If you’re reading this article, you’re probably concerned about your churn rates. You’re not alone.
In 2020 almost 30% of companies had increased churn rates with a general revenue loss of $10 million. Also, more than two-thirds of SaaS companies had a churn rate of 5% or more.
That is a big deal.
Keeping customers is more important than ever, especially considering how cutthroat the competition is in the software business.
Acquisition can be painful and expensive, and it is far better to focus on customers you already have.
Here are some valuable tips about the simplest ways to keep your customers happy.
Optimize Your Onboarding
Use Checklists in User Onboarding
Include Progress Bars to Boost Product Adoption
Communicate Regularly Via Email
Provide Great Customer Service
Educate Your SaaS Users
Simplify Getting User Feedback
Improve the Features That Really Matter
Warn Users About Payment Issues
Offer Discounts and Other Rewards
You should optimize your onboarding for the best customer experience.
Helping your customers get acquainted with your software step-by-step is very important. You’re making sure they invest their time and effort, so they’re less likely to jump ship.
By making it easy, you’re also providing a quick jump from the “testing out“ phase to active use.
When users see value in your product from the very beginning, they are more likely to stick to it.
There is also an upselling opportunity.
While training your customers, you can push additional features that might be useful to them.
If you offer them reasonable pricing from the start and gradually notify them about other great benefits of your product but in a higher price range, they are more likely to appreciate them.
The biggest mistake you can make is constantly forcing upgrades when the customer doesn’t need them. That is a surefire way to make them churn.
It is a well-known fact that satisfied customers are the best marketing tools. If they are content with your product and confident in using it, they are more likely to spread the word about you.
A great onboarding experience makes customers feel valued. It also makes a lasting impression on them which translates to positive reviews and new customer acquisitions.
It is a good idea to break down your onboarding optimization into milestones. That way, you’re showing them you have a clear plan in the process of them achieving their goals.
Make it more fun by gamifying the process, and your users will be eager to learn about the product.
As a SaaS company, you have an opportunity to provide your service to a large number of different groups.
Their needs are not equal, and your onboarding process shouldn’t be “one-size-fits-all” either.
While beginners might need more hand-holding, some people might not want too many tutorials and instructional videos.
Try to be mindful of that and optimize your onboarding (by allowing them to skip sections or providing a progress bar, for example) for better customer retention.
Onboarding doesn’t stop at a sign-up page. By making it easy and enjoyable for the customer, you ensure that they stay loyal to you.
A good way to optimize your onboarding process is using checklists.
Checklists are the easiest way of letting users know how fast they are learning about the product they are using.
They are a way to show users you value their time.
You need to remember that not everyone is tech-savvy. They might not be eager to learn about every intricacy of your product on their own.
Using checklists, you are helping customers of every level evaluate whether the core features they are being introduced to are helpful to them.
After all, the value they get is their ultimate reason for using your product.
Ask yourself, are the steps you include in your checklists easy to achieve?
Break down any more extensive learning phase into smaller tasks, so the customer doesn’t feel stuck.
Demonstrate key features in the most straightforward way, with several extra steps if necessary.
Sometimes users have other things to do, and learning about your product isn’t their top priority for the day. Make sure they can save their learning progress so they can pick it up once they come back to it.
Your goal is to make them want to come back and start using your product regularly, and a simple save and exit strategy helps.
Checklists are a great psychological tool to maximize your onboarding process and create loyal customers.
Depending on the complexity of your product, adding a progress bar to your checklist can boost product adoption and provide a smoother onboarding experience.
The progress bar is a great visual indicator of how far they’ve come in the onboarding process that helps keep your customers engaged.
You are reminding them about uncompleted tasks, and motivate them to accomplish some initial goals. You are also assuring them that they are learning about your product in the right way.
With progress bars, it’s easier to see the impact of your actions.
It’s exciting to watch a progress bar slowly rise as you complete tasks and follow the instructions.
At first, the customer’s perceived value is related to the progress bar and not your product—but that will gradually change once they learn the ropes.
Progress bars facilitate product adoption.
With increased engagement, customers learn faster about your product and are more likely to continue to use it.
It is the first step to familiarise them with your product’s core features and how it will benefit them in the long run.
The first tip in implementing progress bars is to never start at 0%.
Psychology is clear here.
If you check off your customer’s progress bar something as simple as creating an account, the customer can associate that as making progress, and they are more willing to continue.
