In customer retention, every engagement counts. There is no final effort in the days and weeks leading up to an anniversary that can overcome a poor relationship in the months prior. Rather, customer retention for SaaS enterprises is a result of the customer experience. It is an outcome based on an emotional reaction and connection to the performance of a supplier and the value a customer experiences through using that enterprise’s product.
As dependable and recurring renewal is crucial to the growth of our own enterprise, it is vital that we understand customer retention best practices must be implemented at every stage of the customer journey and reinforced by every engagement we undertake.
Why Customer Retention Matters
The digitization of business has made customer retention the lifeblood of the Software-as-a-Service industry. The continued growth of the SaaS model, led by the multi-billion-dollar successes of B2B giants Microsoft and Salesforce, reflects a more responsive relationship between customer investment and ROI. With the majority of revenue spread out across repeated cycles of renewal rather than being captured in a single sales event, enterprises must continually deliver value, or risk their customers seeking more profitable relationships elsewhere.
The result is an emphasis on mutual growth that benefits both the customer and the enterprise. To maximize the spend it derives from a customer over time, or Customer Lifetime Value, an enterprise must shape itself in its customer’s image and adopt their business goals as its own.
This process of creating a customer-centric culture that is focused on delivering additional value to the customer is what defines customer retention in SaaS partnerships. The enterprise must strive to understand its customer at every stage of their journey and continuously deliver value through personalized, proactive, and goal-based engagements.
SaaS customer retention best practices are therefore year-round and ever-evolving in an effort to maintain relevance and deliver value. When renewal time arrives, committing to another year should be just a logical extension of a successful partnership.
6 SaaS Customer Retention Best Practices
Retaining your customer’s interest, and therefore their business, depends on their ability to achieve their goals using your product. To increase the likelihood of renewal you must focus your efforts on product understanding, effective usage, and customer knowledge of how it leads to business success.
The following SaaS customer retention best practices help promote those outcomes:
- Know Your Customer
- Deliver Value at Every Stage
- Personalize Your Voice
- Create and Celebrate Milestones
- Focus on the Future
- Adjust to Customer Business Needs
The process begins with a comprehensive understanding of your customer and their business goals.
1. Know Your Customer
Every time anyone in your enterprise connects with your customer they gain a little knowledge about them. Beginning with the initial sales effort and extending through every facet of the customer journey, this information needs to be collected and stored within a common reserve that is accessible to every member of your team.
Whether it’s the amount of time spent in the product each day and when that time was spent, the details of a support ticket, or the addition of team members, every piece of information is potentially important. The more you understand about your customer the better able you are to help them achieve results they value.
2. Deliver Value at Every Stage
Customer expectations change over time. What begins as a need to learn how to incorporate your product into their workflows eventually becomes a desire to implement advanced features that deliver specific results. That’s why it is important to stay closely attached to your customer throughout their journey. By constantly checking their product usage, feature usage, and rollout though their business you can make personalised and proactive customer engagements.
If you see that a customer is failing to use a specific feature that could benefit them, point out that feature and offer training on its use for the customer’s entire team. That kind of unexpected value goes a long way toward generating positive emotions around renewal time.
3. Personalize Your Voice
As we mentioned earlier, the on-demand nature of the SaaS industry means customers expect their partners to deliver a personalized service dedicated to achieving their unique goals. The best way to create that environment is to fill your communications with facts drawn from the current customer experience. Personalizing your messaging with up-to-the-hour statements about customer progress, usage patterns, and industry-specific information tells your customer you are listening to them and are committed to their growth.
4. Create and Celebrate Mutual Success Plans
Milestones present a two-way benefit to SaaS enterprises. Firstly, they create a sense of momentum and achievement in the customer. Secondly, they give the enterprise a metric by which they can measure and monitor customer progress.
In the first instance, this means establishing clear goals around the adoption and usage of your product and a link between its implementation and the realization of business success. This reassures customers they’ve made the right choice in working with you and makes it easier for them to communicate success and wins to internal stakeholders.
In the second instance, it lets the enterprise identify when the customer is on track for success or when they have fallen behind. These milestones can be used to turn the seemingly unending customer journey into a series of goals-based actions that define the customer success process.
5. Focus on the Future
Customer retention is a promise of future growth. Your messaging should always reinforce the additional value that comes with greater mastery and implementation of your product. As the thrill of the initial sales and onboarding phases passes you should continue to deliver communications espousing future lessons, skills, and advantages.
Your product should be seen as a cornerstone of your customer’s future. There are always new features to be explored and more effective processes to be learned. Use the full potential of your product to demonstrate to your customer that your partnership is the only way to ensure their future success.
6. Adjust to Customer Business Needs
Customer goals can change based on the needs of the business. In some cases, these goals may change rather quickly due to unforeseen circumstances like an economic downturn, industry changes like mandates or legal requirements, and much more. It’s imperative that your company, product, and customer success teams can both carefully and quickly adjust to any changes. Evaluating the impact of changes on customer business needs and adjusting your strategy to meet them is both critical and time-sensitive. Full strategy shifts may have to adjust in days, as opposed to weeks or months. Teams may not have all the answers upfront, but being as flexible, agile, and responsive as possible is important to retain customers through changes in their business needs and goals.
Success Through Customer Retention Software
Delivering a personalized, proactive customer experience depends on understanding how your product is being used. The digital delivery of SaaS products means you can accurately follow customer product usage through customer success software. Such solutions allow you to effectively measure customer engagement, feature use, and license utilization to accurately follow the health of all customer accounts within your portfolio. You can also use the software as a form of early warning system to automatically notify your customer success team of any changes in the customer experience in time to ward off churn or capitalize on renewal and upsell opportunities.
That last point underlines the reality of SaaS customer retention: The defining moments in a customer’s decision to renew or leave occur at any and all times during their journey. The best way to increase renewals is to work toward delivering customer value at every engagement.
Totango designs customer success software that gets you close to your customers. When you explore Spark, you’ll find a comprehensive platform that can capture, analyze, and share knowledge from a wide range of sources. Get started for free and begin to understand your customers better.