Last editedMay 20203 min read
The software-as-a-service (SaaS) market is growing at a rapid rate. In fact, the market was valued at $134.44 billion in 2018, and is expected to grow to $220.21 billion through 2022. As a result, there’s much more competition for customers than before, and if your company doesn’t focus on the right strategies for gaining new SaaS customers, you could be left lagging behind your competitors. That’s why it helps to have a solid understanding of the SaaS customer lifecycle, as well as how to improve it. Read our comprehensive guide for a little more detail. First off, what is a customer lifecycle?
What is a customer lifecycle?
In short, the customer lifecycle is the process that people go through before, during, and after they make a transaction. There are six main steps associated with the process for SaaS customers:
Awareness – Stage 1, where customers realize they have a problem and discover the solution offered by your company via online research.
Conversion – Stage 2, where customers have learned about your offering (perhaps after accessing your company’s free resources) and are moving closer to making a purchase.
Purchase – Stage 3, where the purchase has been made successfully and you demonstrate further value through effective onboarding, proactive communication, and so on.
Activation – Stage 4, where you encourage your customers to become active weekly/daily users through customer success outreach, free resources, or further education.
Retention – Stage 5, where your customer decides to renew their subscription to your service.
Advocacy – Stage 6, where your customers are so satisfied with the service you provide that they become “power users” who refer new customers to your site.
As you can see, the customer lifecycle isn’t a linear process, but a circular process, constantly building brand loyalty and bringing new potential SaaS customers into your orbit. That’s why it’s referred to as a “cycle”, rather than a line beginning with onboarding and ending when the subscription is terminated.
Why is the customer lifecycle important?
Now that you know a little more about the customer lifecycle process, it’s important to get a sense of why it’s so significant for SaaS companies. Put simply, understanding and optimizing your business’s customer lifecycle can help to maximize revenue and reduce customer churn. By ensuring that your customers are engaged throughout the pre- and post-purchase period, you can increase brand loyalty and keep your SaaS customers coming back for more.
What is customer lifecycle management?
So, how can your business improve its customer lifecycle? There’s one relatively simple way – implement customer lifecycle management processes. What is customer lifecycle management? Essentially, it’s the process by which you manage each stage of the customer lifecycle. This allows you to effectively guide the customer through your company’s buying lifecycle. So, whether you’re creating buyer personas to identify your target audience or setting up marketing automation tools to keep up engagement throughout the post-purchase period, customer lifecycle management is an important piece of the puzzle for SaaS companies.
How to improve customer lifecycle for SaaS customers
As we’ve explained, customer lifecycle management is an important element for keeping SaaS customers engaged with your business throughout the buying journey, and beyond. What – specifically – can your business do to improve the customer lifecycle? Here’s six potential options for each stage of the cycle:
Awareness: produce free educational resources – When your customers are learning about your product, they’re likely to look at your YouTube channel, blog posts, social media, and so on. Ensure that you’ve got a content-rich offering that provides potential SaaS customers with all the information they need.
Conversion: proactively nurture your leads – Once you’ve hooked a potential customer, you should be nurturing the lead with targeted offers. For example, offering free trials or demos can help to move customers along the purchase path.
Purchase: provide customer support options – At the point of purchase, doubt can be the biggest barrier to completing a transaction. Providing a wide range of customer support options, such as live chat, can let customers easily connect to your team when they’re thinking about taking the next step.
Activation: keep customers engaged through proactive communication – To ensure deeper post-purchase engagement with your customers, you should communicate with them on a consistent basis. Let them know when new updates or features are available and personalize your content so that they feel taken care of.
Retention: offer Direct Debit payment options – Churn is one of the biggest issues when it comes to retaining customers. Offering Direct Debit through a payment service like GoCardless can reduce involuntary churn and improve your customer lifetime value (LTV).
Advocacy: encourage customers to share their experience – There are lots of ways to give a customer that extra push when it comes to referrals. One potential option is offering compensation or discounts for referring a friend.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.