Customer Retention in SaaS: Best Practices for Subscription-Based Models

Churn, by nature, is baked into the SaaS industry. Whenever you run a subscription-based company, a certain percentage of users will inevitably churn. There’s no getting around it. That said, you want to stay on top of turnover and do everything you can to maximize SaaS customer retention.

To quantify, revenue intelligence company Gong says you should aim to keep your churn rate under 3%.

In this post, we’ll go over ultra-practical steps you can take to accomplish this, while also providing your customers with a consistently positive experience.

Start with Retention Analytics Reports to See the Big Picture

Like any sound business decision, it’s important to start with objective data so you can see what’s happening and what’s causing the bulk of users to leave. To obtain this data, I suggest using a customer journey analytics tool like Woopra.

It offers detailed retention analytics reports that let you:

  • Measure your churn rate
  • See how long customers use your product before churning
  • Determine why you’re losing customers
  • Identify specific areas of improvement that can lower your churn rate in the future

For instance, you can get a bird’s-eye view of your churn rate over time.

You can see how many customers return after using a core product feature.


You can see what your product retention rate is for mobile users…

..and much more.

Armed with this data, you’ll be able to diagnose any leaks that are contributing to higher-than-ideal churn so you’ll know which areas need your attention. That way, every decision you make is based on tangible evidence rather than merely going on a hunch.

Identify At-Risk Customers

Another helpful feature of retention analytics is that it can help you identify at-risk customers — those that have a higher-than-average chance of churning.

Say, for example, a particular customer hasn’t logged into their account for an extended period of time or is engaging with your product far less than most other users. They would likely have a higher chance of churning than another user who logs in every day and frequently uses a variety of product features.

By proactively catching at-risk customers before they leave, it gives you an opportunity to create a better experience and appeal to them before it’s too late, thus increasing their chances of hanging around longer.

Here are a few potential ways to do that:

  • Have a team member reach out to the at-risk customer directly to see what they can do to improve their experience
  • Provide resources to help the customer get the most out of your product
  • Offer an incentive such as a discount to encourage them to keep using your product

Note that any feedback gained through team member interactions should be logged so it can be used to prevent similar issues from happening in the future. For example, if a customer mentions that a specific product feature is frequently glitchy, you would want to fix it ASAP.

Optimize SaaS Onboarding

Research by customer success platform Retently found that the number one leading cause of churn is poor onboarding, accounting for 23% of overall churn.

And this makes complete sense. Just put yourself in the shoes of a new customer who is initially excited about using your SaaS product. However, after experiencing an excessive amount of friction during onboarding, they could quickly sour and jump ship to another competitor.

If this happens at scale, you can have a serious churn crisis on your hands. That’s why efficient onboarding should be a top priority for every SaaS company.

By making onboarding smooth and seamless, this not only minimizes early churn, it sets the tone for long-term rapport-building so you can maximize customer lifetime value and get more loyal brand advocates.

Here are some specific ways to optimize SaaS onboarding:

  • Send welcome emails with tips on how to efficiently learn how to use your product
  • Offer an extensive onboarding resource section with tutorials and walkthroughs
  • Create a detailed troubleshooting and support section for users who run into issues
  • Provide every user with a point of contact if they need one-on-one assistance

Also, be sure to continually ask for feedback so you can identify problem areas that need work.

Rev Up SaaS Customer Support

Unsurprisingly, poor customer support is another chief reason for SaaS turnover, with 14% of users leaving because of lackluster customer support.

I think this is an issue that nearly everyone can relate to. Personally, I’ve found this to be something that’s turned me off from continuing to use tools, and I’ve switched to other products because of bad customer support. After all, nothing is more frustrating than having an issue and struggling to find a quick resolution, especially after you’ve spent good money on a product.

The bottom line is that you should strive to offer A+ customer support, where users can seamlessly get assistance without jumping through a bunch of hoops.

Here are some suggestions for achieving that:

  • Offer 24/7 support through a variety of channels, including phone, live chat, email, and social media
  • Create a self-help center where users can find solutions to common issues
  • Provide walkthroughs on product updates so users can easily learn new features
  • Follow up with customers after they seek support to ensure their issues have been fully resolved

For more details on creating amazing customer support, I suggest reading this guide from Help Scout.

Making Customer Retention a Top Priority

SaaS is an incredibly competitive industry, and excessive customer turnover can make it incredibly difficult to gain any momentum. After all, if you’re on a hamster wheel of continually replacing lost customers, your progress will be minimal.

However, by following best practices like implementing retention analytics, identifying at-risk customers before they leave, optimizing onboarding, and fine-tuning customer support, you should keep churn in check and boost overall customer lifetime value. Not to mention, it makes for a more enjoyable customer experience, which sets your business up for long-term success.

