How to Avoid SaaS Customer Churn

By Hardik Oza / 25 October 2019

Successful SaaS companies retain customers by focusing on customer services, iterating on their product, and rewarding engagement.

Did you know about 55% of SaaS companies believe that customer retention is the key to success? Software as a Service (SaaS) providers should secure repeat business by nurturing loyal customers.

In today's hyper-competitive market, nearly all businesses are struggling to retain more customers or increase their user base. Customers tend to switch between SaaS service providers because many vendors offer similar solutions. 

However, certain strategies can help you reduce your customer churn rate. This article lists a few effective strategies that will help you retain potential customers.

5 Tips for SaaS Businesses to Reduce Customer Churn

  1. Focus on Customer Experience
  2. Improve Your Product’s Key Features
  3. Create Loyalty Programs
  4. Engage With Customers
  5. Take a Proactive Stance

#1. Create a Compelling Customer Experience

Don’t make the mistake of thinking that SaaS customers are only there because of your software’s benefits. They’re also looking for a great customer experience and additional services. 

Customer service is the most significant factor to maintaining your client base. If your services are up to the mark, you’ll be able to attract more customers. Understand your customers and identify their pain points so that you can cater to their needs.

In addition, you should always be ready to promptly respond to customer queries and resolve them as soon as possible. If any of your customers are facing negative experience, resolve that matter with a win-win approach. 

For instance, you could offer a customer who is not satisfied with your services a customized solution. Or you could even offer a free subscription for a specific time frame. 

In short, a compelling customer experience will help stem customer loss.

#2. Improve the Most Captivating Features

As your SaaS solution evolves, you will gradually find that some features are more important than others to your audience. 

Focus on improving those features to enhance your qualitative services as well as your solution’s functionalities. Once you refine your solution’s selling points, customers will keep coming back to your services and likely won’t turn to other solutions.

Make sure your software is feature-rich — you should be capable of offering a smart solution to your audience that hits their core needs. Consistently improving your software will encourage customers to stick with your brand.

#3. Introduce Loyalty Programs

Another good way to keep growing your existing customer base is to offer rewards. Rewards can make a huge difference in retaining more customers. 

Take a look at this graph based on Accenture’s 2016 survey of loyalty programs in the retail industry.

members listed in a loyalty program spend up to 18% more than non-members

Here you’ll see that members enlisted in a loyalty program spend up to 18% more than non-loyalty program participants. This suggests that loyalty programs can benefit you in two ways: retaining more existing customers and increasing sales for your business. 

For SaaS customers, try offering rewards such as:

  • Free subscriptions
  • Complimentary services to access add-on features for a limited time
  • Referral points

You should consider creating a loyalty program that best matches your business requirements to increase your customer base.

#4. Increase Customer Engagement

Often, SaaS businesses suffer from a lack of customer engagement. This may be due to a communication gap or scarce resources. 

Once you’ve sold a software service to a client, it’s imperative to interact with them. Send a regular newsletter or inform them about core updates. This type of communication helps them stay connected with your business.

Moreover, don’t neglect technical support. As a SaaS provider, you need to always be prepared to troubleshoot any customer issues before and after purchase. 

Find out how frequently customers use your software and if they’re able to use it efficiently. Ask them questions about their overall experience.

When you actively take the time to interact with your clients, they’ll feel more satisfied with your services and be more inclined to stick with you.

#5. Adopt a Proactive Approach

Finally, when you are in the SaaS industry, you need to be proactive, especially if you have subscription-based customers.

Those of you who’ve poked around in the marketing world before have likely heard of Pareto’s Principle (also known as the “80-20” Rule). This graphic shows a breakdown of the rule.

paretos 80 20 rule

The image concludes that “20% of the effort produces 80% of the results, but the last 20% of the results consumes 80% of the effort.”

Identifying which activities will produce the greatest effect is an exercise in and of itself, but you can also ask yourself these questions: who are my highest performing customers? And how can I better serve them? 

In an article for American Express, CODA Concepts, LLC suggests rewarding top customers that bring in the most revenue while nurturing all relationships to encourage more high-performing clients.

Being proactive will not only help you to retain more customers but also it will bring more revenue to your business. 

One simple step would be to remind customers about their subscription expiration. Customers typically use a credit card to subscribe to your services. On average, a card subscription expires every 1–3 years, so it’s a good idea to contact the customer before their services expire.

This also gives you the chance to offer add-on benefits to loyal customers and sell them on a lifetime of value. To do this, just email them or pitch your services over the phone. Actively encouraging customers to continue with your services can be an effective strategy. 


Decrease Customer Attrition By Engaging With Customers

Successful SaaS companies offer more than just great software to their customers. You have to give reasons for your customers to stick with your service.

By focusing on your customer experience, improving your product, and investing in engagement, you’ll create a powerful brand that can efficiently and effectively stand out from market competition.


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