20 Customer Retention Strategies to Drive Up the Numbers in 2024

Looking for customer retention strategies to enhance your product performance in 2024?

If so, we’ve got you covered.

Read to learn 20 strategies that will help you better satisfy your customer needs and desires, provide an excellent product experience, and retain customers over the long term.

Let’s dive right in!

TL;DR

• Customer retention is the strategies and tactics used to encourage customers to keep using your product.
• High retention comes with higher customer lifetime value, lower acquisition costs, higher upsell/cross-sell rates, and a more stable revenue stream overall.
• A good retention rate in SaaS is over 90%.

20 customer retention strategies:

1. Use the onboarding process to help users discover new features and experience product value.
2. Personalize customer experiences by identifying different use cases, segmenting users, and customizing the experience for each segment/use case.
3. To ensure a user-friendly experience, use clean design, intuitive navigation, progressive disclosure, and consistent layout, and make the product inclusive and accessible.
4. Analyze the paths of power users and duplicate them for new customers to reduce time to value and churn.
5. Send engaging emails with attention-grabbing subject lines, visuals, interactive elements, tips, and customer stories.
6. Provide excellent customer support, both high-touch and self-service.
7. Integrations expand functionality, improve efficiency, and increase the switching cost.
8. Gamification tactics like rewards, badges, quizzes, and leaderboards make the product experience more engaging.
9. Collect customer feedback, e.g. through in-app surveys, to identify areas for improvement and inform product development.
10. Build an online community to leverage peer-to-peer support, create a sense of belonging, and form a competitive moat.
11. Turn negative feedback into an opportunity to improve user experience and product functionality.
12. Create customer profiles to better understand customers and tailor strategies accordingly.
13. Educate customers through video tutorials, webinars, interactive resources, and training courses to maximize product value.
14. Implement a customer loyalty program with points, tiers, challenges, or anniversary rewards to incentivize ongoing engagement.
15. Set up a referral program to incentivize loyal customers to become brand advocates.
16. Introduce advanced features through secondary onboarding to increase customer lifetime value and drive upgrades.
17. Expand product functionality with new features that address genuine user needs and pain points.
18. Monitor key metrics like activation, adoption, LTV, CSAT, and churn on a custom analytics dashboard.
19. Use product analytics to track feature usage and identify unused or essential features.
20. Use churn surveys to gather feedback on improving the experience and potentially prevent churn.

• Want to see how to implement the customer retention strategies with Userpilot? Book the demo!

What is customer retention?

Customer retention is your ability to keep your customers engaged, satisfied, and continuing to use your product.

This is achieved through a range of strategies and processes, like user onboarding or customer behavior optimization.

Why customer retention matters for SaaS companies

Customer retention matters for your product and business success. How?

• The longer you retain your customers, the higher their lifetime value. This translates into higher revenue. And the revenue is more predictable, so you can better budget and allocate resources to strategic initiatives like innovation.
• You have a 60-70% chance to sell another product to an existing customer. For new customers, it’s only 5-20%. Cross-sell and upsells further drive revenue.
• Retaining customers is 5-25 times cheaper than acquiring new ones, so a sound customer retention program reduces your overheads. This is essential for sustainable growth.
• Loyal customers also make it easier to acquire new ones. They’re more likely to participate in referral programs and promote the product via WOM in their circles.

How to calculate the customer retention rate?

Customer retention rate is the percentage of customers who continue using your product at the end of a period, say a month.

To calculate it, subtract the number of newly acquired customers from the number of paying customers at the end of the period. Next, divide it by the total number of paying users at the beginning of the period and multiply the result by 100.

Imagine you start the month with 100 customers. You acquire 50 new ones but lose 30 during the month. So the retention rate is 70% (70/100) x10 = 70%

What is a good customer retention rate in SaaS?

As the success of SaaS products depends on customer retention, they tend to have decent retention rates.

Anything of 90% is good and some companies manage to get it up to 97%.

Customer retention strategies to use for your SaaS company

With the background information covered, let’s dig into the 20 customer retention strategies you’re dying to learn about.

Exceed customer expectations with a smooth onboarding process

User onboarding helps users discover relevant features and teaches them how to use them to complete their tasks. That’s where the product value comes from.