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Preventing Lost Customers: SaaS Retention Strategies to Reduce Churn

Churn is an inevitable part of running a SaaS company. No matter how great your product is, how streamlined your onboarding, and how quality your customer service, a certain percentage of customers will inevitably leave. That said, churn is definitely something to keep in check, especially when you consider that US businesses lose around $1.6 trillion annually because of it. On that note, here are some of the most helpful SaaS retention strategies to keep churn as low as possible.

Start By Perfecting Your SaaS Onboarding

The exact percentage will vary depending on who you ask, but in most cases, poor onboarding is the number one reason for churn. In fact, a recent study found that poor onboarding accounts for nearly 23% of all churn.

For that reason, I suggest making SaaS onboarding a top priority and continually striving to make it as seamless as possible. After all, the quality (or lack thereof) of the onboarding experience will make a lasting impression on each new customer. So you want to make sure you’re getting them up-to-speed quickly and not creating unnecessary friction.

To learn the fundamentals of quality SaaS onboarding, I recommend reading this post from HubSpot and following this checklist.

Be Committed to Ongoing Product Improvement

According to the same study, the second biggest reason for churn is an underperforming product, with just under 20% of customers leaving because of this.

And this shouldn’t come as a shock. Obviously, if a customer is underwhelmed with a SaaS product, they probably won’t stick around for long.

That’s why it’s so important to take an endlessly iterative approach to product development and improvement. In fact, if you look at the most successful companies, nearly all are constantly looking to identify flaws, fix issues, and make adjustments to help their product reach its full potential.

In other words, don’t treat building your SaaS product as a one-off type of deal. Instead, be committed to ongoing product improvement.

Be Committed to Building Long-Term Relationships

Third on the list of top reasons for churn is ineffective relationship building, with over 15% of customers leaving because of this.

Just like poor onboarding and an underperforming product, ineffective relationship building is a fundamental element of the customer experience. And when it’s neglected, you’re likely to see a higher churn rate than you’d like.

So how exactly can you build stronger relationships with your SaaS customers? Here are some ideas.

  • Maintain regular communication
  • Make it simple to reach customer service through a variety of mediums (website, email, social, etc.)
  • Give customers updates on product improvements, new features, and upcoming releases
  • Ask for their feedback and ways you could improve the product and enhance the overall customer experience
  • Offer discounts and other perks to loyal customers

Practice Proactive Customer Service

Reactive customer service is when you wait for customers to come to you with their problems and questions. Proactive customer service, on the other hand, is when you anticipate problems and questions and actively engage customers to not only ensure there are no deal-breaking issues but that they’re highly satisfied.

Here’s a side-by-side comparison of proactive versus reactive customer service.

Put yourself in the shoes of a SaaS customer for a second. Which type of customer service would you prefer?

It’s a no-brainer. In nearly every situation, customers will always opt for proactive customer service because it makes their lives easier, and they can get the absolute most from their investment.

That’s why I strongly suggest taking this approach if you’re not already. You can learn more about this topic in this guide from customer service software brand Tidio.

Offer Incentives for Customers to Hang Around

Getting customers to convert initially isn’t easy. But getting them to hang around for the long haul, especially when you’ve got competitors nipping at your heels is a whole other matter. One of the best SaaS retention strategies to fix this problem is to offer your loyal customers incentives to stick with you.

I like what Carly Stec of HubSpot has to say about this.

“Give customers a reason to stick around by offering them something special like a promo, discount, or loyalty program. This small effort can go a long way when it comes to showing your existing customers how much you value their business.”

If someone is happy with your SaaS product, they’ll be even happier. And if they were on the fence and potentially considering taking their business elsewhere, this can be just what you need to make them reconsider and remain a customer.

Figure Out Why Churn Happens

Finally, it’s incredibly important to understand what’s contributing to your churn because this will help you take the appropriate steps to lower it. Earlier, I mentioned that poor onboarding, poor product performance, and ineffective relationship building were the top three causes of SaaS churn across the board. But, of course, every situation is different, so you’ll want to know precisely what issues are the biggest contributors for your company.

A great starting point is to use exit surveys when customers leave, as this should provide you with a basic overview of the core causes. However, admittedly, only a certain percentage of customers will fill these out, and it won’t necessarily show the whole picture.

That’s where a retention analytics platform comes in. This is specifically designed to quantifiably measure churn to see why customers leave and what’s causing it. Further, this can also help you measure customer engagement so you can determine the behaviors that are leading to success.

There are numerous products on the market, but one of my personal favorites is Woopra which primarily focuses on the SaaS industry. For example, you can use it to determine how many users return after using a core product feature…

…or what your product retention is for mobile users.

Keeping More Customers with Winning SaaS Retention Strategies

It’s hard to stress enough the importance of minimizing churn. After all, it doesn’t matter how many new customers you gain if you can’t retain them. By using the right SaaS retention strategies, you should be able to tame your churn rate and build the foundation for a long-lasting brand.

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