Data Driven Decisions

6 steps to improve retention and avoid churn in SaaS

6 steps to improve retention and avoid churn in SaaS

February 26, 2024

SaaS companies invest heavily in attracting new users, often overlooking a critical factor: retention is the key to sustainable growth and profitability. It's not just about getting new users to sign up; it's about keeping them for the long term.

In this blog post, we share tips on how to improve your retention rates by taking a few simple steps and adopting the right toolset. 

The cost of churn vs. the value of happy customers

Acquiring a new customer can cost 5-7 times more than retaining an existing one. This means that each churned user represents a significant loss, not just in revenue but also in potential future value.

On the other hand, happy customers can become loyal advocates and valuable case study subjects, driving organic growth and enhancing brand reputation. They are also more likely to opt for upgrades, translating into additional revenue for your business.

The math is clear: retention is a critical part of business growth and should not be overlooked. 

How to minimize churn rates with a strategic approach? 

From creating a seamless onboarding experience to becoming a proactive customer success partner, these steps are crucial for keeping your customers happy and your retention rates high.

  1. Create a frictionless onboarding experience

A frustrating initial experience post-signup increases the likelihood of users abandoning your platform. What you need is an intuitive onboarding process that gently navigates users through core features, offering essential knowledge for success. 

One thing to keep in mind, however: avoid overly complex information at the beginning, otherwise you risk overwhelming and losing your customers.

  1. Become a customer success partner

Don't just ‘abandon’ your customers after the initial user engagement, assuming they will figure out how to use the product on their own. Offer proactive support, tailor resources to their specific needs, and organize educational sessions and interactive workshops to help users achieve real results with your product.

This ongoing support not only strengthens user satisfaction but also positions your brand as a committed partner in their success journey.

  1. Listen to your customers 

Engaging in a continuous feedback loop is essential to understanding your users and refining your product. Actively seek insights through surveys, in-app tools, and support interactions to mine invaluable data. This feedback is invaluable to find out what users need, what their pain points are, and how you can help them.

  1. Adopt Product Analytics 

Business analytics data is from the past and traditional data architectures are siloed. The information you access from these sources might technically be "data," but it's outdated, incomplete, and ultimately misleading.

On the other hand, data mesh and product analytics tools break down data silos, providing a unified, real-time picture of user activity and interactions. This empowers you to:

  1. Focus on proactive intervention

Don't wait for customers to raise their hands. Now that you (ideally) have data mesh or product analytics tooling in place, put insights to good use and identify at-risk users based on usage patterns, feature adoption, and support interactions. 

Then, you can personalize outreach with targeted offers, timely, customized support, or simply a friendly check-in.

  1. Adapt your tactics

Remember: Good retention results require continuous work, not a one-time fix. This involves a willingness to experiment and learn, drawing insights not only from customer interactions but also from the wealth of data at your disposal.

You’ll need to continuously adapt your strategies, experiment, and learn both from your customers and from data to keep your business going strong.

The future of retention strategy: real-time data & proactive prevention

Seeing customer actions as they happen is crucial. Traditional data simply cannot keep up with the fast-changing nature of SaaS customer behavior. You need real-time, holistic insights to address churn risks and foster long-term relationships.

Incorporating real-time data into your retention strategy allows you to proactively address churn risks, build stronger relationships, and unlock the true potential of your customer base, supporting them every step of the way.

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