Did you know that there is a much higher probability of selling something to an existing customer than a new one? Or that it can cost you up to 7 times more money to bring in a new customer than to keep one you already have? Customer loyalty should be something that all businesses strive for, but with SaaS business models, customer loyalty can seriously make or break the business.
Why is customer retention so imperative in the SaaS world? It’s because with SaaS companies customers aren’t making a one-time purchase of a product. They are subscribing to use software, which means you want them to keep subscribing month after month and year after year. Think of it in terms of investing in a gym membership versus purchasing a treadmill. When a person gets a gym membership they pay a monthly fee and have access to all of the gym equipment. It is in the gym’s best interest to keep the members happy and maintain customer loyalty so the customers will keep paying their membership fee each month. Whereas, when a person purchases a treadmill from a sports equipment store, the store isn’t concerned about receiving a payment from them each month—the large purchase already happened. That store will still want to encourage customer loyalty in case that person needs sports equipment again, but it isn’t as important as with a membership based service.
Now that we can see why customer loyalty is so important with a SaaS business, the next big question is: How can we increase customer loyalty?
The number one thing to focus on when it comes to customer retention is customer engagement . Customer engagement refers to customers actually using your product and service. If they aren’t using it, what’s the likelihood they will keep paying for it? Exactly. In order to reduce churn (“…the percentage of subscribers to a service who discontinue their subscriptions to that service within a given time period”) and keep people using your service try offering free training (over the phone, in person, webinars), make sure the software is what people want (listen to customer feedback), and remind customers to use it.
You want to make your software as a service an integral part of the customer’s life or business operation. However, sometimes that isn’t enough to put you above the competition. Take things a step further and really hook your customers with these tips:
Be honest
Let’s face it- mistakes happen. Glitches happen with software, and things do not always go as planned. Customers may not be happy about this, but if you are upfront with them about what is going on, they are much less likely to get upset. Don’t try to hide the problem or give your customers vague answers. That will only frustrate them more. Be transparent instead.
Be available
As we mentioned above, you want your customers to be engaging with your service on a regular basis. Make it easy for them to do so by being available if they have any questions or issues. Have a help telephone line that is manned by real people instead of an automated answering system, or be prompt with responses to email inquiries. If you offer an online chat as a form of communication, be prompt with those responses as well.
Provide original content
Content is one of the key features of inbound marketing. Provide original content that is valuable and pertinent. Offer how to’s for your software, insight into ways to better the customer’s business, or other topics that would be relevant to your customers. Content can come in the form of a blog, email blasts, or videos. Be sure to share your posts on social media.
Show them your appreciation
A great way to encourage customer loyalty is by showing them that you value them and appreciate their business. This could be as simple as sending a thank you note or email or giving a follow up call to ask for feedback. You can also offer rewards through a customer loyalty program . When implementing a loyalty program, make sure it is easy for customers to participate in and that the rewards are actually worthwhile. No one wants to waste time figuring out a complicated system or needing to jump through hoops to actually obtain a reward. Check out this article for tips on implementing a customer loyalty program that works.
Don’t think a loyalty program is right for you business? That’s ok, you can still show your appreciation by giving out random ‘extras’ such as upgrades and discounts.
According to Neil Patel, “It’s a mistake to think that your SaaS customers are in it only for the software. They’re in it for the experience, too.” Make their experience positive by being honest, providing content, being available, and letting customers know your appreciate them. Contact us at Lucid Advisory and Finance for more SaaS tips.
