Yeah, so retention in 2024 is going to be critical. It already was for the most part for most SaaS companies to make sure their customer retention levels were low. However, emphasis for better or for worse has always been on new sales and customers.

Grow sales team, new MRR, optimizing inbound, starting outbound. I mean don’t get me wrong, new customers are critical to help grow your business. You need new revenue flowing into the business to make sure that it remains healthy. At the same time, it’s a great way to off set any churn or contraction that might take place.

Issue with sales in general is that, no matter what kind of software you’re selling, the prospects are a lot more educated now than ever before. There is such an abundance of information available on the internet, that most of the prospects have made up their mind about buying a piece of software before they even start conversing with the sales team.

I mean not to say that the sales team cannot make a difference. Of course they do and they can (my job depends on it ha), but if 10 years ago a major part of all sales made were predicated on strategy or selling tactics, it’s not the same anymore in SaaS. Anybody parroting that same raah raah stuff is just straight up lying about the state of affairs in SaaS.

It’s not about pushing the product down the customer’s throat. It’s more strategic, heavy collaboration with the marketing team, educating and giving the prospect some space for deals to close. Yes, the market has changed and sales teams need to change along with it.

It does not help that the market now is saturated more than ever before. No matter the space you are in, the customers have a lot of alternatives that they can pick and choose from. Which on one hand is great and on the other not so much. It means you need to fight much harder for every prospect that comes knocking at your door.

One of the reasons why I’m a big fan of speedy communication and responses with the prospects.

Ok, so back to the topic. Retention. Any business not paying attention to their customers is in deep trouble and I promise you, you will not be able to grow as much as you want because of that. No matter how great you are at converting leads to customers, if you have a leaky bucket you are not going to get far. You will certainly make progress but not nearly as much as you could with fixing the leak.

Your customers are your assets and automated emails being sent out to them ain’t simply going to cut it. You need to think and be more strategic to prevent them from leaving. Ok, I don’t want to go too much in to the weeds about the issues at hand, I think no matter what year we are in, it’s pretty well documented. Let’s in turn talk about a few things that can help with the retention.

So first things first.

Diagnose

Who exactly is it that is churning? Are there any similarities between the subset of customers that is churning?

One of the worst things you can do here is not trying to figure out who is it that is churning, essentially gathering the right type of data. If you are conflating a 2-10 user customer with a 500+ user customer, your analysis is simply not going to work. What makes an SMB customer tick is completely different than that for an Enterprise customer. These are customers that are in completely different lifecycles and most probably have very different needs.

Different companies have different priorities. But one thing is for sure that similar sized companies in the same space, for better or for worse are facing similar issues at certain stages.

Focusing on diagnosing, any data will help here. So a good check list to have beyond the MRR, team size and industry, would be what their adoption rate was? What level of engagement they had with the product? What critical features they were using or were not using.

These are some of the critical Qs to ask beyond the static metrics. Once you know these things, only then can you start to make assumptions and figure out where to patch things up. Just remember your data is only as good as the quality of it.

Last thing to point out in diagnosing such things is that speed is ultimately the key. The faster you compile and assess the data, the faster you will be able to solve the issues. Don’t get too hung up on getting all the right metrics in place. Move and that too fast.

Talk to your customers

No retention issue can ever be resolved without speaking to the customers. Great, you figured out the similarities in the churn. Now what? you gotta talk to the customers. No amount of time spent here in any way shape or form is a bad investment.

Hell if you are the CEO, you should be personally writing all the emails to the customers that churned and ask them to hop on a call with you. Genuine email outreach works so much better than the automated emails being sent out by every single SaaS business out there.

This is something I find companies especially startups often don’t get 100% right. How much of a vitamin vs. a painkiller are you? How much value did you actually deliver? And most importantly — how much perceived value did you deliver?

Get on the phone with all your churned customers, if you can. But don’t forget the ones that are struggling. Because even if they cut you, they didn’t cut every app out of their tech stack. Find out why you?!

Ask them where you sit, who valued you and who doesn’t, how and why they replaced you, and importantly — who they didn’t cut.

You’ll learn so much. And about where you have to provide even more value.

You are never too big to stop speaking to the customers. One of the things I have set up is whenever a customer churns I get a notification on my slack with the reason for why they churned. Overtime, while all these pings are noisy, they are so valuable for you to learn and understand what is going on with your customer base and where they are struggling. The natural next step is go ahead and schedule a call with and figure out what went wrong so you can prevent it from happening next time around.

