company provides can either make or break a customer’s experience.
Whether it’s a product flaw, a failed payment, or a network failure, customers want to know that you will be able to assist them.
Quick responses to customer inquiries, assistance with onboarding (more on this later), and prompt troubleshooting are all components of good customer support.
Investing in proactive outreach in addition to providing reactive customer support can have a significant impact.
Even if your customers aren’t planning to leave, regularly checking in with them can increase the opportunities for engagement and value from your product.
2. Put in place a customer onboarding procedure
Because the customer onboarding procedure is another important part of the customer experience, it is important to get it right to avoid losing subscribers early on.
Showing customers how to use your product to achieve their goals is an essential part of a successful onboarding process.
An intuitive signup process, a compelling welcome email, and assistance during the initial login are all components of an efficient customer onboarding process.
You can also learn about new users’ first impressions of your company, product, and onboarding process by monitoring the results of your trials.
These insights can help you avoid losing customers before they sign up.
3. Create useful educational resources
Customers won’t stick around for long if they don’t get enough value from your product. You can help customers get the most out of your product’s return on investment more quickly by providing quality education resources and training programs.
A help center is also a great way for customers to resolve additional issues that might arise, and getting started guides can assist in answering many initial questions.
In the same way that you want to create a great onboarding experience, you should also provide resources and create a community around your product.
Workshops and webinars are resources that give subscribers even more value out of their subscriptions and increase their motivation to stay for a long time.
4. Track and Measure
Churn By knowing which customers are leaving and why, you can make a well-informed plan to keep them.
You can, for instance, identify the reasons why some customers may churn more frequently than others by conducting cohort analysis and tracking and measuring churn for various customer segments.
You can address mismatches in customer expectations, poor onboarding experiences, unsuccessful acquisition strategies, and other broader business issues using this information.
Plunging into the information about abrogations, minimize, bombed installments, and more will likewise assist you with recognizing generally client conduct drifts that are prompting agitate.
These insights may reveal whether additional factors are causing voluntary or involuntary turnover. Over time, customer retention will rise as a result of reducing churn and measuring it.
5. Make it simple for your customers to give you feedback
Getting your customers to give you feedback is a great way to find problems with your product or interactions with customers that are making them cancel.
To take this a step further, gathering cancellation insights and taking action on them aids in preventing disloyalty and lasting customer retention.
A timely email or in-app notification when customers decide to cancel their subscription is a convenient method for gathering feedback.
You will be able to identify and overcome pricing issues, a lack of certain features, poor support, and any other factors that contribute to customer churn using cancellation insights.
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How to determine the retention rate and churn
The retention rate is calculated by dividing the total number of customers at the end of the period by the number of new customers.
This tells you how many customers stayed with you over that time period. The retention rate is then calculated by dividing this number by the total number of customers at the beginning of the period.
Churn rate can be determined in numerous ways, contingent upon whether you need to follow revenue churn or customer churn.
To calculate customer churn, divide the number of canceled customers by the number of active customers over a given time period. Then, to get a percentage, multiply by 100.