Customer retention strategy for B2B SaaS companies: Part I

As with many walks of life, it is very difficult to adjust your mindset and basic routine to a new focus when you have become so accustomed to certain norms in your everyday activities. The same also applies when you must change your existing strategy or adopt new strategies as your SaaS company grows. If you have had a growth strategy that took the sole form of customer retention, you will eventually realize that it is time to broaden your focus. If you are reading this piece, then it is most likely for one of the following reasons:

  • You’ve entered a high growth stage and you want to ensure that this growth rate gets higher now that you are achieving scale.
  • You’re moving into a mature growth stage and it’s time to start reducing your churn rate to optimise growth, because the rate of customer acquisition and retantion has somewhat decreased.
  • You are more proactive than 99.99% of the world - you are an early stage startup and want to hit the ground running, well done you!

Well, whatever your reasons are, it is definitely never too early or too late to adopt an even basic customer retention strategy to enhance or sustain your growth. Failing to do so will have an impact on the company in many respects - namely the revenue that is lost in the long term. When this is considered over many months or years, considering the lost revenue can be daunting. It can move into the range of thousands or hundred thousands of lost dollars annually, depending on your scale. However, I don’t want to dwell too much on the drawbacks here, that’s an entirely different conversation for another day. However, for those who may not be experienced or overly familiar with the concept customer retention, the seemingly straightforward and tempting solution may be to start panic-hiring customer success or account managers to blindly call paying customers, without any intelligent targeting of those who are most at risk - with the hope here of at least saving somebody from cancelling their subscription! However, it definitely doesn’t have to be this way! The good news is that there are ways that are both more cost effective and efficient to successfully achieve this. So below, I shall look at some of the building blocks for a basic customer retention strategy to reduce the churn rate:

1. Identify key points along the customer journey.

Your SaaS platform has been created on the principle that it consists of a number of features that are beneficial to your users, and maximising engagement with these features is what will most likely make them a successful user, long into the future (or hopefully!). The reasons they use these features and pay for your software is that it makes some aspect of their daily lives easier. Whilst these milestones along the user onboarding journey may be something that one considers to be more important in the early stages of the customer lifecycle, it is equally important during the after-sale retention stages - it is important to remember that user onboarding is a continuous process, not just something that happens at the very beginning. Many companies have the mindset that the concept of user onboarding is simply those initial stages, whereby the user is guided through a ‘setup wizard’, that usually entails lightly engaging with some or all of the features, such as, adding extra teammates or importing customer lists (in the context of a sales tool). In reality, this would only count as weakly interacting with those milestones, when you consider the level of user engagement. Users engaging with a wizard are only completing those milestone actions in a ‘handheld’ manner, that is, they are guided through these steps very carefully, not completing these actions through their own independent interaction via the main UI. In addition to this, after all key actions have been completed in the wizard, it has disappeared forever and the user might be lost at what to do next, or to repeat one or more of these actions.

So from a retention perspective, whilst the wizard may help these users get up and running in the early stages, the steps are almost irrelevant on an ongoing basis. Therefore, it’s best to consider all of these key actions independently, as, the user will need to complete or repeat these actions through their own engagement with the UI, in order to be successful customers in the long run.

For this aspect, it is best to consider the knowledge of the following:

  • sales agents - welcoming new trialists every week, they most likely have their own mental ‘lite’ user on boarding map they use when guiding users through a trial, that can further be built upon.
  • customer support agents - most likely will have the most granular, feature-rich knowledge, as they will deal with customers first hand more than any other team in the company. They will also be knowledgeable of the user’s pain-points, so know where difficulties frequently arise.
  • software developers - who both build and maintain the software on an ongoing basis. Whilst they may lack the customer-centric knowledge, they know in detail what the backend code can do, so they definitely bring some knowledge to the table that may be overlooked by sales and support agents.

Sit down one day with these parties and brainstorm onto paper, all of the key milestones (actions or events) that can take place when your users are interacting with the software. You can also choose to be quite granular with these actions, such as considering sub-events that can be completed after completion of a specific event - for example, adding a team member could be considered one action. In addition, a sub-action of this could be to change the user permission level of that user (e.g Admin or non-Admin, etc). Brainstorming these ideas with the whole team would also have the added benefit of making employees feel that their opinion is valued (which is nice once in a while). Once these actions have been identified, the best thing to do would be to have your development team create a log of when each of your users completes one of these key events. This provides you with at least a baseline to track which of your users have passed key milestones. You can do this tracking in-house, but there are bunch of different 3rd party tools that can help with this - one example is Segment. Segment enables you to track fine-grained data about your users, including who they are and what they do inside your app.

In case you are unsure of what might define a key user action or event, below are some examples of the kind of events you could track:

  • a user creating a project (on a project management platform)
  • a user sending their first customer reply (if you operated a customer service platform),
  • a user creating a job posting (if your business is a HR cloud solution).

2. Once you’ve begun tracking events, determine which ones are most important

Now that all key actions or events have been identified, it is best to determine and, if possible, order what events are most important to be completed. It’s also important to take the time frame into consideration, for example, you should probably focus on getting users to complete more simple and obvious tasks inside your app before unveiling all of the advanced use-cases and tasks made possible by your SaaS (basically, consider the low-hanging fruit first). It’s always better to walk before you can run - this applies to your SaaS users too! (to be continued)

This is Part I of a two-part series by Traitly on building a basic client retention strategy for your B2B SaaS business. Subscribe below to receive Part II when it is released.

James Moran

James Moran

James is the Customer Success Lead at Traitly. Previously, he worked at xSellco, a fast-growing SaaS company. Given his engineering background, he takes analytical approaches toward customer success.

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Customer retention strategy for B2B SaaS companies: Part I
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