For subscription and SaaS businesses, metrics like the customer retention rate and the closely related churn rate are essential for determining potential trends and tracking how much revenue you’re losing.
The fact of the matter is that in order for a business to grow over the long term, it needs to decrease the number of customers who leave and increase the number of customers who stay.
In this post, we’ll talk about how to accurately track customer retention and churn and five ways to keep customers coming back to your SaaS business.
What exactly is customer retention?
A metric called “customer retention” measures how many customers stay with a company for a set amount of time.
The stir rate, then again, is the level of endorsers who drop inside a foreordained measure of time. Both of these metrics have a significant impact on monthly recurring revenue (MRR), which is arguably the most important indicator of future business success.
On a monthly basis, a good customer retention rate is typically higher than 90%, though the higher the number, the better. Even though it is obvious that you will never be able to keep every customer, a low rate of customer retention indicates a problem for your business.
You can compare your customer retention rate and other metrics to those of other subscription and SaaS businesses.
Investing in customer retention is a more sustainable growth strategy for the majority of businesses because it costs more to acquire new customers than it does to keep existing ones.
As a result, conducting an in-depth analysis is essential prior to implementing strategies that will increase customer satisfaction over time.
Strategies for Retaining Customers
Now that we’ve talked about how customer retention affects subscription and SaaS businesses, let’s look at some ways to improve this metric.
- Excellent customer service
A customer’s experience can be made or broken by your company’s level of customer service. Give customers excellent service.
Customers want to know that you will be able to help them, whether it’s with the product, a failed payment, or the network.
Good customer support includes quick responses to questions from customers, assistance with onboarding (more on this later), and prompt troubleshooting.
In addition to providing reactive customer support, investing in proactive outreach can have a significant impact.
Even if your customers don’t want to leave, regularly checking in with them can help them become committed to your product and see its value.
2. Create a procedure for new customers’ onboarding
Since the onboarding method is a significant part of the general client experience, it is fundamental to get it right to try not to lose clients early.
An essential component of a successful onboarding process is demonstrating to customers how to use your product to accomplish their objectives.
An effective customer onboarding process includes a simple signup process, a persuasive welcome email, and assistance during the initial login.
By keeping an eye on the outcomes of your trials, you can also learn about how new users initially perceive your business, product, and onboarding process.
You can avoid losing customers before they sign up by using these insights.
3. Produce useful educational materials
If your product doesn’t provide enough value, customers won’t stick around for long. By providing high-quality educational materials and training courses, you can accelerate the rate at which customers reap the benefits of your product’s ROI.
Customers can also get answers to many of their initial questions by using getting started guides and a help center, which are excellent resources for resolving any additional issues that may arise.
In the same way that you want to create an excellent onboarding experience, you should start a community and provide resources for your product.
Workshops and webinars are resources that encourage subscribers to stay for a longer period of time and give subscribers even more value out of their subscriptions.
4. Track and Measure Churn
By determining which customers are leaving and the reasons for their departure, you can devise an informed strategy to retain them.
By conducting cohort analysis and tracking and measuring churn for various customer segments, for instance, you can determine the reasons why some customers may churn more frequently than others.
This information can be used to address a variety of broader business issues, including unmet customer expectations, poor onboarding experiences, unsuccessful acquisition strategies, and so on.
You will also be able to identify generally customer behavior deviations that are causing agitation if you delve into the information regarding abrogations, minimize, canceled installments, and other topics that are related to these topics.
These insights may help determine whether voluntary or involuntary turnover is caused by additional factors. Reduced churn and its measurement will lead to an increase in customer retention over time.
5. Make it easy for your clients to give you feedback
A great way to find problems with your product or interactions that make customers cancel is to get feedback from your customers.
Getting cancellation data and acting on it helps keep customers loyal over time and prevent disloyalty, taking this one step further.
Customers who decide to cancel their subscription can provide feedback in a quick email or through an in-app notification.
Using cancellation insights, you will be able to identify and address pricing issues, a lack of certain features, poor customer service, and any other factors that lead to customer churn.
Calculating retention and churn
To calculate customer retention and churn, the retention rate is calculated by dividing the number of new customers by the total number of customers at the end of the period.
This indicates how many customers remained loyal to you throughout that time period. After that, the total number of customers at the beginning of the period is divided by this number to determine the retention rate.
There are a few different ways to look at churn rate, depending on whether you really want to follow revenue churn or customer churn.
Divide the number of canceled customers by the number of active customers over a given time period to determine customer churn. Divide the result by 100 to get a percentage.
Leave a Reply