Therefore, if the bar is automatically set at 10 or 20%, it is an incentive for the customer to keep going.
Another great way to gamify the onboarding experience is to use different types of indicators on your progress bar to boost user engagement, depending on the action.
For tasks involving several steps, you can add visual sequences and pictures to further motivate your customer. For simpler ones, just popping up a star can be an easy motivator.
People like to be challenged with easy tasks, and they want to complete things in an intended order.
By using progress bars, you’re guiding your customers through a simple learning process that will tremendously help with product adoption.
Regular communication with your customers is essential in creating a trusting and value-based relationship, so emails should be your primary communication channel if you’re a SaaS company.
You are showing that you think about them and that their success is vital to you.
Deciding on the frequency and relevancy of your email communication is a crucial factor in retaining customers.
Not all of your customers will want to be contacted regularly and might prefer other sources (help center, etc.), so cater to their needs as well.
Once you learn who your customers are and identify their needs, it’s easier to be more assertive with your marketing strategy through email.
Spam is always frowned upon, but good email practices can help you grow your business, as there are certain types of emails that customers want to receive and actually open.
You can divide them into two categories: engagement emails and transactional emails. They both have their role in customer retention.
Let’s go over some of the most common types of engagement emails.
Thank-You Emails. Send them after a significant change in your customer’s activity with your product – change from trial to paid subscription, upgrading their plan, etc. Users are validated for their choices, and they are happier.
Apology Emails. This is any email that discusses negative experiences the customer had with your product. These are probably the most important because they are the easiest path to churn.
Newsletters. A quick summary of the company’s announcements, articles, and other relevant information that leads to people spending more time on your site or product.
Webinars and Announcements About Upcoming Events. These are some of the top reasons people unsubscribe. Reminding people about upcoming workshops or events is important—but it has to be done in moderation. Don’t send them too often.
Inactivity Reminders. If you notice some of your customers are not engaging with the product as frequently, sending them an authentic reminder email with a good offer that gets them to reassess their decision about leaving is a good strategy.
Now that we’ve gone over the engagement emails, let’s take a look at the transactional ones.
Transactional emails serve to trigger a specific action from the recipient, which is why they’re usually highly personalized.
Payment Confirmation. They are a great way to show respect for your clients. Also, you remind them of the transaction related to your product and thus avoid raising suspicion if money is missing from their account.
Invoice Email. This is the type of email customers expect to receive, so you can utilize it to collect some further feedback. Invoices can be a part of a payment confirmation email or separately.
Upcoming Charge. Emails like these are a tactful way of informing your customers before a payment is made. They can also be used as an upsell pitch when their trial periods are ending. You should make the conversion as seamless as possible. Like payment confirmations, they eliminate unwanted surprises.
Dunning Email. Sometimes transactions fail, or customers’ credit cards are canceled. It’s important to inform the user of payment errors and be lenient in rectifying the problem.
Resubscribe. Sometimes customers leave. However, instead of trying to recruit new ones, winning back the old ones is a much easier solution. Send a reminder after they stop using your product to make an offer or assistance.
With Regpack, you can send transactional emails and set up triggers to send personalized emails automatically.
Emails are the most efficient way to stay in direct contact with your customer, and there are many effective ways to keep the communication going.
Excellent customer service can improve the customer’s experience of using your product.
The first simple reason why you should care about this is that it boosts your sales. Some statistics show that people are 86% more willing to pay for great customer service.
While you’re solving your customers’ problems, you might run into recurring issues that can help you improve your product and customize it for your customers’ needs.
Their problems are being solved, but they’re also gaining more value by giving direct or indirect feedback.
You should cultivate loyalty for stronger customer retention.
Good customer service gives people a reason to want to stick around. They know someone has their back whenever they encounter a problem, which helps build lasting relationships with a company.
With increased demands for better customer service, there are several things you can do to improve.
The first one is to keep a log of all customer interactions. Customers like it when agents already know about their prior activities before they contact them to solve the problem.
It makes for an easier handoff, which they appreciate, as it saves them time.
Also, this can make for a very personalized approach, which is another great bonus.
You should also consider different modes of communication.
People have different preferences in solving their problems. Some are more comfortable with email, while others prefer direct contact via phone or live chat software.
Try to implement as many as you can to cater to every type of customer.
