Last editedNov 20222 min read
If you run a business which provides SaaS, you have a business model which depends upon recurring payments. The logistics of taking recurring payments of this kind can often be complex, and are simplified greatly by working with a payment processing partner such as GoCardless.
We can help with payment methods such as Direct Debits which provide a degree of certainty for your cash flow, but of equal importance is the question of customer churn. The higher the rate of turnover of your SaaS customers is, the less you can rely on the money coming into your business. That’s why SaaS customer retention strategies are of such vital importance.
B2b SaaS customer retention strategies
There are many strategies you can use to retain your SaaS customers, but among the most effective and the easiest to apply across your business are the following:
Customer loyalty strategy
Once you have a customer signed up to your SaaS business, work to retain them. A loyalty strategy could play a big role in helping to make this happen. SaaS businesses often make the mistake of assuming that their job is done as soon as they’ve signed on a customer, but the truth of the matter is that a contract for a period such as 12 months will lapse, and that particular stream of income will disappear unless the customer can be persuaded to extend their contract.
Customer loyalty strategies could include creating a community of users through a platform such as a forum on which users can exchange opinions, advice and feedback. In this way, your customers buy into your SaaS business as a whole rather than simply the parts which they use, and see it as a resource which they can rely upon in the broadest terms. Another effective customer loyalty strategy is to personalise the relationship with your customers as much as possible, through communication which always addresses them in person and refers to their circumstances as specifically as possible.
Make customers feel more involved with your company – as opposed to simply feeling as if they are being viewed as a source of income – by sending out regular questionnaires on levels of customer satisfaction. This could take the form of a regular email which elicits your customer’s views on the quality of your product, the customer service you provide and any changes you are thinking of introducing. Once again, this is a form of SaaS customer retention built upon making the customer feel appreciated and listened to.
Understanding SaaS customer retention
One of the most important aspects of developing an effective plan for SaaS customer retention is knowing exactly what your current churn rate is. Your churn rate is an expression of the number of customers you are losing and therefore having to replace on an on-going basis.
The calculation for the churn rate of your SaaS business is as follows:
The number of clients you have lost over a specified length of time such as a month or a quarter, divided by the total number of clients you had at the beginning of the same period of time.
If this churn rate is too high, your income streams are unreliable, and too much of your focus needs to be placed on attracting new customers. This creates a vicious circle in which your biggest problem is retaining existing customers, but most of your time has – by necessity – to be spent on trying to attract new customers. Once you understand how high your churn rate is, you’ll grasp the need to initiate effective SaasS customer retention strategies.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.