When it comes to keeping your most loyal customers in good favor, you should think about relationships, not subscriptions. Customers who stick around for the long haul are not just interested in the best price — they also want to be valued.
Creating a relationship marketing program focused on retention will save your you-know-what even in the toughest of times.
It’s a game-changer that will help you minimize a mass exodus during, oh, for instance, a global pandemic.
Loyal customers spend more than new customers, and just a 5% increase in your retention could improve revenue by at least 25%.
That settles it: If you’re only focused on selling to new customers, you’re doing it wrong.
Now, how to retain your best customers? It’s all about rethinking relationships and prioritizing good service.
Putting People over Data: It’s All About Relationship Building
Yes, data is vital to decision making. But retaining your loyal base requires flexing your company’s more personable, unquantifiable attributes.
It’s not new-news that SaaS businesses can benefit from getting more in touch with what customers want, expect, and experience. Most SaaS businesses have made plenty of strides in that department already.
For example, “customer journey mapping” has been a hot topic in recent years, and third-party software touting 360-degree customer views can comb through reams of customer data to uncover endless big-picture insights into customer behavior.
But there are limits to what anyone can assess, measure, and quantify when it comes to “relationships.”
Would you try to assess a real relationship using the number of total times you’ve shared a meal or the average minutes you spend together weekly?
There’s a good reason none of us try to measure personal relationships using data: Direct, one-to-one conversations deliver a lot more insight with a lot less work. When a relationship feels personal, there will be clearer communication, better insights into roadblocks, and more trust.
That’s what the best SaaS businesses share with their customers.
A SaaS business with an emphasis on service allows you to cultivate vital relationships naturally.
Smashing Magazine explains this concept well. Their article on the subject discusses how tech agencies need to step up their game in service delivery, not just product development.
Here’s the crux:
“If we do not engage with our clients in a real, personal way, then we are just another vendor — and vendors are easily replaceable with better cheaper options. However, clients are much less likely to consider replacing people with whom they have real relationships.”
Good Behaviors That Increase Trust and Loyalty
Certain measures are proven to retain SaaS customers. And, well, all customers. Other behaviors drive people away and generate churn.
Spoiler: Bad customer service could be the death knell of a company that has a lot of promise.
Here are six tenets of a solid retention marketing plan.
- Ask for feedback and act on it. Is your relationship with clients really a relationship if you don’t have regular check-ins? We think not. Have a schedule for regular surveys, phone calls, and/or changes to cull vital customer feedback. 66% of people say they will change brands due to bad customer service.
- Evaluate your contract options. Not surprisingly, 2.5 to 3-year SaaS contracts have the lowest churn at 8.5%. What you might not guess is that month-to-month contracts actually have less churn than 1-year contracts. If you can’t lock someone in for two years, consider loosening the reins altogether.
- Make sure you’re serving the right base. Average churn for businesses serving large corporations is about 6-10%, while companies targeting SMBs can see a churn rate of over 50% year over year. Maybe it’s time to reel in a bigger fish.
- Price it right. Companies with a higher average revenue per user (ARPU) see less churn than companies with lower ARPU. If your ARPU is less than $100, your monthly churn could be up to 16% of your revenue. Companies that see $500 revenue per customer typically see a max churn of 6%. Increase the value of your SaaS, price accordingly, and you could decrease churn — fast.
- Offer discounts and rewards in advance. Free trials, bonus storage, another pleasant surprise can keep customers around for the long haul. What can you offer that competitors aren’t? A whopping 68% of Millennials would switch brands to get improved rewards.
- Be totally transparent. Show customers exactly where their money goes and give ample notice of things like downtime and software changes. Oh, and make it easy to change service tiers or cancel. Nothing earns bad reviews quite as fast as making it impossible for people to leave.
Are you ready to change your habits to keep good customers on board? It’s survival of the fittest out there, and only SaaS businesses with a focus on relationships can beat the iceberg ahead.
For even more about what to do when the sh!t hits the fan, read our eBook today.