Best Practices for SaaS Subscription Renewal

Expansion is important but retention is critical. Simply put: To grow your business, you must find new customers, but to be profitable, you must retain those customers. For an SaaS, the best way to retain customers is to have a well-planned renewal process. When it’s time to renew their subscription, your customer should be happy, not hesitant.

While you can only influence, but not control, the customer’s decision to renew, you do have control over the renewal experience. The path that your customer must take to renew will also affect their decision to stick with your company or seek out the competition.

But let’s not kid ourselves. Creating a flawless renewal process can be difficult. This guide will help. Below, we’ll discuss the steps necessary to create a smooth as butter renewal process for your SaaS. Let’s get started.

1. Have Credit Card & Agreement to Auto-Renew On-File

Auto-renew is a standard operating process for most SaaS, however, there is a right way and a wrong way to go about it.

The wrong way is to just auto-renew the account when the time comes without giving your customer a head’s up. Be especially careful with this if you’re not on a monthly billing cycle, but instead on a quarterly or annual billing cycle. If you don’t let your customer know that they should expect a charge, they may be surprised, but not in a joyful way. Customers want to know that they can trust you with their credit card information and that you won’t process payments without their knowledge— even if they’ve already agreed to auto-renew. Otherwise, you may have to deal with angry customers who dispute the charges with their credit card company. Not fun.

At the very least, institute these best practices with auto-renew:

  • Be explicit in your contract that their service plan will auto-renew unless they request termination within a specific time frame (between 30 to 90 days before renewal date)
  • Send an invoice and a notification of impending auto-renew within a set time frame (60 days prior, 30 days prior, and 15 days prior)
  • Sell the benefits of auto-renew (the biggest reason is to protect the customer from a future price increase)
  • Give yourself a way to increase prices even with auto-renew (i.e. In the contract, state that you may raise the price in two years)

2. Identify How to Better Use Your Product

SaaS Subscription Renewal Process

A common mistake among SaaS is to simply forget about the customer in the period between onboarding and renewal. This period of time, whether it’s 30 days or 12 months, is crucial and should not be overlooked. You want the customer to remain excited about your service and use it consistently. The best way to guarantee renewal is to embed your service into the daily routine of that user.

To do that, identify your customer’s goals. Why did your customer sign up for your service? Survey your customers about their goals and segment them accordingly.

After you know their goals, stay in contact with your customer. Continue to send them useful resources, such as guides and video tutorials, that keep them engaged in your service.

But don’t just use their survey responses to guide your engagement campaign. (Not everyone will respond to your survey.) Also look at the hard data, which never sugarcoats to spare your feelings, to find out how your customers actually use your service. Ask questions like:

  • How often do your customers log in? (Create a trigger when your customer doesn’t log in for a designated period of time. A decline in use is never a good sign, but it can be reversed.)
  • On average, when do customers disengage with your service? (You may be able to intercept this by sending out well-timed resources before the anticipated slump in use.)
  • Where do your customers typically struggle with your service? (Take a look at your open support tickets.)
  • What features does the customer use the most? The least?

The answers to these questions can help you segment your customer base. Segmenting, or grouping your customers based on similar behaviors, goals, or pain points, can help you increase customer retention rates. You’ll be able to craft and send more personalized messages to your customers according to their needs or behaviors. When customers are able to use your service based on their unique goals, they’ll have a better experience which leads to retention.

Equip your customer support team with data so that they know how to engage your customers.

For some customers, engagement may mean a personal phone call every quarter to gage their satisfaction and show the customer who they’ve benefited from using your service. For others, engagement will take place exclusively via email, where your team will send tips and tutorials to keep the customer active in your app.

Check out this list of tips for interacting with your customers on social media.

3. Thank Your Customers For Their Loyalty

SaaS Subscription Renewal Process

Thanking your customers is a simple gesture that can lead to increased retention. No one wants to feel like a customer, i.e. a dollar sign. Your customers want to feel valued, not just when they sign up, but throughout their relationship with your SaaS. Here are a few ways that you can thank your customers:

  • Give your customer a gift. Gifts don’t have to be expensive to be thoughtful. From a personally written email to a branded coffee cup, there are tons of cheap (or free) gift ideas that you can offer as a tangible way to say thanks.
  • Offer a discount. Tie your discount to their early renewal and both you and your customer wins.
  • Upgrade their service. This is a great gesture to offer to those customers who refer your services to others.

4. Create a Win-Back Campaign

Even if your customer doesn’t renew their service, all hope isn’t lost. Before you take the aggressive action of cutting off access or erasing data, give your customers a grace period to make things right.

Remember that payments fail for all sorts of reasons. Sometimes, the customer has no clue that their payment didn’t go through. Make a plan for passive churn also. Instead of preventing access to your service, you can use Stunning to minimize churn without alienating customers.

In addition to sending out dunning emails (and even SMS messages via cell phone), we can also attempt to collect payment with our Smart Retries technology. Stunning will retry the failed payment at the specific times when you’re most likely to recover the lost revenue. We can do this over a period of 21 days for best results.

Another benefit of using Stunning? Our automated credit card updater. Don’t bother your customers with requests to update their billing info— Stunning can do that for you. We’ll do it way before your customer’s payment has a chance to fail. But, if we can’t update their records, we’ll then send out a series of emails to your customers on your behalf asking for their updated billing information. The best part? It’s all automated!

If you’d like to learn more about our dunning and pre-dunning services, click here.

Additional Resources

Before you go, check out these related resources:

Don’t forget to download this list of tips for engaging with your customers on social media.