How to Improve Customer Retention: 20 Actionable Strategies

Wondering how to improve customer retention?

If so, we’ve got your back!

The article shares 20 actionable customer retention strategies for your SaaS! You will also learn how to implement them with Userpilot!

TL;DR

• Customer retention is your ability to keep users using the product.
• Without retention, a SaaS business doesn’t have a predictable revenue stream necessary for growth. Retention makes businesses more profitable by reducing the CAC and making account expansion easier.
• Here are 20 strategies to improve customer retention:

1. Share customer testimonials and well-known customers to provide social proof and build trust.
2. Offer personalized onboarding experiences to help users quickly realize product value.
3. Use interactive product tours to guide new users through the core functionality.
4. Leverage targeted in-app messaging to announce new features, drive upgrades, and overcome user friction.
5. Optimize the user interface to minimize friction and provide an intuitive experience.
6. Implement a customer success program to exceed customer expectations.
7. Gamify the experience with badges, leaderboards, and challenges to increase engagement.
8. Provide proactive support by anticipating and addressing user problems before they occur.
9. Create comprehensive self-service resources to enable users to solve problems independently.
10. Maintain constant communication and engagement with existing customers.
11. Offer educational resources like guides and webinars to help users maximize product value.
12. Recognize and celebrate customer milestones to reinforce desired behaviors.
13. Foster an online brand community to increase loyalty and create competitive advantages.
14. Implement a customer loyalty program with rewards for ongoing usage and referrals.
15. Provide exclusive access to new features and beta programs for loyal customers.
16. Regularly collect and act on customer feedback to improve the user experience.
17. Use predictive analytics to identify and proactively address potential churn risks.
18. Leverage churn surveys to understand cancellation reasons and improve retention.
19. Offer product integrations to expand functionality and increase perceived value.
20. Create a customer retention analytics dashboard to measure success across key metrics.

• To learn how to implement them with Userpilot, book the demo.

What is customer retention?

In SaaS, customer retention is a stage in the customer journey when the user has adopted the product and continues using it.

The term can also refer to a business strategy aimed at building long-term relationships with customers and strengthening their loyalty.

Why is it important to retain customers?

Customer retention is at the core of SaaS product success.

SaaS companies depend on ongoing customer engagement and subscription renewals. It provides a stable revenue stream essential for sustaining and scaling the business.

It doesn’t stop there.

Customer retention reduces overheads. It’s 5-25x cheaper to retain existing customers than to acquire new ones. Loyal customers can help you reduce CAC by promoting it through positive word of mouth, which many marketing experts consider the most effective marketing channel.

What’s more, good customer retention is linked to successful account expansion. You have a 60-70% chance of selling new products or upgrades to an existing customer. For a new customer, it’s just 20-30%.

Overall, customer retention increases business profitability. A 5% increase can boost profits by up to 25%.

Effective customer retention strategies to implement

Ready to increase customer retention at your SaaS? Here are 20 strategies that might help!

1. Provide social proof to build trust

Social proof is a powerful psychological lever you can pull to boost customer retention.

By sharing customer testimonials, reviews, or even just a list of well-known customers, you show your customers they’re in a good company. If others trust you, there’s no reason why they shouldn’t.

2. Provide exceptional onboarding experience

User onboarding guides users to the Aha! moment and helps them set up and start using the product. It also allows them to maximize the product by aiding new feature discovery and driving upsells/cross-sells.

If I had to name one thing that makes onboarding exceptional, it’s personalization.

Personalized onboarding experiences focus on specific user needs and introduce only features and information relevant to their use cases.

The result?

Reduced time to value, higher product adoption, and a better user experience. All of which are essential for customer retention.

3. Create interactive product tours to guide users through the product

Interactive product tours or walkthroughs are made up of in-app patterns, mostly tooltips overlayed on the product UI. To guide them through the product GPS navigation guides you to your destination.

Their purpose is to show users the core functionality they need to achieve their objectives and teach them how to use the features.

4. Create targetted in-app messaging

In-app messages, delivered via modals, slideouts, or banners, serve multiple purposes. For example, you can use them to announce new features, prompt users to upgrade or help them overcome friction.

