Customer Experience and Retention Strategies in the UK SaaS Industry

Customer experience (CX) and retention are two key factors that determine the success of any SaaS business. CX refers to how customers perceive and interact with your product and service, while retention refers to how many customers stay with your business over time. Both CX and retention are influenced by various aspects of your SaaS offering, such as product quality, pricing, support, onboarding, feedback, and more.

In this article, we will explore some of the best practices and strategies for improving CX and retention in the UK SaaS industry, based on the insights and examples from some of the leading SaaS companies in the market.

Why CX and Retention Matter for SaaS

According to a report by McKinsey1, improving CX can increase customer satisfaction by 20%, loyalty by 10-15%, and revenue by 15-20%. Moreover, improving retention can have a significant impact on profitability, as retaining existing customers is much cheaper than acquiring new ones. A classic study by Bain and Co2 found that increasing customer retention rate by 5% can increase profitability by as much as 75%. Additionally, retained customers tend to spend more than new customers, as they know the value of your service and are more likely to upgrade or renew their subscriptions.

In the UK SaaS industry, CX and retention are especially important, as the market is highly competitive and saturated. According to a report by Tech Nation3, the UK is the third-largest SaaS market in the world, with over 6,000 SaaS companies operating in 2021. The report also found that the UK SaaS sector grew by 34% in revenue in 2020, despite the challenges posed by the COVID-19 pandemic. This shows that there is a huge demand for SaaS solutions in the UK, but also a lot of competition and pressure to stand out and retain customers.

How to Improve CX and Retention for SaaS

There is no one-size-fits-all solution for enhancing CX and retention for SaaS, as different businesses may have different goals, challenges, and customer segments. However, there are some common strategies and best practices that can help any SaaS company improve their CX and retention rates. Here are some of them:

1. Establish customer expectations before they subscribe to your software.

One of the main reasons why customers churn or become dissatisfied with a SaaS product is because their expectations are not met or aligned with the reality of the product or service. Therefore, it is crucial to set clear and realistic expectations for your customers before they sign up for your software. This can be done by:

• Providing accurate and transparent information about your product features, benefits, pricing, and limitations on your website, landing pages, marketing materials, etc.
• Offering free trials or demos that allow potential customers to test your product and see if it fits their needs and preferences.
• Communicating your value proposition and unique selling points clearly and consistently across all channels and touchpoints.
• Asking qualifying questions or using surveys to understand your customers’ pain points, goals, challenges, and expectations before offering them a solution.

By setting customer expectations upfront, you can reduce the risk of disappointment or frustration later on, and increase the likelihood of customer satisfaction and loyalty.

2. Overhaul the onboarding process.

The onboarding process is one of the most critical stages of the customer journey for SaaS, as it determines how quickly and easily customers can start using your product and see value from it. A smooth and effective onboarding process can improve CX by:

• Reducing confusion or friction during the initial setup or configuration of your product.
• Providing guidance or assistance through tutorials, videos, tooltips, checklists, etc.
• Highlighting the key features or benefits of your product that solve your customers’ problems or help them achieve their goals.
• Encouraging engagement or activation through gamification, incentives, feedback loops, etc.

A smooth and effective onboarding process can also improve retention by:

• Reducing churn or abandonment during the trial period or early stages of usage.
• Increasing adoption or usage frequency by showing customers how to use your product effectively.
• Building trust or rapport with your customers by providing value and support throughout the onboarding process.
• Creating a positive first impression or experience that sets the tone for future interactions.

3. Look at metrics that matter.

To improve CX and retention for SaaS, you need to measure and monitor the right metrics that reflect how your customers perceive and interact with your product and service. Some of the most important metrics to track for SaaS include:

• Customer churn rate (CCR): Shows how many customers have unsubscribed or stopped using your product in a given period of time. High churn corresponds to low retention.
• Customer retention rate (CRR): Shows how many customers have stayed with your product or service in a given period of time. High retention corresponds to low churn.
• Net promoter score (NPS): Shows how likely your customers are to recommend your product or service to others. High NPS corresponds to high customer satisfaction and loyalty.
• Customer lifetime value (CLV): Shows how much revenue or profit you can expect from a customer over their entire relationship with your business. High CLV corresponds to high customer loyalty and profitability.
• Customer acquisition cost (CAC): Shows how much it costs you to acquire a new customer. Low CAC corresponds to high efficiency and profitability.
• Customer satisfaction score (CSAT): Shows how satisfied your customers are with your product or service. High CSAT corresponds to high customer satisfaction and loyalty.

By tracking these metrics, you can identify the strengths and weaknesses of your CX and retention strategies, and make data-driven decisions to optimize them.

4. Address decline in usage.

One of the main indicators of customer dissatisfaction or churn risk is a decline in usage or engagement with your product or service. This can happen for various reasons, such as:

• Your product is no longer relevant or valuable for your customers’ needs or goals.
• Your product is too complex or difficult to use or maintain.
• Your product has technical issues or bugs that affect its performance or functionality.
• Your product is facing competition from other products or alternatives in the market.
• Your customers are not aware of or interested in your product updates, features, or benefits.

