In B2B SaaS, winning new customers grabs headlines, but keeping them drives real growth.
Every cancellation chips away at your predictable recurring revenue and forces you to spend more on acquisition.
By focusing on retention, you can stabilise your bottom line and unlock upsell opportunities to turn customers into advocates.
In this article, we’ll dive into proven strategies to help you improve your customer retention rate. From stellar onboarding to proactive support and product upgrades, these will help you hold onto customers and improve your customer retention rate. Let’s get started!
Customer Retention Rate (CRR) is the percentage of customers a business keeps over a given period. It shows how good you are at keeping your existing customers subscribed and satisfied over time.
Here’s the formula for customer retention rate:
CRR = ((E - N) / S) × 100
Where:
Let’s say you started the quarter with 100 customers, gained 20 new ones, and ended with 110.
Your CRR = ((110 - 20) / 100) × 100 = 90%
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Customer retention is extremely important for B2B SaaS businesses as they rely on recurring revenue from repeat customers. Chasing new customers constantly is costly and unsustainable. That’s why you should try to improve your customer retention rate.
Actively tracking and trying to improve your customer retention rate can help you:
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Want to improve your customer retention rate but not sure where to start? Implement the following strategies and see what works for you.
Without knowing who your customers are and their activities, purchases, and habits, how can you best serve them? Using a customer relationship management (CRM) solution is a good place to start, but it’s not enough to improve your customer retention rate.
Your customers should be segmented as much as possible. Identify your VIP customers (those who spend the most, have the biggest contracts, or the best networks that can benefit you). If they are important for the success of your business, you should be devoting time to them.
Identify your "needy" customers. Which ones need more hands-on help to implement new features or understand how your system works? Don't get annoyed or frustrated by these customers, be as helpful as possible, and they will be more likely to share their good experience with others.
But you should also track key metrics that signal that customers are on the verge of cancellation. Are there repeated invoicing issues? Are there customer service tickets that go unanswered? Are they spending less and less time on your platform?
These are all opportunities for intervention. Reach out to these customers to identify the issue and how you can solve it. Perhaps they aren't understanding the SaaS billing terms, or they don't know how to maximise the use of your software. It is possible to avoid losing these customers and improve your customer retention rate, just by tracking more individualised information about them.
Use a subscription management and recurring billing software solution like Younium to get in-depth analytics and insights into your customer behaviour. It tracks all important metrics related to accounts, bookings, revenue, and customers to help you make informed decisions to improve your customer retention rate.
Image via Younium
Think about the factors that contribute to customer churn: perhaps your customer has an issue that is unresolved, they don't feel they are getting a good value for their money, or they don't feel that you care enough about them.
If you practice a high-touch sales process, you may likely set expectations of your customers for a high level of continued support. Try to put yourself in your customer's shoes. What is most important to them, and what would really impress them in terms of customer support?
Here are some common causes of customer churn in B2B SaaS businesses for your quick reference.
Conduct a thorough churn analysis to find the reasons why customers leave and take measures to prevent them from leaving to improve your customer retention rate.
Approach your customers with enough support in place. Check in with your accounts periodically to show that customer satisfaction is important to you.
Perhaps your organisation doesn't yet have the ability to designate account managers to each of your customers. That doesn't mean you don't have the ability to still help them.
Consider how you can create content that will address and answer common questions. Create guides for step-by-step methods for getting the most out of your products. Or, create an online community where your customers can gather, ask questions of each other, or generally feel a sense of belonging.
These tactics will help you improve your customer retention rate by enhancing the customer experience.
Loyalty programs and referral incentives are actually an incredibly effective method for remarketing and sales. Again, the sense of belonging that your customers may feel when they are a part of a loyalty program can greatly improve the likelihood that they will stay your customer.
For B2B companies, loyalty programs may seem like something that doesn't apply, but that's not true. As with tracking your customer data, find when your customers are up for subscription renewals. Perhaps you can give them a discount, or a reward for renewing, or at least show some form of appreciation when they do. While happy customers don't always need incentives to stay with a product or company that they love, it can still go a long way in continuing to develop their positive impression of you.
If you are prioritising existing customers throughout your entire organisation, rather than spending all of your focus on acquiring new customers, your retention rates will improve. In fact, you can spend far less time and money when you focus on customer retention than on customer acquisition, because you have a captive audience.
By utilising your customer information and data, putting your existing customers first, and considering how to boost customer loyalty, you can improve your customer retention rate.
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A structured, engaging onboarding sets the tone for long-term customer success and helps you improve your customer retention rate. Treat it as a guided journey that helps users reach their first “aha” moment, then reinforce that value.
Here’s how you can organise each step to improve your customer retention rate.
Younium, for example, has an extensive resource hub where customers can find useful guides on using its different features.
Image via Younium
Regular product updates and upgrades show customers that you care about improving customer experience and building a best-in-class product. This helps build trust in your business, which helps improve your customer retention rate.
Here are some tips you can follow to improve your customer retention rate by continually updating your product.
This can help you encourage customers to remain loyal and improve your customer retention rate.
If you want to improve your customer retention rate and keep customers happy, you need to provide excellent customer service and support. Poor customer service can cause even a loyal customer to switch to competitors. Per a survey, 86% of loyal, satisfied customers leave a brand after two bad experiences.
Here’s what you can do.
Most customers prefer phone support, especially for complex issues, so make sure you offer that.
Image via Zendesk
Gathering and acting on customer feedback shows you value your users’ voices, which helps improve your customer retention rate in the long run.
Here are some ways in which you can collect feedback to improve your customer retention rate.
Collecting feedback is only half the battle, as you also need to act on it, so make sure you include it in your customer retention strategy.
Here are some tips to help you follow through on feedback to improve your customer retention rate.
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Tracking customer data to identify and prevent potential churn, having a customer-centric attitude, and providing great onboarding and customer support are some of the ways in which you can improve your customer retention rate.
2. What are the 3 Rs of customer retention?Rewards, Relevance, and Recognition are the 3 Rs of customer retention, which are used mainly in the context of customer retention programs. Creating engaging loyalty programs based on these principles can help you improve your customer retention rate.
3. What is the formula to measure customer retention?Here’s how you can calculate your customer retention rate.
Customer Retention Rate =
(Customers at End of Period)− (New Customers Acquired) ×100 / Customers at Start of Period
4. What is the key to customer retention?Consistent value delivery is the key to improving the customer retention rate. Customers stay when your product continually solves their evolving needs.
5. How can Younium help improve your customer retention rate?Here are some ways in which Younium can help you improve your customer retention rate.
The B2B SaaS landscape is becoming increasingly competitive. If your sole strategy is working endlessly to keep bringing in new customers, you will likely fail.
You need to focus on retaining existing customers and gaining recurring revenue to succeed, and the customer retention tactics listed above can help you improve your customer retention rate.
Implement a few or all of these to improve your customer retention rate and build a community of loyal customers.
If you need an end-to-end solution to manage your B2B subscription management needs, try Younium. Get a demo to see what features it offers and how they can help you grow your B2B SaaS business.