Are you obsessed with growing your SaaS?
Get in line. For most SaaS businesses, the number one question is: “How do I get more customers and more revenue at the same time?” The answer is quite simple — nurture the customers that you’ve already won over. Those customers are more likely to buy from you in the future. And they’re cheaper to sell to when compared to a brand new customer.
But wait, there’s more: Your most loyal customers will also turn into powerful referral sources, bringing in new customers (without you having to spend any additional marketing dollars to woo them).
But don’t just take my word on it. Here’s a study to back up my claim:
The researchers at ForEntrepreneurs found that it’s nine times cheaper to keep an existing customer than it is to get a new one.
They also found that it’s four times cheaper to upsell to an existing customer. While it may cost $1.18 to acquire a $1.00 of revenue from a new customer, it will only cost $0.28 to get $1.00 of revenue from an existing customer.
The moral of the story is that once you find a quality customer, it’s not only cheaper to keep them, it’s also more profitable.
[tweetthis]Once you find a quality customer, it’s not only cheaper to keep them, but it’s also more profitable.[/tweetthis]
In this post, let’s discuss how to keep your customers from churning. We’ll focus on the things you can and should do right now — not a year from now — to increase customer loyalty.
1. Create a Dedicated Customer Success Team
Are you using your sales team to prevent churn? Not a good idea.
Salespeople are great at closing deals but not so great at ongoing customer management, especially when it comes to encouraging renewals and preventing churn. Selling a product and managing the customer’s experience requires two different skill sets.
If you haven’t already, start recruiting for a dedicated customer success team. After closing the deal, your sales team will hand the customer over to your customer success team. In their capable hands, your customer will be welcomed aboard and supported every step of the way.
The customer success team will be responsible for fully onboarding the customer and providing personalized tips to help the customer reach their desired goal(s) with your product. Seeing continuous value from day one is the key to getting your customers to renew. That starts with a strong customer success team.
2. Ask for a Testimonial
When it’s time to renew, ask your customer to provide you with a testimonial. This testimonial hits three birds with one stone:
- It gives you insight into your business’ strengths and weaknesses
- It can be used as social proof in your marketing to bring in more business
- It will remind your existing customer why they use and love your product
By timing your ask for the period immediately before the renewal, you can gently help your customer see the value of your product. With a testimonial, they’ll actually convince themselves to stay put.
When asking for a testimonial, don’t just ask for feedback. Direct your customers to provide the best picture of your SaaS with a series of open-ended questions.
3. Answer the “Why”
Why should your customer renew their service agreement with you?
It’s important that you know the answer to that question so that you can help your customer when the time comes to renew.
How exactly does the customer benefit from using your service? Do you have actual data to back up your claims? Exactly how much money has your product saved the customer? What about time or other resources?
Before it’s time for your customer to renew, send an email or in-app message to share this data with them. Sometimes, providing this data for your customer will help them see the value of your product.
4. Incentivize Renewals
Do you run incentives or share discounts for new customers but nothing for your current customers?
Not a good look.
While they may not say anything, your current customers definitely see the shiny, incredibly low prices that you’re offering to new customers — and they don’t like it.
Businesses that focus solely on acquisition but never acknowledge loyal customers are setting themselves up for failure. Give your customers — all of your customers — a reason to use your services. Every time renewal comes, you also need to renew your commitment to your customers. That often starts with a small but considerate incentive.
Incentives come in various types, from branded gifts (like t-shirts) to free months to more storage space. Instead of offering a discount that can eat away at your profit, consider upgrading their account to premium.
5. Thank Customers Throughout Their Time With You
Simply put, businesses don’t say “thank you” enough. Sure, you may say “thanks” at the end of a generic email newsletter, but is it sincere? Does your customer feel appreciated? I’m willing to bet that the answer is no.
Look for ways to show your customers that you truly care about their success. (This is another reason to have a customer success team on staff.) But, even if you don’t have this team in place, you can still begin to appreciate your customers right away.
Start simply. Send out an email blast to all of your current customers with a sincere note of thanks. It doesn’t need to be fancy or lengthy. It only needs to convey the right sentiment.
You may find that it’s easy to film a video instead of write. Attach a link to that video in the body of your email and send it to your customers this week. Don’t wait for the perfect time — there is no such thing.
6. Predict Churn Before It Happens
Sometimes, the signs of impending churn are obvious — if you know where to look. In every SaaS, there are things that indicate possible churn on the horizon:
- Open help desk tickets
- Decreased logins
- Zero or reduced referral activity
Ideally, your customer success team should monitor all of the above regularly. They should also follow up with your customers to prevent the disappointment that so often leads to churn.
7. Make Renewal a Convenient Process
Audit your renewal process. What is required for your customer to renew their commitment? If they need to actually click on a button, you’re asking for too much.
Ideally, your renewal process should be automatic. Customers shouldn’t be forced to think about whether or not to renew. In the weeks leading up to renewal, show them why it’s a good idea to renew, but don’t ask them to renew — not if you have their credit card on file and their agreement for you to automatically renew. Just inform them that you’ll be charging their credit card a day before you process payment.
If you don’t have this agreement to automatically renew, make this a policy as soon as possible.
8. Prevent Unintentional Churn
Are you using a tool to prevent unintentional churn?
The most common form of unintentional churn is failed payments. Expired credit cards can lead to failed payments. And this is a big problem that’s 100% avoidable.
Most credit cards are set to expire every three years. If you do the math, approximately one-third of your subscribers’ credit cards will expire this year. Some customers will update their payment information before that happens. Many will forget.
With Stunning, you can prevent churn from expired credit cards. Our system automatically emails your customers before failure occurs. If a customer does not update their information in time to prevent failed payment, we’ll also intelligently retry payment collection for up to three weeks to maximize your chance of recovering revenue.
Before you go, check out these related posts:
- 3 Retention Strategies That You’re Probably Not Using
- Best Practices for SaaS Subscription Renewal
- How to Inspire Customer Loyalty in Your SaaS