Engagement tools like Userpilot enable you to target specific user segments with tailored messages.

For example, you could use them to remind users that their credit card expires and they won’t be able to renew their subscription or invite new users who meet certain criteria, like company size, to live demos.

5. Optimize the user interface to minimize friction

Poor UI design adds friction to the user experience.

For example, a cluttered product dashboard with lots of features can overwhelm the user, and increase mental fatigue and the time needed to complete their tasks.

The solution?

• Personalize the UI to user needs by adding shortcuts to the most relevant features and templates only. To make the navigation more intuitive.
• Invest in inclusive design and make the UI accessible for users with different needs. For example, by simplifying the color patterns or font sizes for users with impaired vision.
• Break down content into smaller chunks and disclose it progressively. Like in our checklist builder, where the settings are divided into 4 sections (Tasks, Style, Settings, Localization).

6. Exceed customer expectations with a customer success program

Satisfying basic customer needs isn’t enough to retain them. You need to exceed them, and a customer success program can help with that.

Customer success is about enabling customers to achieve their goals with your product. You can do it by:

• Thoroughly assessing customer needs.
• Allocating a dedicated customer success manager to key customers.
• Offering live demos to demonstrate how the product can best satisfy customer needs.
• Regularly collecting user feedback to gauge their satisfaction levels.
• Organizing meetings to discuss evolving customer expectations and provide guidance to satisfy them.

7. Gamify the user experience

Gamification makes the user experience more engaging and fun. It isn’t enough to retain customers if your product doesn’t deliver value but can keep them going through rough patches.

Common gamification tactics include:

• Badges and achievements for completing key actions or mastering skills.
• Points and leaderboards that let users compare their progress to others.
• Quests and challenges that require users to complete specific actions.
• Levels and progress bars to give users a sense of advancement.

8. Provide proactive customer support

When customers ask for assistance, they’ve already had negative experiences. Like a problem they weren’t able to resolve.

You can still do a lot to minimize the damage and improve their perception of the product, for example, by responding promptly to their request.

But here’s a better approach: instead of waiting for problems to arise, anticipate them and provide proactive support.

Collect customer feedback and use product analytics (funnels, paths, heatmaps, session recordings) to find areas where customers may experience friction.

Next, develop in-app experiences and support resources that help them overcome potential barriers.

9. Create comprehensive self-service resources

Studies show that customers still value human contact. However, it’s not the case when it comes to solving simple problems: 67% would rather do it without talking to an agent.

Reason?

Self-service resources like resource center modules are available 24/7 and often help them find answers in less time. Chatbots can deal with customer queries 3x times faster, which considerably reduces waiting time and the disruption to their work.

10. Regularly communicate and engage with existing customers

In the traditional sales-led model, the sales reps disappear as soon as they close the deal. You only hear from them when it’s time to renew.

This feels very transactional and it’s not something a PLG company can afford.

You need to keep your customers engaged with constant communication. For example, via newsletters, in-app messages, and social media.

Want to see a good example of how to do it? Check out our Product Rantz newsletter where we cover news about product updates and new features, industry trends, and product best practices.

11. Educate and train customers

Educational resources, like how-to guides or video tutorials, help users maximize product value and reduce the need for customer support. This leads to greater satisfaction, loyalty, and retention.

That’s not all.

Webinars and certification courses can also drive customer acquisition. They attract users who look for answers to specific questions and promote your product as a potential solution.

12. Recognize and celebrate customer milestones

When users reach an important milestone, for example, when they use the product for a specific period or complete certain actions, recognize it and celebrate it with them.

A celebration modal or animation often does the trick. Or you can offer them a discount or a limited-time offer if you’re feeling generous.

This makes them feel valued and reinforces the desired behaviors.

13. Foster customer relationships with an online brand community

Product communities foster customer loyalty and increase customer retention.

How?

Customer forums and user groups are places where product users can interact, exchange ideas, share resources, and offer peer-to-peer support. This allows them to get more out of the product and gives them a sense of belonging.

Here’s the real kicker:

Your community is like a moat that protects you from competition and prevents users from leaving. Competitors can copy your features but cannot copy your community. They need to build it from scratch, which takes time.