Here’s an example of a primary onboarding sequence:

When the user first logs in, a welcome screen appears. It has a CTA, which triggers an onboarding checklist. It contains a list of tasks necessary to activate the product, and each of them is linked to an interactive walkthrough that aids the user.

Create personalized customer experiences

Personalization makes users feel valued. More importantly, it helps them achieve their goals in less time.

For example, a dashboard populated with the most relevant information or shortcuts to key templates reduces the effort needed to get the job done.

To personalize the customer experience, follow this process:

• Identify key user needs and pain points.
• Develop solutions to address each of them.
• Use welcome surveys to profile and segment your users.
• Customize the experience for different segments.

Want to see a good example of personalized experiences? Check out how Canva does it.

Ensure a user-friendly and intuitive customer experience

Ever heard of the Fogg behavior model? In a nutshell, the higher the risk, the user gives up. And churns.

To prevent this from happening, make the customer experience as smooth as possible.

How? Here are a few ideas:

• Use a clean, uncluttered design with a consistent layout.
• Make sure the navigation is intuitive. With clearly labeled menus and straightforward access to key features.
• Use progressive disclosure to avoid overwhelming users with too many options or information at once.
• Keep the design consistent throughout the user journey.
• Ensure the product works seamlessly on various devices (desktops, tablets, smartphones).
• Make the product inclusive and accessible.

Duplicate the paths of power users for new customers

To identify the happy paths to activation and adoption, use product analytics.

First, segment users by use cases. Next, within each segment, identify your power users—for example, those who use your product daily and have been paying customers for a certain period.

Analyze their paths within the product and use the insights to create onboarding flows that guide new users along them.

What’s the result?

Reduced time to value. And reduced risk of churn.

Send engaging emails to existing customers

Emails are great for announcing new features and keeping users in the loop. They have more real estate than in-app messages, so you can communicate more information. And they can reach and reengage users that haven’t used the product for a while.

How can you make the emails engaging?

• Craft intriguing and attention-grabbing subject lines.
• Make the design visually appealing.
• Use images, graphics, and videos.
• Embed interactive elements, like surveys or quizzes.
• Share tips and product hacks. And customer success stories.

Improve your customer support

Even if your product is super intuitive to use and your onboarding is top-notch, users will come across challenges. That’s why you need to provide excellent customer support.

This includes high-touch support, with well-trained agents manning the telephones, live chat terminals, and self-help resources.

The latter has multiple advantages:

• Most users prefer to solve their problems independently without talking to agents.
• AI chatbots deal with customer requests more quickly.
• Self-service resources are available 24/7.
• Self-support reduces the load on the customer service teams so they can focus on resolving more complex issues.

Offer integrations to maximize the value of your product

Product integrations expand product functionality. By connecting your product to others, users can achieve more tasks.

For example, the Userpilot-Hubspot integration enables Hubspot users to segment customers based on their behavioral data from Userpilot. And Userpilot users leverage Hubspots’ email marketing capabilities to target their customers with personalized campaigns.

Integrations improve efficiency, too, by seamlessly synchronizing data between tools and enabling teams to automate lots of their manual tasks.

And the more sophisticated the workflow, the more time-consuming it is to replicate it if the customer decides to switch to another product.

Engage customers with gamification

Gamification makes the product experience more engaging and fun, so your users are more likely to stick around.

What gamification tactics can you use?

• Rewards.
• Badges.
• Quizzes.
• Levels and challenges.
• Progress bars.
• Leaderboards.
• Social media sharing.
• Milestone celebrations.

For example, Landbot, an AI chatbot generator, uses gamification during its onboarding. The process consists of 5 steps, and when the user completes one of them, the screen fills with confetti to recognize success.

Collect customer feedback to improve customer satisfaction

Customer feedback could be a source of insights needed to increase customer retention. You can use it to identify areas for improvement and inform future product development. So that it better satisfies customer needs.

If you have to choose one way to collect customer feedback, go for in-app surveys. They have higher response rates. And allows you to reach users when they’re interacting with the product, so the feedback is more reliable.

In your surveys, use a mix of closed-ended and open-ended questions to gain both quantitative and qualitative insights.