When problems arise, it is important to have everything in place to solve any problem that may occur so that you can provide for a better customer experience, from emails, quick response time, and different communication channels.
Everything to keep your customers happy!
Encourage people to learn about your product because they want to, not because they feel like they have to.
Through the onboarding process, an educational approach can help with MRR, customer retention, and conversions.
By educating your customers, you will help them experience all the benefits of your product, and they will be more willing to upgrade their subscription plan—but only if they feel like they know how to use it to its full potential.
One example is an analysis from LeanWorlds.
The company discovered that people who visited their education academy were 4x more likely to purchase after a trial.
Extra educational material about your product is a great way to showcase the nitty-gritty of your product and how it can be used.
You’re broadening your onboarding experience, but you’re not forcing your users to take it.
Not everyone will read your e-books, watch your videos or participate in your course, but the opportunity is there.
The logical result of teaching your customers about your product is that they will be so familiar with it that they will solve any problems they encounter by themselves.
Your customer service agents will take a break.
The overall satisfaction from being properly educated about your product will be an incentive to use it more, thus keeping those churn rates low.
With education, it’s important to plan your content. What do you want your customers to learn?
In your brainstorming phase, it is crucial to come up with every relevant topic and subtopic you want to cover, and once you do that, it’s easy to reuse what you have for different mediums.
When planning, take into consideration that it should be accessible and digestible.
Then, consider who your customers are and how they usually consume content. Invest in media that make the most sense for your customers and are most cost-effective for your business.
Decide how you want to produce your content. Popular methods are blog posts, e-books, podcasts, video tutorials, and webinars.
By properly educating your customers, you’re already doing a better job retaining them than with anything else.
Customer feedback is essential in making any changes, but it’s most important for retention rates.
When customers give suggestions, they are showing how invested they are in your company.
In other words, they are showing you they care enough about your product to want to see it improve and fit their needs, and by proxy, your growth as well.
It’s yet another way to build a relationship with your customer, and you should be proactive in seeking it.
SaaS companies operate on a different level than traditional ones.
They usually build a minimal viable product and seek demand for it.
Customer feedback is invaluable in this process; many suggestions will prompt minor to more remarkable pivots in tweaking the software, but the initial customer’s needs will be met.
Not knowing if your efforts have merit is the worst you can do for your SaaS business. Removing any obstacle upfront saves you a lot of energy and money in the long run.
The marketing SaaS Ahrefs, for example, has a robust feedback page, allowing users to submit detailed suggestions, while also keeping them in the loop with an implementation roadmap, as seen in the screenshot below.
One way to use customer feedback is closing the feedback loop.
One way to use customer feedback is closing the feedback loop.
Don’t trouble people with mile-long surveys and interviews. They don’t have the time or the will to complete it.
Instead, try to narrow your focus on specific questions and send out quick surveys more often. And don’t stop at asking questions. If you like your customer’s idea, you should tell them.
On the other hand, if some bad ideas pop up, kindly explain why they’re not viable to your company and your vision for your product at this time.
There are plenty of ways to collect the necessary feedback, from customer analytics, interviews, and usability testing to in-app surveys and social media.
You can combine the more direct approaches and the indirect ones that tell you more about general responses to your product rather than outright telling if they’re satisfied with it or not.
With social media, surveys, and interviews, people are more open and ready to speak their minds. Stick to those that will help you stay relevant and make quick fixes.
Who knows the customers’ needs better than the customers themselves? SaaS companies need to listen to their users and provide valuable fixes to their feedback for better retention rates.
SaaS businesses are customer-focused, so failing to address the needs of your customers in the right way is a deal-breaker.
Improving features that matter to your customers will make them rely on your product and lower your churn.
The best features of your SaaS are the ones that integrate themselves into the daily workflow of your customers.
You should focus mainly on those—provided you have taken customer feedback into consideration.
Feature request tools are your best friend when it comes to customer retention.
Sure, user feedback is nice, but sometimes people need a system in place that will allow them to voice their wishes.
This is where feature requests come in. Handling them can be tricky, but the pay-off is excellent.
Below is an example from Buffer—they have a form for requesting new features.
Feature upvotes are the best solution for both parties.
Users can rate their needed features, and your team can prioritize the next batch of upgrades to the software. It also prevents duplicating requests and private requests.
