<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1657023147888051&amp;ev=PageView&amp;noscript=1">
Get Your FREE Funnel Audit

Growth Marketing for SaaS Retention

Allen Bayless
Allen Bayless 07 October 2022

With SaaS, retention is the art and science of getting your customers to stay with you. It's not enough to just acquire customers, but it's also critical to keep them around. SaaS companies rely on subscription revenue, so keeping customers for as long as possible is vital for growth. Growth marketers are tasked with maximizing CLV (customer lifetime value), which is critical for companies who rely on subscription revenue.

The customer lifetime value (CLV), a critical component for SaaS companies

With growth marketing, experts are tasked with maximizing CLV, which is critical for SaaS companies who rely on subscription revenue. The more money you can make from each customer over time, the more valuable they'll be to your business.

There are many formulas for CLV and it will depend on your situation, but a simple formula to calculate is:

CLV = Average Revenue Per Customer * Customer Lifetime

To make sure that your CLV is as high as possible, start by creating products that solve problems for customers—and make sure those solutions are clear from the beginning. Once you've done this, it's time to show customers how to use your product and how it will help them solve their problems.

Your retention rate is the number one driver of growth.

The most important part of your growth strategy is retention. If you have no customers, your business can't grow. Your retention rate is the number one driver of growth; if you can increase your customer retention by 10%, then your annual revenue will increase by 10%.

The way to increase CLV is by increasing revenue per user (RPU), but how do we get customers to spend more? The answer lies in understanding who's at risk of churning and reaching out directly to them with an offer that solves their problem or makes their life easier.

For a SaaS company, customer churn rate (the inverse of retention) is another key metric.

There are many different ways to measure churn rate, but they all essentially boil down to the same thing: the percentage of customers who cancel their subscription. The lower your churn rate is, the more likely it is that a customer will remain subscribed for longer than a month. This metric can help you identify which parts of your product or service need improvement so that you can keep subscribers happy and engaged with your product.

Churn rate is an important metric because it can indicate how satisfied new users are with your platform—or how likely they are to stick around after trying the trial period for a number of days. If users aren't happy with what they see and don't get to their "aha" moment during this trial period, then chances are good that they won't stick around long enough for their subscription payments to begin paying off in terms of ROI on marketing spend (more on this later).

Churn Prediction

You should have a clear idea of your churn rate and the reasons customers are leaving your service. The best way to do this is through data analysis, which will help you identify patterns in your customer retention.

Churn prediction is one of the most important parts of growth marketing because it helps businesses identify opportunities for improving their retention strategies, resulting in more revenue and profits.

Retention Strategy

The first step in creating a retention strategy is to assess the current situation and come up with some hypotheses about what might be causing churn. To do this, you need to understand your business metrics. What is your customer lifetime value? How many customers are actively using your product? Are there any trends that you can see in these numbers over time or between different cohorts of users?

After you've gathered information on the current state of affairs, it's time to develop a few key hypotheses about why customers leave. For example: "People who sign up for our trial but don't convert within two weeks will likely cancel their subscriptions." Or maybe there are certain segments of users who tend not to stick around long enough for us to collect meaningful data about them—maybe they're more interested in one-off purchases than subscription billing plans.

Retention Campaigns

Retention campaigns are a great way to turn a customer into a repeat buyer. They’re also an easy way to recover from churned customers and can improve your revenue by increasing the lifetime value of your users.

Retention campaigns are best when they take advantage of existing user data, focusing on customer needs rather than product features. There are many campaign strategies and areas to look at but onboarding is probably the most common one.

Build a seamless onboarding process for new users.

Making a good first impression is important when your customer subscribes with your company and it begins the thought of SaaS retention — so make sure that onboarding process is up to par.

Keep your sign-up process as short and straightforward. Though if you need a lot of information at first, split it into multiple pages rather getting it on one single form page. Really, if you can collect certain information later on the better.

Another process would be eliminating friction on sign-up making it easier for new customers to get started with your service. They can fill out a form once and then use the same credentials on other services that they already rely upon, like Google—allowing them to jump right in!

The first time they log in. Make it easy! No one likes to figure out how their new software works on his or her own—so whether you start off with a welcome pop-up that lets new users know about your product, or if you design something more complex like an automated wizard is entirely up to you: just make sure there’s a way for customers to get the value you want them to have.

To get your customers engaged with your product, give them easy wins they can experience right away. For example, invite them to complete a walkthrough of your application, import files or invite team members.

Retention is Your Lifeline

Focusing on retention is one of the most important initiatives you can run in your SaaS business. This is where you show your customers how much they matter to you and how much their continued success means for them. By taking the time to personalize customer retention, you’ll see amazing growth and loyalty!