Onboarding should be the top priority

If your customers are not getting value out of the software you sell and that too instantly after signing up, you have lost half the battle. Think about it. Would you rather use a piece of software that helps you get to the results faster or the one that requires you an hour or two to just setup things first before you get any results out of it?

I think the answer is pretty straight forward. Your product’s onboarding experience should be so straightforward that it becomes a no brainer for the customer to derive value from it and that too quick.

If you fail to accomplish that, chances are the customers will churn at a faster pace, because you are not able to get them to the “Aha” moment fast enough. I can tell you first hand if the customer gets value out of your software fast and the perceived value is there, that customer ain’t churning anytime soon.

Doesn’t matter if you don’t deliver new insights or value to them, the value they got in the beginning (and continue to get) will be enough to dictate their retention.

One of the critical things to do when creating an onboarding plan is to figure out what you want the customers to achieve when they start using your software. What are the goals?

• Week 1 retention: Can you get your customers to use your product more than once?
• Mid-term retention (weeks 2-4): Can you establish any pattern of usage?
• Long-term retention (weeks 4+): How does your software become an indispensable tool for the customer?

Answering these questions and planning strategy around it gets you one step closer to a customer base with a higher LTV and a lower churn rate.

Robust support and success function

While these teams don’t get too much time under the spotlight. The value they add is enormous. No onboarding or customer retention could ever take place without a strong customer facing team that helps navigate the customers through the product.

It all starts with first making sure that the team that is speaking to the customers is well versed with the product. The buck of knowledge stops with the customer support/success teams. These are folks that are on calls with the customers on a daily basis and they don’t get to have the luxury of telling the customers to wait while they try and figure out the answers.

In depth product knowledge is critical here. Once we have that, it’s all about building relationships with the customers. Look I know it’s tough, it’s not very easy to connect with all your customers or your book of business in a flash. And even if you do, the relationship side of things can take a long time and that’s OK.

Your customer facing team’s goal should be to offer support to all the customers when they need it. You do that enough time in a speedy and helpful manner, you will build a relationship with the customer. The goal is to genuinely help the customers get the best out of your product.

Furthermore, provide timely and effective support to address any issues or concerns the customers have and that too promptly. Offer multiple channels for customer support, such as live chat, email, and phone support, to cater to different preferences the customers may have. Not everyone wants to submit a ticket.

Keep an eye on the health of the customers

This is as close to a crystal ball as you’ll ever get. I truly believe in making sure that you are keeping a close eye on your customer base. If someone is going to churn, and that someone also is a heavy user of your product, I promise you they will leave signs along the way.

This is why it’s imperative to use a customer success tool where you can see the customer health in real time. I use Vitally for this and it works really well for us but don’t get hung up on the tool. It all boils down to how you set up the customer health score.

Monitoring customer health involves assessing various metrics and signals to understand how engaged and satisfied customers are with your product.

Now customer health score is a lengthy topic, maybe it would be best to create a whole new blog post about that. But in a nutshell you need to keep an eye on the following:

Usage Metrics

Track how frequently and extensively customers are using your product. This includes metrics such as logins, feature adoption, and time spent using the platform. A decrease in usage could indicate declining engagement or satisfaction. A CSM pulse on top of this all could be really handy for all customers that have a CSM assigned to them.

Product Feedback

Collect feedback directly from customers through surveys, feedback forms, or in-app feedback pop-ups. Pay attention to both quantitative ratings and qualitative comments to understand customer sentiment and identify areas for improvement. I cannot stress this one enough.

Support Interactions

Monitor customer support interactions to gauge the level of assistance customers require and the nature of their issues. A high volume of support tickets or frequent escalations for help may indicate usability issues or dissatisfaction with the product. Even if they are not dissatisfactions, they sure as hell will turn into them soon.

Health Scoring Models

Develop a health scoring model that aggregates various data points to quantify the overall health of each customer account. Assign scores based on factors such as usage, engagement, support interactions, and feedback. Use these scores to prioritize customer outreach and intervention efforts. This score should be the north star dictating where your customer base stands at any given moment.

Look, retention does not have a silver bullet fix. There just simply isn’t one. If there was I promise you all the SaaS companies would be paying through their nose to get the solution in place. Retention is a lot about trial and error.

Every company is different. Maybe some of the things mentioned above will work for you, maybe none of them will. The key is to make sure that you keep trying different things and see what sticks against the wall. Ultimately, whatever path you take, please remember that it will take time to get retention under control.

It all starts with you recognizing that you have a retention problem and from there tackle it head on, step by step. Solving retention is a marathon, make sure you look at it from that lens and I can guarantee you will see success overtime.