5 Strategies to Boost Customer Retention for Your SaaS Business

Acquiring and retaining new customers is a challenge for any business—and the more competitive the industry, the more challenging it is. Among the most competitive industry sectors are SaaS companies. On average, for example, SaaS businesses had no fewer than 9 principal competitors in 2018, and the number of new businesses which offer software products like yours is likely to increase exponentially in the years ahead.


If you think losing subscribers isn't that big a deal because you can simply replace them with new customers, think again. That's because acquiring new customers is a lot more expensive than keeping existing ones. 

On average, for example, it costs your SaaS business anywhere from 5 to 25X more to acquire a new customer as to retain an existing one. And increasing your customer retention rate by as little as 5% will increase return on investment (ROI) by as much as 95%. Equally important, retained customers know the value of your products and for that reason are more likely to refer it to industry colleagues than new ones.


The "churn rate" for your business is the percentage of new customers you retain over a specified time period. Obviously, the lower your churn rate, the better. To better understand how your churn rate compares to industry averages, the following are some key metrics for SaaS businesses:

  • In 2018, more than 65% of SaaS customers lost 5% or more of new subscribers within the first year
  • A net revenue churn of 2% or higher per month indicates a substantial problem with your business
  • SaaS companies among the top quartile of performers have net revenue churn rates as much as 23% lower than their underperforming counterparts
  • On average, SaaS businesses lose 10% of annual revenues due to churn


The fact that some SaaS businesses experience higher subscriber retention rates than others isn't due to chance. It's based on their leveraging best practice customer retention strategies, including the following 5:


The more your subscribers know what to expect about how to onboard and integrate your software, the less likely they'll be to abandon it. Above all, in your marketing and one-on-one communications with customers, don't oversell or make promises you can't keep about software performance or customer service. If you do, customers will feel they can't trust you and be more likely to run to one of your competitors. 

It's also important to communicate key facts about your product during the selling stage. For example, give customers useful content which describes precisely what your software will do, any problems they might encounter and, if they do, troubleshooting and customer service tips they can use to solve them. 


Your relationship with your customer shouldn't stop at the point of sale. If it does, they'll assume you care more about profits than about them. In addition to providing stellar customer service, you can solidify that relationship by offering ongoing training and support. 

One of the leaders in providing support to its subscribers is HubSpot. Through their HubSpot Academy, they offer useful articles, videos, case studies and tutorials on a wide range of topics, from content marketing to growth-driven design (GDD), inbound sales and social media marketing. Subscribers to their software products appreciate their willingness to make their software as easy as possible to use and stay with them for that reason.


Customer retention isn't about talking at your customers—it's about listening to them and encouraging ongoing conversations. That means generating feedback from the entire customer team—not just the key decision-maker. 

There are many effective tools to measure customer satisfaction (Hubspot offers one of the best). These will tell you long before dissatisfaction rises to the critical point the problems your subscribers are encountering and give you the opportunity to fix those problems. 

In addition, you can use email marketing to maintain an effective communications strategy. Automating that process will ensure that your communications are personalized and relevant to key market segments. For example, you could send a welcome email following a product purchase that thanks customers for their patronage, outlines the future of your relationship (what your customers can expect from you in the course of your relationship) and offers robust support, including specific directions for what they need to do if they have problems. 


Case studies are a great way to demonstrate your product's ability to solve prospective customers' most protracted problems, but they can also show them if your business is a good fit for them. You should in other words design case studies to show how your business communicates with its customers, how it structures customer service and its characteristic approaches to troubleshooting problems. 


Customer experience is the overall impression customers and prospective customers have about your business. It derives from 2 principal factors: (1) the quality of your product, and (2) the effectiveness of the customer service you provide. 

Regarding your product, don't launch until you're certain it does what it's supposed to do. That means robust beta testing as well as generating useful customer feedback through free product trials.

It's also important to personalise customer service using effective marketing automation tools. You should, for example, employ a strong customer relationship management (CRM) tool to ensure your customer service reps know everything about each customer's history with your business and can, therefore, be as helpful as possible when they call needing help. 

You should also automate email marketing to trigger relevant emails based on customer behaviour on your website. For example, if a customer visits a troubleshooting page, they should automatically receive an email acknowledging that fact and offering additional assistance.


Retaining existing customers is one of the best ways to increase your business's profitability—but it's not the only one. To maximize results, you need a comprehensive, integrated strategy designed to achieve your top business objectives. Download our guide for more info on the Top of Funnel journey of this strategy: "How SAAS Founders can Generate High Revenue from LinkedIn"