In a Subscription economy, the customer is the true king. It gives the power to the customer aka subscribers to not only choose the vendors among available options but also the power to fire them at their will. This can be attributed to the low cost of switching to a different vendor and more options to choose from. Although the Global SaaS industry suffers from a 30% churn rate at the same time there are companies that are hitting 130% MRR. So what are the proven customer retention hacks?
Pro tip: Know why customer retention is important for B2B SaaS
Top 6 Customer Retention Hacks/Strategies
1. Reduce the time to Onboarding
Our world is full of myths. They arise because we rely on others to tell us about the world, and rarely do we question what we hear. Once established, false beliefs linger on and on, even after debunking. It’s the same thing with your customers. If a large group of people believes your product doesn’t deliver value, then you have significant churn risk. And it’s for this precise reason that you need to ensure your customers achieve value FAST. The faster the customer is able to actually see the value of using your product, you are able to build trust and the chances of churn reduces.
But most often CSMs make the mistake of explaining all features to the customer during the Onboarding itself with the belief that once the customer is explained all features, he would not have any trouble. But in reality, you are making them confused and frustrated. This is called Over-boarding or I would say “Onboarding fatigue”. The same product is often bought by different people to solve different problems therefore you need to first understand what was the main purpose for buying the customer success software and teach only those features which will help them reach their initial goal or value.
2. Automation without Human Intervention
So you’re growing and now want to scale up your customer retention and you’re contemplating automation. But automating every step is not the solution for scaling retention using customer success. The key is how do you automate without losing the human touch? The simple solution is to automate all mundane tasks by continuously monitoring the impact of automation.
For example- You send an email to the customer for Onboarding detailing the steps to importing data, creating a new report or starting a new project, etc. Once the email has been sent, how many of your customers have actually acted upon the action mentioned and got the desired outcome? How have they adopted the product? How many have actually created the report or imported the data? And that piece needs to be monitored. So actually you automated one and monitored the other so that you can trigger the right human intervention for the right accounts at the right moment. And that is how automation needs to be done. You automate the messaging and monitor the product adoption and create subsequent tasks to bring in Human intervention.
3. Not analyzing past churn
Churn is inevitable and cut across all products and services. But a proper analysis of churn will help you increase customer retention and cut down unexplained customer churn. You need to dig into historical churn data and analyze the use cases nailed, the segment of the customer, license utilization, QBR is done, frequency, and trend of usage. Churned customer expectations from the product and what could have been done better. This analysis will help you to update processes, product roadmaps, and other practices across functions to improve the current system and get a grip on unexplained churn. At CustomerSuccessBox, we have a Churn Analysis playbook that automatically gets triggered when a customer churns.
4. Effective Communication
What is the right channel to communicate with customers? This question comes back in multiple forms. The support on one side is talking about omnichannel presence but from a customer success perspective, the priority should not be on the channel to be used. Rather the channel should be the one that the customer is comfortable with. At CustomerSuccessBox, we use a blend of channels – weekly /monthly calls to ensure we make progress every time we meet each other. This is more critical during the Onboarding process for strengthening the relationship and building trust.
We also have private channels in Slack to engage with customers. Sometimes during the onboarding process and sometimes throughout the lifecycle of that customer. This gives a feeling that you’re available to them in real-time next to their colleagues. Apart from the above, we also use regular channels like emails, zoom meetings. The other dilemma is whether to send emails to the customer from a common email address or individual email address. The common email address is accessible to everyone and is helpful in bringing in operational efficiency but this is not the ultimate goal of Customer Success. The CSM should foster a relationship with the client and communicate through an individual address helps to build trust and confidentiality which goes a long way in strengthening the relationship.
5. Segmenting Customers
As the number of accounts grows, scaling a customer success team without customer segmentation is not economical and hence not feasible. Segmentation helps to treat similar types of customers together as they have similar issues and problems, and thus helps in resource utilization and brings inefficiency. You can segment customers based on various attributes like MRR, ARR, or on the plan selected. A customer who is paying more might be wanting to derive maximum benefit from the product and would need more hand-holding.
At CustomerSuccessBox, you can choose various attributes such as health, usage, frequency, users, subscription, etc. based on your business requirements. You can even put multiple conditions to segment the customers more efficiently. The segmentation can also be based on what the user is trying to achieve using your product. Choosing the wrong factor for segmentation can lead to a churn rate even though you might have a good product. For example, assume that you have a high-paying customer but s/he doesn’t need a lot of handholding. If you blindly put them in the segment of high-paying customers and assume they are high-touch clients, they might get frustrated with the excess touchpoints and even churn.
6. Configuring 360-degree account health
Most Customer Success Heads make the mistake of having a single health score. With a single health score, you’re expected to set up complex formula-defining weights based on which you’re supposed to define the tasks. The customer success team that doesn’t understand the why behind the health score, does not know what to look at and which outcomes to drive for. The reason is there are too many false positives and false negatives, For example, you have 10 parameters for good health configuration and you are dealing in averages. If one parameter, say, the last log in was 10 days ago is negative and the remaining 9 are positive, the health score will show 90 which is good health. In reality, if the last login was 10 days ago, it should get flagged and alert the CSM.
This leads to customer success teams having low confidence in the health scores and leads to missed opportunities as accounts can keep showing up in good health and then churn. So, what’s the ideal way to configure a customer health score? The framework for a health score should be comprised of three steps-List signals. Bucket them, configure good and poor health. The List signals could be usage frequency, last login, due invoice, NPS, last touchpoint, key feature usage, manual input such as CSM risk score, and more. The Bucket can be done based on logical grouping-For example, revenue trend, due invoices, and days since last renewal can be in one group which is actually a measure of financial health. Similarly, unresolved tickets, frequency of new conversations, and CSAT scores are in one logical group and indicate service health, and then based on the buckets good and poor health can be defined to get a holistic view. This is why this is one of the most vital customer retention hacks!
Suggested Read: The essential guide to customer health scores
Final Thoughts on Customer Retention Hacks!
Although Customer Success is an essential and permanent part of all SaaS businesses, it requires a well-planned effort to build the right processes, and team and implement the right set of customer success tools to see the impact of implementing Customer Success in the Organization, The above strategies and customer retention hacks can help companies to drive retention if done correctly. To know more about how your SaaS business can be benefitted, here’s an exclusive case study of CustomerSuccessBox on how they have help salesscreen to increase their customer retention by 10%.
Suggested Read: the ultimate guide to customer retention
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P.S. – The main image has been taken from pexels.com
