Gaining Customer Loyalty in SaaS - What, Why and How
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Gaining Customer Loyalty in SaaS – What, Why and How

Customer loyalty in SaaS

SaaS products have made the lives of today’s businesses and individuals much easier. SaaS applications being easily accessible, low maintenance, and cheaper when compared to on-premise software, customers have increasingly started investing in them. A recent study has predicted that by the end of 2020, nearly 73% of businesses will be purely running on SaaS applications.

This also means that the competition in the SaaS industry is cut-throat – customers have several options to choose from. They are demanding and don’t stop looking for the right product until all their needs are fulfilled. However, according to Nielson’s 2012 report, 92% of the people are more likely to invest in a brand recommended by a friend, a family member, or a colleague. Apart from that, 88% of people place their trust in the reviews available online for choosing a product.

Now, ‘what does all of this have to do with customers being loyal to my SaaS business?’, one might wonder. Let me quote Chip R. Bell, the Customer Loyalty expert here.

Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.

Need I say more? Let’s go deeper into why customer loyalty in SaaS is imperative.

Rewards of creating customer loyalty in SaaS

Increases profitability

The SaaS business model is a subscription-based model that has an upfront Cost of Acquisition of the Customer (CAC). The graph below depicts the cumulative cash flow of a single SaaS client.

CAC - Customer Loyalty in SaaS

Source: SaaS Metrics 2.0 – Detailed Definitions | For Entrepreneurs

Customers become loyal to a brand/product when they benefit from it. The business, on the other hand, is profitable when customers keep renewing their subscriptions and are willing to pay more for an upgraded version of the product. Customer loyalty ensures that up-selling to an existing customer becomes easier for a SaaS organization and helps it reduce the time to recover CAC. This, in turn, ensures a faster route to profitability for the SaaS provider.

Increases chances of customer acquisition

Customers that are loyal to a brand are as good as “walking” billboards. They recommend the brand to their friends as well as family and leave positive reviews on social media platforms. These raving fans never hesitate in sharing their success stories with the entire world. Since 88% of people trust online reviews, it becomes much easier for SaaS organizations to reach out to newer audiences and convert them into customers.

Tips for creating customer loyalty in SaaS

Focus on user experience

I can not emphasize enough on this point. Any SaaS organization that wishes to create raving fans for the business, must deliver a great user experience to its clients. SaaS users majorly evaluate a product based on the kind of experience they have while using it. If the application is buggy or has a steep learning curve, the customers would not think for a second time before investing in the competitor’s product.

user experience - customer loyalty in saas

Source: Improving Your SaaS User Experience for Customer Success | Process Street

Deliver as promised

Working in a SaaS startup myself, I know that customers do not stop requesting for new or customized features. If a SaaS company has promised to deliver on such requests within a certain deadline, it is necessary that it delivers the same. On the flip side, if it promises a certain requirement, but delivers it after the deadline has crossed or with faulty functionalities, the customers would start losing their faith in the brand.

Stay in constant contact with the customers

When SaaS vendors keep contacting the customers frequently, they are able to analyze customers’ behavior towards the product and even predict their woes or requirements. This helps them in solving the problems for their customers and improving customer experience. To customers, the “human” touch in this age of chatbots is like a cherry on top of the cake.

Express the love

Since SaaS applications are deployed online, customers find it difficult to understand whether the vendors value their business or not. But, they would always appreciate it when they are valued by the SaaS application providers. Sending holiday greetings or gifts, announcing special discounts, or thanking the customers for their business on social media would show that how much the SaaS organizations appreciate the loyalty from their clients.

For instance, when chosen as the Best Customer Relationship Management (CRM) Lead Management Software of 2018 by their customers, Hubspot decided to appreciate and thank them for all their support.

Source: HubSpot’s Twitter Page

Ensure customer success

SaaS companies that are at the top of their games of turning customers into champions are also among the most successful ones. Successful customers are the ones that benefit immensely from using the SaaS application. This leads to customer happiness, thus ensuring that these customers keep coming back for renewing their subscriptions with their SaaS providers.

Consistently collect customer feedback and work on it

Customer feedback is a goldmine of information for SaaS companies; it gives them better insights on what they are doing right, where they are going wrong and how they could keep improving their product and processes. Early stage SaaS startups can also use customer feedback to build the right product roadmap. However, collecting feedback shouldn’t be just another exercise that the company ticks off from their list of tasks. Working on the feedback, whether it is negative or positive, would help the company in creating successful customers, improving customer retention rates for the organization and growing the business.

Provide proactive customer support

Today, no organization can survive without having a customer support process in place. But, most of them provide passive customer support; customers get in touch with the customer service representatives only when they face an issue and need some assistance to resolve it. Today’s smart and impatient customers prefer self-help customer support. Thus, SaaS organizations that provide proactive customer support, after having identified most of the areas where customers might need the most assistance while using the application, have an added advantage over their competitors in creating more number of loyal customers.

Conclusion

From the customers’ perspective, switching between various products is a painful and time-consuming task – exploring new products, experiencing a different learning curve for each one and, finally, identifying as well as analyzing the pros and cons of using the product for the business. Thus, consumers would want to stay loyal and stick to using a particular product, without having to settle for an average one.

From the SaaS vendors’ perspective, having customers that are loyal to their brand not only ensures brand advocacy but also improves customer retention rate. This, subsequently, increases their profitability and reduces customer churn.

Thus, SaaS businesses must leave no stones unturned in gaining customer loyalty and retaining them for life!

SaaS customer success

The Art of Creating Successful Customers in SaaS