14. Reward loyal customers

A customer loyalty program rewards customers for their ongoing product usage or repeated purchases.

This could be in the form of:

• Points-based programs (customers earn points for purchases or specific actions).
• Tiered programs (offer different reward levels based on usage or spending).
• Referral programs (customers get rewarded for referring new customers to the business).

To keep users engaged even more, you can offer variable rewards at random intervals. Such rewards work as a treat because they create anticipation and introduce excitement to the user experience.

15. Provide exclusive access to new features

Exclusive access to new features and beta programs is enough way to reward customers for their loyalty. In this way, you strengthen their relationship with the brand by making them feel valued.

And can build better products.

Let me explain:

Loyal customers are often product power users. They’ve used the product long enough to know how to use it for the best results.

They’re also keen to experiment with new features and can offer valuable feedback. Thanks to them, you can identify bugs and areas for improvement before rolling the features out to the whole customer base.

16. Improve customer experience based on insights from customer feedback

Want to improve customer experience but not sure how?

Ask your customers.

Thanks to customer feedback, you can better understand their needs, preferences, and pain points. And find out how to address them.

There are two ways to do it.

First, collect customer feedback regularly via in-app surveys to track overall user sentiment. Back them up with contextual surveys on specific product aspects, like new features.

At the same time, enable a feedback widget to gather passive feedback and customer requests.

In either case, use open-ended questions to collect qualitative data.

17. Implement predictive analytics to proactively address churn risks

As mentioned, proactive support can help you address issues before they escalate.

This includes churn prevention.

Thanks to predictive analytics, you can identify users at risk of churning and engage them in a timely manner to prevent it.

Here’s one way to do it:

Use path analytics to identify events or behavior patterns that lead to churn. For example, you may discover that users complete actions X, Y, and Z before disappearing.

You can create a custom event that combines all 3 actions so that you can track them as one. And use it to trigger in-app guidance.

18. Use churn surveys to learn about churn reasons and improve retention

Another way to find out why users churn is through surveys.

Churn surveys are a part of the cancellation flow and ask users about the reasons for cancellation.

The insights can help you improve the product experience to prevent other customers from churning.

You may also be able to win back the customer who is canceling.

Let’s say the customer says the product doesn’t deliver enough value for the price.

In this case, you could offer them a limited-time discount and use the time to change their value perception with in-app guidance or a demo.

19. Offer integrations to increase the value of your product

Integrations expand the product functionality. So the user can achieve more with the product.

For example, by integrating Hubspot with Userpilot, you can create more detailed customer segments and engage customers by email.

They also allow users to embed your product into their existing workflows seamlessly. This enhances their productivity and efficiency.

20. Measure the success of your customer retention strategy with an analytics dashboard

When tracking the performance of your customer retention programs, there are more metrics to monitor than the customer retention rate.

There’s the churn rate, customer lifetime value, and CSAT, to name just a few. And you need to monitor them for various user segments and timeframes.

Tracking them all could be a pain if you have to switch between multiple reports or tools.

Unless you can create a customer retention dashboard that you can populate with all the important reports and metrics. And share with the stakeholders that need them to make data-driven results.

How to implement customer retention strategies with Userpilot

Userpilot is a product growth platform that can help you implement all the customer retention strategies.

With its engagement layer, you can create in-app messages, interactive walkthroughs, and checklists. To onboard new users, announce new features, recruit beta testers, provide in-app guidance, and gamify the user experience.

There’s also the resource center functionality for self-service support.

Userpilot allows you to create in-app surveys to collect customer feedback so that you know exactly what your customers need and how well you’re catering to their expectations.

Creating the surveys is easy thanks to the template library and visual editor.

And let’s not forget about Userpilot analytics.

The analytics features include:

• User segmentation.
• Feature and event tracking.
• Funnels.
• Paths.
• Trends.
• Retention analysis.
• Custom analytics dashboards.

Conclusion

Customer retention is vital for product growth. Without retaining customers, you cannot grow your customer base and this means no resources to fund further innovation and development.

There’s no one foolproof way to improve customer retention. In your strategy, you need to identify the causes of customer churn and use a wide range of retention tactics to address them.

If you’d like to learn more about boosting customer retention with Userpilot, book the demo!