How SaaS Companies Retain Customers and Grow their Business

25-Jul-2019 03:49 PM Leadership

Software as a Service (SaaS) products are aplenty and a wrong move can stop the progress of your SaaS company. Retaining your existing customers is less expensive and more important than gaining new ones. Learn the challenges that SaaS businesses face and how to keep customers interested in your products.

For SaaS companies, losing customers is losing business opportunities and potential growth. The growing popularity of SaaS have spurred startups to build SaaS products and get the attention of customers. To this end, you have spent countless hours to develop your product, in sales and marketing. Despite all this, if you have noticed that your hard-earned customers are leaving, that’s a cause for worry.

You may be tempted to pour in money into your marketing campaign and earn a few more paying customers, but stop and ponder. Earning customers is sometimes more expensive than retaining the customers you already have.

Why Customers Leave

In simple terms, SaaS companies fail if customers leave or if they churn. Let us look at the two primary causes of churn.

Desired Outcome Churn


Customers buy your product with a target in mind. Desired outcome churn occurs when customers fail to hit their intended goals with your product. When people or businesses pay for SaaS products, they want immediate results starting from invoicing to onboarding process to their first success with your product. If this takes time, they may choose to go to your competitors.

The second reason is not facilitating customer success. Customers would have set their own goals like ‘send emails faster’, ‘increase profitability’, ‘allocate three processes to the admin’, etc. If these goals are not met, customers will move on.

Bad customer support is another cause for desired outcome churn. Customer service is one of the parameters for customers to choose your company. Problems crop-up in SaaS products like confusing in-app settings or functionality. You must have a proactive and action-oriented customer support team. You must make customer support a priority or else you will risk losing customers.

Competitor-churn is also a factor. If your customers think that your competitor can help you reach their goals faster and accurately, they will leave. You can avoid this by helping your customers reach their first desired milestone faster. Lastly, attracting the wrong type of people for your product will contribute to churn. You must see to it that there is no disconnect between what the customers believe your product can do and what your product can actually do.

Natural Cause Churn


In SaaS business, there are natural problems that sometimes crop up, but cannot be avoided. Problems with the product is the foremost natural causes for churn. Service outages impact customers like no other. Companies must tackle this challenge quickly and also keep the customer in the loop by communicating clearly.

Affected customers can be enticed with temporary discounts and perks. This may not work all the time, but it is better to lose some money on a short-term basis than to lose the customer permanently.

Cash crisis of your customer is another reason your service may be overlooked. It can severely hamper their engagement with your company. If your customer is not considering your service as essential, there could be a chance that your customer may consider discontinuing. Convincing the customer to view your product as an absolutely essential service can retain them longer. Getting the customers to agree to a long-term agreement is a win-win situation for all the stakeholders involved.

As your business grows, you may consider turning your customers into evangelists. Offering incentives for referring your product to other potential clients may keep them invested in your company and product.

How to Retain Your SaaS Customers

To reiterate, retaining your customers is less expensive than trying to gain new ones. Here are a few tips to retain your customers.

Improve customer experience

SaaS users are not here for just for the product. They want an experience. In SaaS, service is key. Trust us, customers judge your every move, starting from the cost of the product to product features to purchase process, after-sales service, software speed, communication, etc. Providing a great customer experience will retain them.

Keep selling to customers and then upsell


Successful SaaS companies always sell to their customers more than unsuccessful ones. That means, having unparalleled customer service. Poor customer service has lead to losses in billions. Rude customer service representative, escalations, unresolved issues are signs of bad customer support.

SaaS cycles must be mostly short, meaning, customers expect rapid deployment of the software and rapid integration. The deployment of products must not hinder operations.

Once you sell to the customer, you must upsell to them. This will ensure the level of service to the customer is constantly upgraded. Customers will get better features to play around with and your company will earn more revenue, which can be used in the customer retention programs.

Listen for feedback and improve features regularly


Get your customers invested in your company by inviting feedback. Place a feedback form where customers can see. It is also important to have other channels of communication open that will reassure the customer that you are completely invested in the product and its benefits. Make giving feedback easy, collect feedback and listen to what your customers say.

This is part one. The second part is to put the ideas collected to good use. If customers are dependent on a feature, work on it and make it better. Sales are made by selling one small feature that works better than your competition. Identify that and sell it to customers.

Help customers by guiding them

The easier it is for your customers to understand and use your product, the longer will they stay. This is when you work on your content marketing. Useful blog articles, ebooks, and user guides must be part of your content marketing strategy. Provide useful tools, tutorials, and webinars to coach users on how to use your product. This will create a deeper relationship which in turn could go a long way to reduce churn.

Customer retention is an important activity. Give your customers the desired experience without spamming them with aggressive marketing. While you figure out how to earn and retain customers, keep an eye on metrics that can help you figure out how your product is performing in the market.