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SaaS Customer Retention Essentials
Life and Style Daily
February 08, 2021
2 min

There are around 11,000 Software-as-a-Service (SaaS) companies operating around the world. Competition can be tough, but companies are gearing for battle. Their biggest adversary? The ‘customer churn,’ and there is a way to beat it.

The ideal churn rate

The dreaded ‘churn’ is the number of clients that cancel their subscription to the company services. In this business, a certain degree of churn is unavoidable. A 3% annual churn rate is considered a good benchmark. A 5-7% churn rate is deemed manageable, but anything above it requires attention.

Here are some suggested customer retention essentials that helped many SaaS businesses overcome the odds:

Be proactive with customer support

Customer service should go above and beyond. According to Dan Martell, an award-winning coach to SaaS founders, responsiveness and reaching out to customers are key. For instance, flag clients who are not fully utilizing the product features and have customer service representatives reach out and help them get engaged.

Measure engagement score

Monitoring customer engagement can significantly reduce the churn rate. Monitoring reveals which customers are struggling, not using the product features, and are most likely to cancel. Once identified, salvage the situation by making customer service reach out to struggling clients.

Keep upgrading and improving the service

When a client subscribes to SaaS services, it is already considered a win. However, another hurdle needs to be faced---keeping the customer subscribed for a long time. Over time, a customer might find the product lacking in features or have found other ways to run their business, leading them to cancel their subscription. The challenge is to keep them engaged and make the system essential to their workflow. Make them feel that the product is a big part of their business growth.

Award loyal clients random gifts

Long-time paying clients need to feel that they are VIP customers. One of the best ways to make them feel special is to give them exclusive deals, product rewards, subscription discounts, and service upgrades. Once they feel that they are essential and getting more than their money’s worth, they are more likely to retain their subscription.


SaaS business owners need to pay more attention to customer feedback and satisfaction. All customer feedback, whether good or bad, is a good sign of engagement in SaaS.

Interested to get into the finance world? Read ”Do I Need an MBA to Get a Job in Finance?” to learn more.

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