SaaS retention: 8 ways to keep your customers paying

Losing valuable customers to churn is the stuff nightmares are made of for businesses part of the SaaS industry. While churn is inevitable, a solid customer-retention strategy, which has proven to be five times less expensive than acquiring new customers, can help to combat it.

Did you know that boosting customer retention by 5% can actually increase profits by 25-95%? Furthermore, businesses have a 60-70% chance of selling to an existing customer versus a 5-20% chance of selling to new customers. It literally pays to focus on your existing customers!

We’re here to cover everything you need to know about retaining customers and give you eight effective strategies to ensure your customers remain loyal and you can boost retention and, by extension, future revenue.

What Is SaaS Retention?

Retention, simply put, is the sum of activities SaaS businesses undertake and their corresponding strategies to retain customers. SaaS retention is a key metric that measures your efficiency to keep your customer retention rates high, getting customers to stay loyal to your product and engaging over the long term.

Why SaaS Customer Retention Is So Important

Customer retention is essential for a sustainable business since SaaS is based on a subscription model. It is a crucial indicator of a business's long-term stability, growth, and overall profitability and a good measure of overall customer satisfaction. In short, the higher your retention rate, the higher your revenue growth and lifetime value.

Optimizing customer retention is the most cost-effective way to maintain and increase recurring revenue. It’s easier to upsell to long-term satisfied customers, and it increases their lifetime value, which is also essential. These customers are also more likely to become loyal advocates for your brand. Zippia research has found that 65% of a company’s business comes from existing customers. Loyal customers can become a real recurring revenue engine.

On the flip side, if customer retention isn’t done right, you’ll likely suffer lost revenue, as acquiring customers is a costlier exercise. So if current customers churn before they have completed enough payment cycles for you to break even on their acquisition cost, you’re using an ineffective growth strategy. Eventually, you could churn through your entire potential customer base, which would be disastrous for any business.

Defining Your SaaS Retention Strategy

One of the most important things you’ll need to do is conduct a retention analysis to understand whether your customers are staying, churning, upgrading, or downgrading. Of course, the desired behavior is for your customers to renew their subscriptions and stay with you for as long as possible. Fortunately, customers who renew multiple times will lower the customer acquisition cost (CAC) and increase profitability. Make it a top priority to spend time defining your goals and carefully working out the best SaaS retention strategies to get there.

Top 8 Strategies To Keep Your Customers Paying

These eight strategies will help you build strong customer relationships and prioritize customer engagement and increase retention. With boosted retention and reduced churn, you’re making it possible to grow your business and increase its revenue.

1. Make Your Value Proposition Clear

Your value proposition is a short statement that communicates why customers should choose your product. Keep the value proposition brief and easy to understand. Provide customers with immediate “a-ha” moments in the onboarding process, where the value of your product is made obvious and clear. As they become paying customers, you’ll need to deliver consistently on the value proposition. If you keep offering the same great value they signed up for, you will keep them subscribing and paying for the product.

Read on to learn all 8 SaaS retention strategies on PayPro Global's Blog.