Before you start prioritizing, you should consider several key factors:
- Potential value
- Customer acquisition potential
Not each requested feature will bring you the desired results.
Some features that your customer chooses might not be cost-effective for you at the time, or it might take longer than expected to implement them into existing software.
Enabling feature requests is helpful, but you should analyze every aspect of a request before sending it off to the development team.
Nevertheless, feature requests have numerous benefits if implemented correctly.
Choosing which system works best for your company is the trickiest part, but if you value your customers, they will most likely have the best ideas to keep your business growing and stay loyal to your product.
Recurring billing can be canceled if you’re not careful and fail to inform your customers of failed payments on time.
Involuntary churn happens by accident, and it can lead to a real churn if you’re not careful.
Usually, people just have a billing error they’re not aware of. They’re not necessarily angry or disappointed with your product.
But why is it important to track involuntary churn?
According to Baremetrics, SaaS companies lose around 9% of MRR due to involuntary churn. If not controlled properly, it can ruin your business.
However, not every involuntary churn is made equal. There are hard and soft declines.
With hard declines, the bank doesn’t approve payments if the following happens: credit cards were stolen, the account connected to the card is closed, or the card isn’t valid.
On the other hand, soft declines are more likely to be basic accidents: expired credit cards, incorrect billing information, and maxed-out credit cards.
Most credit cards have a short expiration date (three years). Therefore, with a large number of customers, you’ll likely have to deal with expired credit cards on a weekly, if not daily, basis.
With soft declines, it’s easier to retry the payment process, but hard declines take much longer to take care of.
Your best solution is to send reminders about expiration or cancellation.
In most cases, the customer will be quick to rectify the payment situation on their own, and you can continue to provide an excellent service.
You’re here to help your customer have a great experience and show them that you care about their financial security.
While dunning emails are not the most exciting to see in your inbox, they’re an important part of every business because bad things happen all the time. And it’s also an essential part of customer retention.
Here’s an example of a solid dunning email for a failed payment.
As mentioned before, customers aren’t aware of payment errors most of the time, so reminding them while they’re using your product might be an effective way to solve any issues.
Give them time to update their billing info, but if they continue to ignore the subtle reminders, putting a paywall might be the best solution to get your money for the service you provide.
Cards can get canceled over very small reasons, and users aren’t mostly aware of them until it’s too late.
As a good business practice, it’s recommendable that you warn them ahead of time before their next recurring bill lands in their inboxes.
One of the easiest ways to show your customers you care about them is to give them rewards and include them in loyalty programs.
According to a lot of research since 2017, customers look for several crucial things in loyalty programs and rewards systems.
First, customers expect you to care about them.
Simply giving them discounts is not enough anymore. You should focus on creating an emotional connection between your company and the customer.
By doing this, you’re building a program that will make them want to use your product more.
Second, customers want to get on a rewards program if they feel they are getting a great deal.
For instance, the points system is a tried and true way to keep customers coming back and encourages retention.
VIP programs in retail have proven that customers purchase more often and in greater volume.
Why shouldn’t you repeat the same success?
As a SaaS business, you probably have a carefully thought-out subscription plan with multiple tiers.
People like to feel special. Meeting this expectation can make your customers more loyal because maintaining a relationship with your business is perceived as its own reward.
Offering some extra benefits if they choose your highest tier is a great incentive for conversion and retention.
Nothing is more personal than a birthday or celebrating anniversaries. Thank your loyal customers on their special days by giving them personalized discounts and rewards.
Also, celebrate another year in which they stayed with your company and used your products with similar tactics.
Make sure to keep the rewards system simple.
If they have to jump through hoops to get a good deal, many customers will give up from the start.
By keeping your rewards system simple and easy, you’re allowing them to get the most for the least amount of effort.
A rewards system is a great way to ensure your customers have another reason to continue using your product.
If all else fails, encouraging people to stay with your company with discounts and rewards isn’t so bad.
Putting something as simple as a progress bar or a checklist can help you optimize your onboarding process, which is the starting point in any customer retention plan.
Good communication, great customer service, and education should be the new pillars of maintaining a SaaS business.
However, overlooking something as simple as a dunning email can be a defining point in retaining a customer or seeing your revenue plummet, so always give it the attention it deserves.
More and more SaaS companies are turning to customer retention as a strategy to keep their business growing. It is not too late to implement any of these tips to keep churn rates low.