Do you remember the first time you acquired a customer for your SaaS business?
And do you remember when one of those first customers left, giving you a brief introduction to churn (cancellation of recurring subscription)?
Reducing the churn is the dream, but customers are fickle creatures. Maybe you’ve even tried giving them a free trial in hopes of your churn rate decreasing.
However, free trials or freemium models aren’t enough.
So if you want to keep your customers coming back for more instead of canceling their subscriptions, here’s what you can do to retain them, and how to convert them from free to paid customers.
1. Don’t improve – predict
Even though we’ll cover product optimization, the truth is that it’s not enough.
Churn is a fact of business. Successful companies strive towards 5% annual revenue churn, and it doesn’t have a negative effect on their business (churn is only a problem if we’re talking about 5% monthly).
So if we understand that SaaS churn is unavoidable, it’s important to understand why it happens, when it happens, and to whom it happens.
Luckily, we live in a highly-technological time. We’ve got access to more customer data than ever before. Back in the day, only big companies could afford to gather and analyze data about their customers and their behavior.
Today, there are multiple options for predicting customer behavior in order to reduce churn and improve customer retention. *cough* Weav. 😉
So if you’re working on improving your product, you should also be working on predicting users who’re going to drop it.
Typically, the process of predicting churn looks at relevant factors, such as:
- Usage (number and frequency of log-ins, time spent, actions performed, etc.)
- Technical details (device type, etc.)
With the right software, this analysis of customer behavior can help you define similar patterns of usage and profile among all customers who’ve canceled their subscriptions.
And once you know what kind of customers you don’t want to attract, it’s much easier to target those you’ll be able to retain and convert successfully.
2. Personalize your approach to customers
Depending on the size of your SaaS’ user base, you may be juggling tens or thousands of customers.
However, this retention solution stays the same no matter the numbers: personalize your approach.
This is especially important if you want to convert free to paid customers.
Let’s say you’ve got two types of customers:
1) Customer A: They use your SaaS for business, and it’s becoming indispensable to them,
2) Customer B: They’re still on the fence about committing to a paid version. They like what your product is doing for them, but they’re not convinced.
There’s no success guarantee if you’re approaching both the same way.
Instead, show Customer A how they benefit from doing business with you. How much can you help them increase [the factor they’re increasing by using your SaaS]?
As for Customer B, offer them a promotion, or a trial of the features they’d get by upgrading to a paid version.
3. Communicate, and keep communicating
If you want to retain your customers or convert them from free to paid, it’s important to keep talking to them.
What this really means for retention is:
- Implementing an email campaign (and communicating with your customers every step of the process, especially in the beginning)
- Stimulating engagement (for example, if you’ve noticed they haven’t been using your product, send them a follow-up email with tutorials)
- Offer more value (with blog posts, case studies, and things relevant to your SaaS)
Your goal should be for your users to get into the habit of using your product.
This goes both for freemium customers you want to convert into paid, and for customers who are in danger of canceling their subscription.
Your approach should be focused on showing them how they can get more and achieve more by using your product.
4. Make it easy to upgrade
There’s a lot of great products out there, but they’re not all easy to use. In fact, most customers bounce as soon as they see how complicated most of them are. The solution may be helpful, but if the execution isn’t – it’s moot.
So if you’re all set on the product side, improve the technicalities. Just because you understand your SaaS and how to use it doesn’t mean that customers don’t have to jump through hoops.
Take a look at the user journey again, and get feedback on it:
- Are the terms clear from the get-go?
- Do the customers understand what they’re getting?
- What can you simplify?
- How are you processing payment?
It’s especially important to pay attention to payment processing.
Create an automated action triggered by customer canceling the payment process, and offer help through email or through a chat with your customer service.
Redirect them to your FAQ section, and make sure you clearly outline all the terms they’re agreeing to, and all the fees they’ll cover. Bold it if you have to.
Selling the customers on your product is the easiest part. Getting them to go through with the payment is where it can get tricky. So if you want to retain and convert your customers, make sure the process is as simple as possible.
5. It’s freemium, not free
There are so many cost-free alternatives that customers today are expecting everything to come at no cost to them.
That’s why only 15-20% of customers end up upgrading from free trials.
While we can’t change the customers’ general perception, we can change how they perceive our service.
Some SaaS providers like Netflix limit their free trials to 30 days. Others opt for feature reduction up to the point where users have to upgrade if they want to be able to use the product fully.
Depending on your style of doing business, you may opt for a different solution.
However, you should make it clear that your product trial is freemium – not completely free.
Sometimes this can be as simple as changing the copy so customers know exactly what to expect.
Other times, you can send them notification emails about their free trial running out.
Whatever you do, show them the benefits of upgrading, and define the length and span of your trial if you want to convert them to paying customers.
6. Learn from your best customers
If you’re predicting which customers are going to bolt, you should also be predicting which customers will be satisfied.
And then you should look into why that’s the case.
Without understanding what you did right (or falsely deciding that you’ve done everything right), it’s impossible to retain future customers.
Take a look at factors like:
- Engagement levels (not only with your product but with your communication – e.g. email opens)
- Customer service experience
- Preferred channels
Customers today expect more personalization and communication from businesses, so there are many more factors (than just usage) you should be monitoring.
And while we’re on the topic of more personalization, customers also want a fuller experience.
This means that it’s not enough to just give them your product and call it a day. Businesses like Hubspot succeed because they motivate people enough for them to want to give them money.
They offer courses and valuable content that customers can use in their field of work. The fact that their SaaS products like CRM improve their results are the foundations of their success, but the cherry on top (that retains customers) is the extra mile.
In order to retain your customers and convert them, you should offer them more. And learning from your best customers can show you exactly how to do it.
7. Reward your customers
There’s nothing that will help you retain your customers more than showing them that you know how to play just as hard as you work.
While a simple email triggered by certain customer actions can go a long way, you can also do more to show you appreciate the fact they’re doing business with you.
There are a few simple ways you can reward and retain your customers:
There’s nothing like the good old word of mouth to really help you acquire new customers.
However, it can also help with retention.
If you gamify the process and help your customers include their contacts or friends, that will take your user relationship to the next level.
It will also motivate your customers to engage with your SaaS even more.
b) Thank-you promotions
Why not thank your customers for no reason (other than doing business with you, and not with your SaaS’ competitors)?
This doesn’t necessarily have to be a monetary discount. You can also offer them to test out new features or feature them in a case study.
c) Social media engagement
Social media is powerful because it helps your business become more than just the sum of your products.
It also helps your customers create a connection with you, increasing the rates of retention and upgrading.
And it can be as simple as one tweet.
d) Surprise & delight
Finally, we all want to be surprised and delighted.
You don’t have to do what Mercedes Benz did by communicating with their customers to find the perfect Christmas gifts for them and buying them.
But you can make an extra step to brighten your customers’ day. If you’ve run a survey and noticed they have a problem, see how you can help them.
After all, that’s the goal behind offering your SaaS to the world. Make sure your customers can see it.
How do you convert your customers?
Are there other ways you’re converting your customers with your product? We’d love to hear what’s working for you.