Best Practices to Improve Customer Retention for SaaS

The SaaS business model predominantly relies on subscription revenue which can potentially lead to recurring revenue from existing customers. So it becomes imperative for businesses to retain customers.  The cost of acquiring new customers, getting them onboard and making the product work for them is a lot higher. So it makes good business sense for companies to retain their existing customers to protect recurring revenue. 

You may never know if the customer has simultaneously signed up for four other competitors’ products to test which works the best for him. So, it becomes more essential to have him choose you over the others. How do you do that? 

Is having a kickass product enough? How do you plan to make your customers stay and pay after you’ve made the sale? Let’s discuss customer retention in detail. 

What is Customer Retention?

Customer retention rates in SaaS indicate the percentage of customers that have remained with your organization for a specific period. The retention speed is the inverse or opposite of the speed of customer churn. Customer churn refers to the percentage of customers your organization has lost over time causing revenue loss. 

The value of retention rates as a measure varies depending on the industry type. Customer retention is critical for companies that supply SaaS products or services because of the predominant subscription model and it directly influences business profitability. 

Often customer retention can be confused with customer loyalty.  Customer retention scope is narrower where it focuses on the number of customers who continue to do business with the company. Loyal customers not only do business, but also positively endorse and engage with the brand. The impact of loyal customers is much larger to the business. 

Customer retention is even more crucial than putting up the effort to attract new clients. Your organization will save money and increase income by having high SaaS client retention rates. It’s also beneficial for increasing customer loyalty and lifetime value.

SaaS Customer Retention Strategies 

Deliver Promised Value

One of the most common causes of customer churn is when users’ expectations are not met. A product can underperform against published capabilities. Product may not deliver expected value.  In any communication, it’s critical to be very explicit about how you create value for your users. Tell them exactly what they will receive if they sign up.

Improve TTV and Ease of Use

From the time a user signs up to use the service to the time the product starts delivering real value is very important to the customer.  Longer the TTV, lesser the customer satisfaction. Ease of deployment, configuration and customization play a key role in retaining customers. Product training and good tutorials help in customer retention. Overall user experience in using the product has to be great.


SaaS customers are sensitive to the pricing strategy adopted by companies. In the tiered pricing model, every plan should have the right balance of price and capabilities and it should provide an easy path to upgrade the plan.  The price bands should cater to the needs of all segments of customers – small businesses, start ups, mid size and enterprise customers.

Product Upgrades

The subscription customers should have access to product upgrades.  Businesses need to provide more frequent feature upgrades and new capabilities to keep pace with competition. This is a key factor in retaining customers.

Active Listening 

One of the essential variables in customer retention is collecting user feedback at the right time and location. You’ll be able to do most of it without bothering users to fill out tedious forms if you employ the right technologies. Feedback on customer service resolution will help optimize your process, but it may also disappoint the users unknowingly.

In places where you’d like to give customers a sense of power, ask for input. Make sure it’s pleasing to the eye and inviting for users to give honest comments. Creating a support network around your entire project could be a good idea. It has advantages for both the user and the business.  

Reward Customer Stickiness

Rewards, loyalty benefits and discounts go a long way in retaining customers. Repeat customers can be offered discounts on renewal or provide attractive offers to upgrade plans.  Providing surprise gifts to long term customers can boost customer delight.

Great Customer Service

Customer service plays an important differentiating factor for SaaS businesses. Providing seamless customer experience with omnichannel customer service, 24/7 support and good help and knowledge management systems can delight customers. Customer service bots can automate much of the customer service tasks at a fraction of the cost.  Integrating customer surveys with customer service boosts customer satisfaction.

The above mentioned are some of the key strategies that companies can adopt for customer retention. Ofcourse, all these will only complement a great product.  Right implementation of these strategies should be organization priority and the measurement of KPI associated with them is important. These should be part of the company’s customer success programs.

Customer retention programs can eventually pave the way for customer loyalty programs. There are a number of customer loyalty tools available that can be adopted. Use Cuspera Buyer’s guides to understand the various options available.

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