The Best Customer Retention Management Software of 2021

The Best Customer Retention Management Software of 2021

Let me be frank: if you’re a SaaS company and you’re not using customer retention management software, you’re missing out.

Not only is it significantly easier and cheaper to retain a customer than it is to acquire a new one, retention is also where all the money is in the SaaS world. A study by Totango found that 70-95% of revenues come from upsells and renewals, as opposed to only 5-30% from the original sale.

retention diagram
Source: Guy Nirpaz, Totango

Investing in customer retention might just be one of the highest-ROI investments your business will ever make.

In this article, we’ll look at the best software options SaaS companies have at their disposal to manage customer retention and reduce churn.

What We’re Going Over In Today’s Customer Retention Management Software Article:

TL;DR

  • Customer retention management software collects user data, organizes it, analyzes it, and creates actionable insights for your product team.
  • It’s an essential purchase for SaaS businesses because of how intimately SaaS revenue is connected to retention. It’s much easier and cheaper to retain an existing client than it is to acquire a new one.
  • The software you choose should have multiple ways of collecting customer data. The best ways on the market now include session recordings, email surveys, in-app surveys, and third-party data. The data should be a mix of qualitative and quantitative data.
  • Your chosen software should include in-app, events-based analytics. The analytics should include options for segmenting customers, assigning them a customer health score, and analyzing user data in real time.
  • The insights you glean from analysis mean nothing if you don’t act on them. Your chosen tool should therefore make insights visible across your entire business, assign tasks to your team automatically that can be implemented without a tech background, and include A/B testing.
  • The tools we recommend are Userpilot, Mixpanel, Optimove, Hotjar and Zendesk.

What is Customer Retention Management Software?

value of retention
Source: Brightback

Customer retention management software performs two main business functions:

1. It gathers and organizes customer data so that you can form a picture of a given customer’s relationship with your company.

2. By analyzing that data, it produces actionable insights that reduce the odds of your customer churning.

In order to achieve these functions, most good retention management software comes equipped with the following features:

  • Data collection from a wide variety of sources, both qualitative and quantitative. Generally these sources include product usage, financial data, support ticket data, demographic insights and survey responses.
  • Analysis of that data in real-time
  • Segmentation of customers based on data analysis
  • Customer scoring based on their probability of churning
  • Automated task assignment

Putting all this together, retention management software will give you a real-time understanding of customer experience, so that your team can act (or pivot) accordingly before a customer churns.

Why Does a SaaS Business Need Customer Retention Management Software?

retention graph impact
Source: Smartkarrot

Most businesses think that they need to focus on acquiring new customers in order to grow. Seems fair enough, at first glance. What business doesn’t love a new customer?

The problem with this type of thinking in a SaaS environment is that most of the revenue in SaaS businesses is accrued over time, as opposed to in one single sales event. A study by the Gartner Group found that 80% of your future revenue will likely come from 20% of your current customers.

Put another way, your existing customers trust you and are likely to buy from you again, while new customers will have to go through the entire buyer’s journey from scratch. This is time-consuming and expensive. Selling to a new customer costs at least 5 times as much as keeping a current one!

With this perspective in mind, intelligent businesses are increasingly thinking in terms of Customer Lifetime Value (CLV). This measures the amount of money a customer will spend over their entire history of using your product. And the best way to maximize CLV? You guessed it: retaining your customers!

This is where customer retention management software comes in. Through collecting and analyzing customer data, SaaS teams can create product experiences that delight users of every variety:

  • New users: Interactive walkthroughs that show the value of the product as quickly as possible.
  • Experienced users: Exposure to new features in ways that make customers want to use them.
  • Enterprise users: Custom help and support that are tailored to a complex use case.

All of these positive user experiences will maximize retention and CLV. In each case, it’s retention management software that empowers businesses to understand their customers’ needs in real time and act on them.

It’s worth noting that retaining customers is doubly valuable in trying economic times, when there are fewer new customers than usual out there looking to spend money.

What to Consider When Choosing Customer Retention Management Software

retention management software considerations

In our experience, there are three main categories of features you want to bear in mind when looking for good customer retention management software.

How the retention management software collects data

Consider the following:

  • Can you set up session recordings? This is when you record a user’s clicks and mouse movements on your product.
  • Can you send out email surveys? Some examples of popular formats are NPS, CSAT and multiple choice.
  • Can you create in-app microsurveys? An example of this is a welcome screen that asks the user what they do for a living.
  • Is the data you are collecting both quantitative and qualitative? We’ve found that qualitative data is often invaluable for providing deeper insights which complement quantitative data.
  • Does the software integrate with the other tools in your tech stack? There’s a good chance you won’t just be looking at product data to make decisions that affect customer experience.

