When you deploy the right customer retention strategies, this can improve the sustainability of your SaaS business and help to reduce churn.

Churn is an inevitable part of any SaaS business. However, by focusing on customer retention, you can lessen the impact churn has on your business.

A reasonable SaaS churn rate benchmark falls somewhere between 5-7% for annual churn and under 1% for monthly churn. If you're losing more than 7% of your users annually, you need to start reviewing your customer retention strategies.


Customer Retention Strategies (Why Do They Matter?)

Customer retention is the lifeblood of any SaaS business. If your SaaS user base resembles a leaking bucket, you've got a problem. A high churn rate not only has a direct impact on your revenue but also puts a strain on your ability to acquire new customers.

Bringing in new users is up to 25 times more expensive than retaining your existing base. If you're suffering from a high churn rate, you need to keep your acquisition costs as low as possible. The combination of a high churn rate and high customer acquisition costs can throw the sustainability of any paid advertising efforts into question.

Customer retention strategies act as a safety net, ensuring that your business doesn't succumb to the effects of a high churn rate. Let's break a few down.

Improve Customer Retention (5 Strategies)

Review your user onboarding processes

One of the most effective customer retention strategies is to optimize your user onboarding processes. If you're not helping your users get the most out of your product, they'll quickly become frustrated and move on to one of your competitors.

Make sure that you're providing adequate support and guidance during the onboarding process. If a user can't figure out how to use your product, they're not going to stick around for long.

Customer activation is vital to the success of any SaaS business. Once a user is activated, they're much more likely to continue using your product and become a long-term customer. The key to an effective onboarding process is ensuring that it's tailored to helping users unlock your product's value proposition.

Customer Retention Strategies
Customer Retention Strategies

Create team incentives around high retention

If you want your team to focus on customer retention, you need to create the right incentives. Align your team's goals with the company's retention strategy. This will ensure that everyone is working towards the same objectives.

Customer retention should be a key metric that's tracked and reported on regularly. By making retention a priority, you can ensure that your team is focused on keeping your users happy and engaged.

Engage with your SaaS users

Another important customer retention strategy is to engage with your users on a regular basis. This can be done through in-app messages, email campaigns, or even phone calls.

When your team is ready and available to answer questions, this can help to ensure users are well-equipped to unlock your product's value proposition. Enabling users to fully unlock your product's value proposition is likely to inspire retention.

Optimize your pricing structure

One of the most common reasons for SaaS churn is poor pricing. If your pricing structure doesn't align with the value your users are getting from your product, they're going to look for a cheaper alternative.

Make sure that you're constantly reviewing your pricing structure and making adjustments based on the value your users are getting from your product.

Utilize the right tools to support retention

There is no shortage of effective customer retention tools on the market for you to leverage. You can utilize SaaS user feedback tools like Raaft to collect user feedback and identify areas of improvement.

When you have access to user feedback, you can begin to make informed decisions about how to improve your product and keep your users happy.

How To Retain Customers (SaaS Playbook)

44% of companies focus more heavily on acquisition than customer retention. Only 18% cited retention as a higher concern. This indicates that the majority of SaaS companies are focused on acquiring new customers, rather than keeping the ones they already have.

Acquiring new customers is important, but it cannot come at the expense of customer retention. In order to build a sustainable and successful business, you need to focus on both acquisition and retention.

Focusing on maintaining your existing user base is just as important as acquiring new users. In fact, it's often more important.

Improving customer retention gives you a solid foundation upon which to grow your business. It's easier and less expensive to keep a customer than it is to acquire a new one. Moreover, happy customers are more likely to evangelize your product and bring in new users through word-of-mouth.

Customer Retention Strategy (Best Advice For 2022)

The best customer retention strategy for SaaS businesses is to leverage user feedback tools to constantly improve your product. These tools will give you the necessary insights to ensure your product's value proposition is aligned with the needs of your target market.

You should also concentrate on building a strong team that is incentivized to focus on customer retention. You can ensure your team stays focused on delighting and engaging your customers by making retention a priority.

Finally, you should optimize your pricing scheme so that it reflects the value your product provides to your customers. SaaS churn is prevented by performing regular price analysis and adjustments.

Customer Retention Software (Top Pick For 2023)

Raaft is an intuitive customer feedback tool enabling SaaS companies to collect user feedback and reduce churn. With real-time analytics, the tool offers cancellation insights and identifies retention opportunities. This is a game-changer for SaaS businesses struggling to address high churn rates.

Raaft's user feedback capabilities are unrivaled. The tool offers everything you need to collect user feedback and make informed decisions about how to improve your product.

Are you ready to get started and begin addressing customer retention?

Try Raaft for free today!

Adam Crookes
Written byAdam Crookes
Reviewed byMiguel Marques

📢 Why Listen to Me?I work with both bootstrapped and VC-backed SaaS companies to develop scalable inbound marketing strategies.


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