The Challenge of Retaining SaaS Customers

Jun. 20, 2024

The Challenge of Retaining SaaS Customers

A problem that SaaS companies face is being unable to hold their clients for a long time. Now, it doesn't mean that companies fail to build permanent relationships with their clients, but there is something else that takes extra effort to retain customers. 

What is it? It is the subscription model of SaaS companies. Mostly, their clients go with a monthly plan, and that's to test the product first. So, the SaaS company has to ensure the client retains after the trial period of 1 to 3 months. 

So, in this blog, you will learn how to retain customers in your SaaS business and fight customer churn. 

What is SaaS Customer Retention?

SaaS customer retention is the ability of your software as a service (SaaS) company to keep your customers using your product over time. With the help of it, you can ensure that your customers continue to find value in your service. Moreover, they may also renew their subscription and stay loyal to you. In simple words, your customers will keep choosing you over your competitors. Also, high retention rates are important for the success and growth of your SaaS business. This is because acquiring new customers can be more costly than retaining existing ones.

Calculating Retention: The Formula 

If you want to calculate customer retention, you must know there is a very simple formula to follow. All you need to know are three things. The first is the number of customers at the start of a period. Let us call this "S". Next, you need to know the number of customers at the end of that period. Let us call it "E". Lastly, you should know the number of new customers you have gained during this period. Let us call it "N". So, now the formula is:
Customer Retention Rate= [(E−N)/S] ×100 

Fighting the Battle Against Customer Churn

Now, let's look at how you can fight with customer churn. But first, let's get clear on this term. Customer churn refers to an organization's inability to retain its customers. So, yes, it's the exact opposite of customer retention. To learn more about it, read our following blog about customer churn- 

And, to fight it, here are the steps you must follow:

1. Collecting Insights from the Right People

When dealing with customer churn, you need to clearly understand who are the people you need to reach out to for feedback. It's important because, at this point, feedback is the baseline from which to start. There are two main parties from which you should get your feedback, namely, the decision-makers and users. 

● Decision Makers: The Key Players in Retention Decisions

The decision-makers are important to attend to you because they are the ones who make decisions about whether to renew their subscription with you or not. Since SaaS tools are important for businesses, the decision-makers also look at whether employee productivity and growth have increased or not after the implementation. So, by taking surveys from decision-makers, you can learn about their organizational needs and preferences, which you haven't fulfilled yet. 

● Users: The Daily Drivers of Your Product

Now, to better understand what problems there are, you need to get in touch with those using the product daily. While the decision makers may inform you about the lack of offerings and features, the employees will tell you what issues they face in using the software. Also, they are the ones who also influence the decision-makers; otherwise, why would the decision-makers choose not to continue with you? 

2. Crafting the Right Surveys

In the second step, let's discuss the right surveys you'll send to both parties and when you should send them to them. 

● Product NPS Survey

The first survey to be sent after the onboarding of the clients is the NPS survey to gauge the users' overall satisfaction. Yes, you will have to ask the product users about it. For the first time, you can send this survey anytime between 30 and 90 days, as this period is adequate for the users to engage with the product properly. Moreover, you should continue sending this survey to the users once every quarter. 

Now, what questions to ask? You have to ask just two simple questions. The first must be the NPS question, "How likely are you to recommend our software to others?". Next, you must ask an open-ended question about why you chose the following rating.

● Product Experience or Feature Launch Survey 

A CSAT survey has to be conducted to get insights about a new feature you added to your product or the overall product experience. Being a CSAT survey, the question has a rating scale of five, with a question directly asking about the user's satisfaction. The survey timing should be enough to let the users explore the feature or the product. 

● Relationship NPS Survey

Another survey in the list is the relational NPS, which is important for having a bird's eye view of the relationship between you and your clients. While the users should also receive this survey, sending it to the decision-makers is necessary to maintain an overall relationship with the client. You can simply gauge the insights about some important aspects, like the product being valued for money, how well it performs, or how good you think the customer support team is. 

These are the important surveys to ask both users and decision-makers. 

  1. Subscription cancellation survey
  2. Onboarding survey
  3. Product market Fit survey

However, you may think sending and managing all these surveys is a big task. But with a Net Promoter Score tool like SurveyCXM, you can streamline it easily. This powerful tool makes sending surveys and receiving their responses easy and generates insights and reports. 

3. Boosting Engagement: Enhancing Your Survey Response Rate

To manage the churn, you must identify the right problems. But with a smaller sample size, you may get on the wrong path and solve problems that are not the reason behind the churn, at least. 

Hence, you need to get more responses to be accurate with the problems you choose to solve. You should strategically time the survey to get more responses, as we discussed above. It ensures the user or decision-maker has enough time to answer the questions. It also eliminates the entries that could be entered into the data. If they aren't involved in the survey, you can try to get their response with a friendly reminder. 

4. Turning Data into Action: Analyzing Feedback 

Lastly, you will have all the data, and it's time to analyze it. At this point, you should follow a procedure. Firstly, segregate the responses to find the detractors, as they are the ones who are more likely to churn. Now, analyze their open-ended responses and get directly in touch with them to better their problems with the product.

In the end, when you are done solving the problems, inform the customers about the changes and start it again, as it's a loop that has to continue. 

Enhance Customer Retention with QDegrees’ Expertise

In conclusion, enhancing SaaS customer retention requires strategic feedback collection and analysis. Many things can fail retail clients. One of these is the lack of a great customer experience. Here, you should utilize QDegrees' customer experience measurement services to reduce churn and improve satisfaction. Partner with us to understand your clients better and foster long-lasting relationships.