7 Proven Customer Retention Strategy that works for SaaS Business

For the SaaS business model to be profitable over time, customers must stick around long enough to break even on acquisition costs before they churn out or move on. Maintaining customer retention should be a priority for any SaaS business, as it is much more effective to keep an existing customer than acquire a new one. Retaining customers is paramount for success in the SaaS world. Investing in customer retention activities often produces benefits that are greater than those derived from customer acquisition. User churn can lead to higher costs and lower profitability if customers don’t engage with the product long enough to break even on acquisition costs. 


Retention strategies improve customer lifetime value (LTV) over time, creating more opportunities for upselling and increasing word-of-mouth referrals. As a result, long-term users create a valuable asset – Raving Fans! – who will actively promote your product and bring more new customers into the business. Here are some customer retention strategies that have proven to work in retaining 85% of SaaS customers. Let’s look around.

Customer retention strategies
  1. Set realistic customer expectation

Churn can be caused when user expectations are not met. It is important to properly explain the value that your product provides and be as specific as possible. Setting realistic expectations for customers is an effective way to guarantee that their experience with your product will be satisfactory, if not better. While meeting customer expectations should always be a priority, it is best practice to slightly underpromise and overdeliver–this will ensure the customer leaves feeling impressed with the value they receive from your product. Failing to meet customer expectations or overpromising what you can deliver can cause serious issues within the relationship between the user and the company.


According to Paul Reeves, the CEO of Customer Kaizen, a tech company that specializes in helping customers reach their success objectives profitably, having an understanding of the desired outcomes and how to measure them is key. Sales or BD representatives should incorporate elements of this discovery process before signing a new customer. The CSM can likewise use this information to produce a proposed plan and present it during the kick-off. Knowing what the customer wants and being able to demonstrate capabilities is essential for the successful onboarding of any new client. Without this understanding, it becomes increasingly challenging—and risky—to make sure all goals are achieved within an appropriate time frame.

  1. Focus on improving the onboarding process

No matter how good your onboarding process is, there will still be room for improvement. Onboarding should help customers reach their first point of perceived value quickly. Depending on the use case, early value can differ for different customers.

As a result, you may need different onboarding processes based on different use cases. It is also important to teach only those features in a way that will help the customer reach early value as soon as possible.


In order to help the customer onboard in a stepwise manner, you may want to consider an onboarding framework to make it a smooth process for them.

  1. Constantly Analyse and report on customer KPIs

If you wish to ensure your company is doing well, it is important to establish and assess customer KPIs regularly. Things like MRR (monthly retention rate), account retention rate, and portfolio growth are key internal KPIs that should be observed – however customer metrics such as product adoption and product stickiness are the leading indicators in helping you to reach the former. 


Ensure that only a few metrics are chosen and concentrated on; having too many can make the success plan chaotic. Upon choosing these few metrics, devise strategies that will help them improve, then fully focus on their execution and subsequent reporting until they reach an optimal level.

  1. Keep upgrading your product via new features 

This is another avenue to help customers accomplish their targets. Invite helpful feedback on your product (more info about this soon), and keep refining it with upgrades and new additions. As individuals perceive more value as time passes, retention rates will continue to rise. 

In some cases, churn can be caused by boredom – as users interact with a similar program for an extended period, value recognition may decrease and involvement may fall as a result. Bringing out new versions can aid in combatting this issue.

  1. Measure customer engagement with the product

Customer engagement can give an indication of what is to come. A low customer engagement could suggest the customer has abandoned the product, which diminishes retention possibilities. To retain them, something creative must be done to help them reach their objectives. 


Specialized customer success platforms can be immensely beneficial in this regard; they retrieve and analyze masses of data to generate a health score indicating the current status of the customer. Parameters for a good or bad assessment can be tailored according to the situation. By virtue of this, you will have ample time to take proactive action long before it’s time for renewal. 

Complete Guide to Customer Health Score

Learn how to configure a Perfect Health Score for your SaaS

Customers with healthy scores present another valuable occasion; you can use software with Customer 360 feature to identify which features they use most often and see if there is an upgrade or upsell option that would enable them to meet their goals faster and more conveniently.


5. Community building for better customer relationship

Creating a supportive environment for your brand is an excellent decision that helps both the users and the company. Users can engage with one another and with you to feel a level of personal connection. Additionally, it offers a platform from which helpful feedback can be obtained. Creating a feature request forum, where customers can put out requests and have them responded to by either other customers or representatives from the business can prove to be a great way of involvement & engagement with customers.


Plus, Yasasree Nerayanuri, who is Customer Success Lead at Freshworks, believes in fostering relationships with customers on multiple levels. This is especially important for mid-market clients, who may be more likely to experience a shakeup in personnel. Without connections across all levels of the organization, it can prove difficult to retain a customer once their primary product champion has been replaced. Consequently, partnering with customers through content relevant to every stakeholder is essential to prevent churn.

6. Capture & share the customer’s voice


Using health scores, CSM insights and referrals assists in deciding which customers offer the most appropriate reviews, video testimonials, can be part of case studies and provide future recommendations. Utilizing these pertinent customer feedbacks, critiques and cases, insert these into the customer journey to aid incoming customers comprehend how others in their sector have utilized your product to acquire desired results. Doing this will help bolster new customers’ trust in you and reinforce their opinion that purchasing your product is the correct decision.


Collecting user feedback, NPS score etc at strategic points is essential to customer retention. With the right technology, tedious forms are unnecessary and engagement with your product can be gauged with tracking of user behavior. 


Reptrics provides a valuable tool that enables you to keep track of all engagement KPIs in one place, as well as alert you when users seem likely to abandon your services so that you can intervene with the correct message. This improved monitoring leads to better customer retention.


No two customers are the same, and what works in terms of retention for some may not work for others. With a tailored approach to retention in place, you can build customer loyalty and encourage them to stay with your product for the long haul. But don’t forget about getting new clients! Attracting consumers is just as important if you’re aiming for business success. By investing in a comprehensive plan to maintain your current customer base, you’ll reap rewards over time.


Using these retention strategies even for the slightest increase in the retention rate will do wonders for your Annual Recurring revenue. The key is to recognize user needs and make it

Get to know your customers better with Reptrics CS

Related Posts