To address decline in usage, you need to:

• Monitor usage patterns and trends using analytics tools or platforms.
• Segment your customers based on their usage behavior, such as active, inactive, occasional, power, etc.
• Reach out to your customers proactively through email, in-app messages, notifications, etc., and offer them value, support, feedback, incentives, etc., to re-engage them with your product.
• Identify and resolve any issues or problems that may be affecting your customers’ usage or satisfaction with your product.
• Educate or inform your customers about your product updates, features, benefits, best practices, etc., and show them how they can use them to achieve their goals.

5. Connect with your user through content.

Content is a powerful way to connect with your customers and improve CX and retention for SaaS. Content can help you:

• Attract new customers by providing valuable information, insights, tips, etc., that address their pain points, challenges, goals, etc.
• Educate existing customers by providing useful resources, guides, tutorials, case studies, etc., that show them how to use your product effectively and efficiently.
• Engage loyal customers by providing entertaining content, such as stories, podcasts, videos, quizzes, etc., that showcase your brand personality, values, culture, etc.
• Retain at-risk customers by providing personalized content, such as testimonials, reviews, recommendations, etc., that demonstrate social proof, trustworthiness, credibility, etc.

To create effective content for CX and retention for SaaS, you need to:

• Know your audience and their needs, preferences, interests, etc., and tailor your content accordingly.
• Use different types of content formats and channels to reach and appeal to different segments of your audience.
• Optimize your content for search engines and social media platforms to increase its visibility and reach.
• Measure and analyze the performance and impact of your content using metrics such as views, clicks, shares, conversions

6. Seek customer feedback.

Customer feedback is essential for improving CX and retention for SaaS. Customer feedback can help you:

• Understand what your customers think and feel about your product and service
• Identify what your customers like and dislike about your product and service
• Discover what your customers need or want from your product and service
• Learn how you can improve or enhance your product and service

To seek customer feedback effectively for CX and retention for SaaS you need to:

• Use different methods and tools to collect customer feedback such as surveys polls ratings reviews comments suggestions etc
• Ask relevant specific timely clear open ended questions that encourage honest detailed constructive feedback
• Analyze interpret summarize categorize prioritize act on the feedback you receive
• Follow up thank acknowledge appreciate reward respond to the feedback providers

7. Optimize product pricing.

Product pricing is another key factor that affects CX and retention for SaaS. Product pricing can influence how customers perceive the value quality affordability fairness of your product and service. Product pricing can also impact how customers decide whether to subscribe renew upgrade cancel switch from your product and service.

To optimize product pricing effectively for CX and retention for SaaS you need to

• Use different pricing models and strategies to suit your product value, customer segments, and market conditions.
• Test and optimize your pricing regularly based on customer feedback, data, and performance.

Some of the common pricing models and strategies for SaaS include:

• Cost-based pricing: This involves adding all your business costs, dividing the total over the number of users, and adding a percentage for profit. This can be a simple and straightforward way to price your product, but it may not reflect the true value or demand of your product in the market.
• Value-based pricing: This considers your customers and how they perceive the value of your product or service. This can help you package your product to meet customer needs and expectations, even if your competitors charge a higher or lower price. However, this requires a lot of research and analysis to understand your customers’ willingness to pay and their perceived value drivers.
• Flat-rate pricing: This involves charging a fixed price for your product or service, regardless of the number of users or features. This can be an easy and transparent way to price your product, but it may not appeal to different customer segments or incentivize them to upgrade or renew their subscriptions.
• Usage-based pricing: This involves charging your customers based on how much they use your product or service, such as the number of transactions, hours, data, etc. This can be a fair and flexible way to price your product, but it may also create uncertainty or unpredictability for your customers and your revenue streams.
• Pay-per-user pricing: This involves charging your customers based on how many users they have on your product or service. This can be a simple and scalable way to price your product, but it may also discourage collaboration or adoption among users or teams.

8. Offer wraparound customer support.

Customer support is not just a reactive function that deals with customer complaints or issues. It is also a proactive function that enhances CX and retention for SaaS by:

• Providing timely and helpful assistance or solutions to customers’ problems or queries.
• Educating or training customers on how to use your product or service effectively and efficiently.
• Soliciting or collecting customer feedback or suggestions on how to improve your product or service.
• Building trust or rapport with customers by showing empathy, appreciation, recognition, etc.

To offer wraparound customer support for CX and retention for SaaS you need to:

• Use different channels and tools to provide customer support such as email phone chat social media helpdesk etc
• Empower your customer support team with the right skills knowledge resources authority etc
• Automate or streamline your customer support processes using chatbots FAQs knowledge bases etc
• Measure and improve your customer support performance using metrics such as response time resolution rate satisfaction score etc

Conclusion

CX and retention are vital for SaaS success in the UK market. By implementing some of the strategies and best practices discussed in this article you can improve CX and retention for SaaS by:

• Establishing customer expectations before they subscribe to your software
• Overhauling the onboarding process
• Looking at metrics that matter
• Addressing decline in usage
• Connecting with your user through content
• Seeking customer feedback
• Optimizing product pricing
• Offering wraparound customer support

By doing so you can increase customer satisfaction loyalty revenue profitability and growth for your SaaS business.

If your company lies within the Tech or SaaS space and you’re keen to build out your finance team, don’t hesitate to get in touch with Thomas ([email protected]) for expert support.