How the software analyzes data

Here you should consider:

  • Does the tool provide in-app events-based analytics? This is the gold standard for SaaS companies.
  • How powerful are the customer segmentation tools provided? The more sophisticated your segmentation, the better tailored your solutions will be to the individual needs of your users.
  • Can you automatically assign a user a customer health score? This is a great way of measuring the probability that a user will churn.
  • Can you analyze the data in real-time? This is much more useful than data that is only analyzed once per week, or a few days after key customer experiences.

How easy the retention management software makes it to act on the data

Assess the tools on the following basis:

  • How visible is your users’ data across your entire business? There’s a good chance that folks in customer service will have different insights than their colleagues in marketing.
  • Is A/B testing provided for? Frequently your first attempt at solving a problem will not create optimal results, and so testing is required.
  • Are tasks assigned to your team in an automated way? This increases the chances that your team will actually follow up on the insights from the data.
  • Can the solutions implied by your data analysis be implemented without code, or will they require developer resources?

On the basis of these three categories, here are our recommendations for the best customer retention management software for 2021.

Best Customer Retention Management Software for SaaS

#1: Userpilot

Userpilot excels in all three of the categories we mentioned: in collecting customer data, analyzing it, and deriving actionable insights from it.

Userpilot’s main tool for collecting customer data is event and attribute-based user analytics, as well as in-app microsurveys. We think these are more useful than collecting data via email surveys because they keep your user on your platform and the user can fill them out super quickly.

Once your user has filled out a quantitative survey using Userpilot, you can easily send them a qualitative survey as a follow up to gather additional information. Sticking with our advocacy of in-app solutions, you can send your user this qualitative survey in-app, rather than laboriously creating an email survey by hand.

qualitative survey example
Qualitative Survey Example

Both types of surveys can be set up in one automatic user experience flow. These flows don’t require you to know code to build them, but can rather be created using our Chrome extension.

Let’s look at a concrete example.

welcome screen example
Postfity Welcome Screen

This is an example of a welcome screen that was built using Userpilot. Based on the user’s responses, they will receive follow-up microsurveys and interactive walkthroughs that point them to the specific product features that they want to use.

As a result, the user is much more likely to become activated, maximizing the odds of Day 1 retention. Success!

If you want to see whether your user engaged with the welcome screen experience flow you built, just have a look at our analytics suite.

analytics example
Sample Userpilot analytics

This tells us that 96% of users engaged with the welcome screen over 11 months, and 40% completed it.

Does the user have a problem after the initial new user onboarding?

No worries! You can easily use Userpilot to create a Resource Center in-app so that your customer can find answers to their questions on-demand and sort out their issue as quickly as possible. This will drastically reduce the likelihood of users churning because they don’t know how to use the product.

In-app resource center
In-app Resource Center

What’s more, the data insights from Userpilot are easy to spread around your whole team. So if customer success has tons of frequently asked questions, your marketing department can create in-app content that answers them, without requiring developer support.

Userpilot is available at prices starting from $249 for up to 2500 MAUs. Get a demo today!

#2: Mixpanel

mixpanel dashboard
Source: Mixpanel

Mixpanel is a business analytics platform. Its powerful data analytics make it an invaluable tool for SaaS companies looking to retain more customers.

Mixpanel’s primary way of collecting user data is through in-app survey forms and A/B tests. These aren’t as sophisticated or easy to use as Userpilot’s microsurveys and experience flows, but they get the job done.

Where Mixpanel excels is when it comes to analyzing user data. Their interactive reports are intuitive to figure out, meaning that you can create impressive visualizations very easily without requiring your data scientist to help you.

By correlating in-app behavior with retention, it’s possible to use these reports to figure out why your top users like your product so much, and then replicate that same customer journey with newer users that you want to retain. Mixpanel’s data models are all based on real-time data, and even account for personal biases, which is an interesting nuance that we haven’t seen on other products.

Mixpanel is very strong at segmenting users, so you can use it to analyze engagement trends by customer segment in order to find key retention drivers. We were impressed that they go as granular as to even analyze which operating system each customer uses.

Putting all this together, you could use Mixpanel to launch a new feature to your power users and visualize how attractive that feature is. If the feature in question doesn’t benefit retention or other key metrics, Mixpanel also includes an A/B testing function that you can play around with until you identify what works.

