10 Effective strategies to boost SaaS customer retention

Customer churn is like a hole in the SaaS revenue bucket, that may not be noticeable at first but leaks out a lot of money over time. It is an ever growing issue in the SaaS market that scares SaaS founders the most.

So, finding creative strategies to innovatively plug the customer churn hole is much more effective and cost reducing than trying to add more customers to the mix.

Don’t you agree?

Without further ado, let's dive into some more insight on customer retention and the tactics used to promote it.

What is SaaS customer retention?

Customer retention process of adopting various strategies, activities, and actions to retain customers by stop them from leaving. It involves giving customers a satisfying and positive experience to boost sales and profit growth.

While the effective factor is crucial for every organization, subscription firms are particularly dependent on it because fewer to no subscribers leaving equals more stable and reliable revenue. This doesn't require you to burn extra cash but involves providing discounts, loyalty programs, personalized customer service, and introducing new products and services that meet customer needs. It accurately reflects consumer loyalty, business performance, and profitability.

Why is the calculation of SaaS customer retention crucial?

From grabbing an individual's attention to taking it down to the end of the sales funnel, where they’re converted to a paying customer, is both time-consuming and expensive. Although crucial for your business revenue stream, these potential new customers are harder to acquire than it is to engage with the existing ones.

Therefore, SaaS customer retention is a reliable statistic to assess the vitality and performance of your company and to manage long-term client connections, and ultimately improve your bottom line.

How to calculate your SaaS customer retention rate?

The percentage of active customers who continue using a SaaS product over the number of customers using it at the beginning of a particular time is known as SaaS customer retention rate.

Customer retention rate (CRR) = No. of active customers continuing their subscription in a given period / total number of active customers at the beginning) × 100


Customer retention rate (CRR) = ((E-N)/S) x 100.

E = total number of customers at the end of a specific period
N = total number of new customers acquired during that period
S = total number of customers you had at the beginning of the period

Note: Usually the duration for which services or products are offered determines the period used to calculate client retention. For example, if your business provides services for a shorter time frame, like every month, measure the monthly customer retention.

10 Key metrics to promote SaaS customer retention

1: High class customer service experience -

Needless to say, no SaaS customer retention strategy can work for your SaaS business if customers are dissatisfied with the product or service offered by your business. The standard of your service/product can reinforce or debilitate your organization's core selling ability. The more you go above and beyond to delight your clients by enhancing your services and products, and the more your actions are geared toward resolving customers' issues, the more chances you have of them being loyal to your business. Keeping in mind that bad customer service experience is the primary reason customers churn, ensuring a good customer service experience is crucial to let the revenue stream flow and thrive in today's competitive marketplace.

2: Upgrades and adding new features -

Launching new versions of your products/services or upgrading your existing services by adding new features is one of the best SaaS customer retention strategies. Customer feedback can play a major role here, as it can highlight their points and allow you to eradicate these in new versions of your product or service. Customers are kept up to date on the newest products and cutting-edge technology as long as they’re consistently using your products. Upgrades and new features give customers something to look forward to, whereas not delivering anything new to customers breeds boredom and lower engagement, making it more likely for them to leave you for a competitor.

3: Upselling -

Enhancing business customer relationships is the SaaS customer retention strategy you shouldn't ignore moving forward. Customers are likely to remain loyal to you for longer after they recognize your product's value, which leads to higher customer retention, and ultimately higher revenue. This strategy includes offering upgrades, additional features, or tiered pricing plans, further allowing customers to feel valued and engaged. Upselling promotes a more positive customer experience, which means increased lifetime value (CLV). The more they purchase from you, the more revenue your business gets. Win-win for both.

4: Encourage renewals -

The next crucial factor in the list of SaaS customer retention strategies is to encourage customers to renew their products or services. Successfully obtaining a customer renewal from existing customers is significantly less expensive than finding new ones. Also, reaching customers during the last days of the existing service period or maintaining better relationships with them from the beginning allows businesses to mitigate customer churn, build relationships with customers and strengthen customer loyalty. Recent cancellations are also a vast field that businesses can touch to get those customers back to their customer base.

5: Reward loyalty -

Rewarding the loyalty of your customers is a great measure to take when talking about the SaaS customer retention strategy. If done right, this method of appreciating and valuing your customers' presence makes them stick around for longer, yielding results for you down the line. They receive their reward in the form of simple discounts and promotional offers, upgrades, loyalty points, exclusive access to products, personalized gifts, or a freebie, and you receive guaranteed revenue from them. Also, do not forget to keep track of the strategy's impacts on your SaaS customer retention.

6: Use targeted campaigns -

One thing to not forget while going through customer retention strategies for a SaaS business is to always take a targeted approach—better if personalized—into consideration when engaging clients. A specific consumer group can be configured to receive automated emails for upgrades, product, or service launches, highlighting new features, offering discounts, and more. Emails may also be employed to inform consumers about updates and new features that can enhance their usage of the product, keep them subscribed, or show appreciation for their business.

7: Build anticipation and set expectations –

A businesses' inability to fulfill consumer expectations is a significant disadvantage that hinders customer retention. The key to preventing dissatisfied consumers, and ultimately keeping them on board, is to be upfront with them about what they can expect to receive after purchasing from your company and to ensure that promises are delivered within the anticipated time frame. Besides, keeping the buzz and anticipation high by sending emails or updates about impending features keeps clients waiting for the greatest deals.

8: Be transparent about your value proposition -

A clear understanding of your value proposition helps people understand the benefits that your goods or services provide, making them stand out from the competition. It should be well-versed and not written in difficult business jargon to be readily understood by customers so that customers may make informed decisions about whether to use your service. Make sure that customers are being made aware of the value they receive from time to time, as it is what they signed up for.

9: Don't hesitate to ask for feedback -

"The customer is king, and the king must realize its power." Make this possible, then. Businesses can identify possible systemic problems, make the required adjustments to address them and gain insights into customer wants and preferences by asking for customer feedback. This helps to enhance the customer experience and satisfaction levels.

10: Exit survey -

Being a hindrance to a customer who wants to leave is against corporate ethics. Instead of making it hard for them to end their relationship with you, ask for their feedback via exit surveys. Additionally, try reminding them of the values your products and services add to their lives. Your cancellation policy should be straightforward and provide the information that enables you to determine the primary causes of their departure. When a consumer is leaving, it's possible that they won't be interested in answering your questions, so be careful not to add too many. At the end of the day use the data to retain customers in the future. 

Final Words

Understanding and analyzing the behavior and requirements of your customers is an essential component of client retention. A company's SaaS customer retention tactics should focus on eliminating all potential causes of customer turnover. Although they may initially seem daunting, the abovementioned critical elements are essential to encourage SaaS customer retention and increase income.

With Billsby, you can boost SaaS customer retention and attract larger revenue rates for your business.