The last thing that we like about Mixpanel is that it’s easy to share user data across your organisation.

Overall, this is a solid investment at prices starting from $36 for 1000 Monthly Tracked Users.

#3: Optimove

optimove dashboard
Source: Optimove

Optimove is a relationship marketing platform. It helps SaaS companies retain customers through powerful segmentation options and predictive AI.

This retention software works by collecting information from in-app actions, survey campaigns and third party apps. Optimove synthesizes all this data and applies mathematical models to create a predictive customer model for each individual user of your product. The attention to detail here is outstanding, far more qualitative than a quantitative measure like a customer health score.

Optimove will automatically group users with similar characteristics and preferences into micro-segments. If you address the needs and concerns of each micro-segment individually, you’re likely to increase retention significantly.

When it comes to taking action on data insights, Optimove has got you covered there too. They’ve developed a relationship marketing bot called Optibot that autonomously looks for untapped revenue opportunities across your base of customers. This is a unique perk that we haven’t seen elsewhere in the market.

When you want to act on one of these insights, the software integrates with all the communication tools that you can possibly imagine. So if you launch a new feature that will benefit retention, it’s easy to set up a large-scale communication campaign that targets your customers across multiple channels.

The one downside is that all this AI power doesn’t come cheap. Pricing starts from $4000 per month, depending on how many customers and user databases you have.

#4: Hotjar

hotjar demo
Source: Hotjar

Hotjar is a behavioral analytics tool. It’s best known for its heatmapping ability, but it has various other features that also help SaaS businesses retain more customers.

In terms of heatmapping, first of all, you can use Hotjar to record the browser actions of users, including clicking, scrolling and other mouse movements. The session recordings that Hotjar creates from this data provide valuable qualitative insights for product managers who want to retain users. Here are some examples:

  • Day 1 retention. You can use Hotjar to figure out why users are churning when they use your product for the first time. By comparing the session recordings of users who activate with those that don’t, you can then use tools like Userpilot to create interactive walkthroughs that direct users to the main features of your product.
  • Bug fixing. Just about everyone has had the experience of using a buggy tool, hating it, and not wanting to use it anymore. Hotjar will let you watch a user’s actions on your site and see how they behave when they find a bug. By fixing the bugs, you’ll retain more customers.
  • Product journey comparison. Like other products on this list, you can use Hotjar to figure out how the product adoption journeys of your power users differ from the users who barely activate. By replicating the experiences of power users more broadly, you’ll increase retention.

It’s important to note at this stage that the data you get from a tool like Hotjar is qualitative. This makes it a nice change of pace from the NPS surveys that inform many product management departments.

Less well known than the heatmapping are Hotjar’s in-app surveys. These are comparable to Userpilot’s in terms of functionality and ease of use. They’re easy for the customer to see and fill out, just sliding in and out by widget.

We particularly appreciate their form analysis feature. This automatically identifies fields that users are taking too long to fill. By making changes to those forms, you’ll reduce friction in the product adoption journey and increase retention.

Hotjar’s analytics aren’t nearly as strong as other products on this list, but the variety and depth of the qualitative data they provide make up for it.

This tool starts from just $39 per month.

#5: Zendesk

zendesk dashboard
Zendesk Dashboard

Zendesk is a company best known for their customer support software, but they also produce retention management software called Zendesk Connect.

Connect is an interesting option to consider because there’s a good chance that you’re already using Zendesk’s main product to deal with customer support queries from your users. Connect enables you to take all of that rich customer support data and turn it into product insights that improve the odds of user retention.

Zendesk’s ability to segment users based on their behavior, actions or attributes is on par with the other tools in this list. Their analytics are ok, but are nothing on the likes of Mixpanel.

Connect shines when it comes to following up on product insights. It has the standard features you would expect from a good product in this category, such as in-app messaging and email campaigns to re-engage customers. All of these campaigns can be set up based on user segments as well.

But a unique selling point of Zendesk is that the person reaching out to tell users about new features, or pointing them to a walkthrough that could benefit their specific use case, could be the same agent the customer interacted with in customer support. This is an unusual level of relational depth that benefits user retention.

Prices for Connect start from $153 per month for 2,000 users.

Finding The Right Customer Retention Management Software For You

So that wraps up our recommendation of the best customer retention management software on the market right now. Ultimately, the software you choose is up to you. Just remember to ensure that you have the features you need for collecting user data, analyzing it, and (most importantly) acting on that analysis.

Want to give Userpilot a spin? Our demo is free, so you have nothing to lose!

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