Build lasting customer relationships with an online community

An online community can improve customer retention in a few ways.

First, it’s a place where users can get support from more experienced users and share tips and resources. This helps them overcome their challenges and get the most out of the product.

Secondly, they give users a sense of belonging. Emotional connections that they form reduce the likelihood they start looking for another product.

Finally, unlike features, communities are not easy for competitors to copy. So, they form a kind of moat that protects you from disruptors and keeps users inside.

Turn unhappy customer complaints into resolutions

Nobody likes getting negative feedback. However, instead of getting defensive, use it as an opportunity to offer a better user experience.

For example, if your users complain about a feature’s lack of functionality, research it to see how it could add value to your product and how feasible its delivery would be.

And if the feature already exists, look into your onboarding. How can you make it better to drive the feature discovery and adoption?

Build customer profiles for easy data storage

A customer profile is a detailed description of a typical customer that includes demographic, psychographic, and behavioral characteristics.

The purpose?

It helps businesses understand who their customers are, what they need, and how they interact with the product.

Creating and using customer profiles can improve customer retention by allowing companies to tailor their strategies to meet specific customer needs and preferences.

Constantly educate your customers

Customer education initiatives enable users to maximize product value. By training them to use the product to get their jobs done, you increase their chances of success and satisfaction.

Well-designed educational resources can be engaging too.

You can educate your users through:

• Video tutorials.
• Webinars – live and recorded ones.
• Interactive learning resources (quizzes).
• Training courses and programs (make sure they come with a certificate).

Such resources don’t just serve existing customers. Webinars or certification courses can also attract new ones.

Start a customer loyalty program

The principle behind loyalty programs is simple: users get rewarded for using the product. The more they use it, the higher the gratification, so the incentive for ongoing engagement grows.

Here are some examples of loyalty programs:

• Point-based systems: Give customers points for various actions, like using certain features, and redeem them for rewards such as discounts or exclusive features.
• Tiered rewards: Offer different loyalty levels (e.g., Bronze, Silver, Gold) based on usage or tenure, with increasing benefits at each level.
• Anniversary Rewards: Celebrate customer anniversaries with special rewards or recognition.

Turn loyal customers into brand advocates

The odds are your most satisfied and loyal customers are already singing prizes about your product.

Why not give them an extra incentive to do it by setting up a referral program? Or reward them for reviewing the product on G2?

By rewarding them for bringing new customers to your product, you strengthen their commitment and reduce CAC. Win-win!

Increase customer lifetime value with secondary onboarding

As mentioned, secondary onboarding revolves around maximizing customer value by introducing more advanced features so that all users experience the full product potential.

This increases their satisfaction, reduces the risk of churn, and consequently increases customer lifetime value.

However, that’s just one way for secondary onboarding to increase the LTV.

And the other?

If you hide the killer features in the premium plan, secondary onboarding can help you increase customer lifetime value through upgrades.

That’s what happens when you run over the 5-minute limit in Loom or try to use one of the premium templates in Canva.

Retain customers with new features that meet their needs

Talking of features. Expanding your product functionality is one of the main ways to make your users stay with you.

As long as they’re relevant and address genuine problems, that is.

To avoid feature bloat, resist the temptation to accommodate every customer request.

Instead, develop a robust discovery process.

Start by identifying user needs, desires, and pain points. These are your opportunities to shine.

Make sure they’re aligned with your product vision and prioritize them in terms of their impact.

Next, brainstorm solutions. Don’t just copy your competitors; try to solve the problems innovatively.

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

Apart from the retention rate, key customer retention metrics include:

• Customer activation rate: the percentage of users who experience product value by reaching an activation milestone in a given time.
• Product adoption rate: the percentage of users who start using the product habitually.
• Customer lifetime value (LTV): the total value a customer brings during the business relationship.
• Customer satisfaction score (CSAT): customer satisfaction score.
• Churn rate: the percentage of users who drop off during the period.

That’s quite a lot, and tracking them across multiple reports or dashboards could be a pain.

The solution?

A custom retention dashboard with key metrics and visualizations you can monitor from one place.

Track product usage to identify unused key features

Some features are more valuable than others. Some don’t deliver any value, while others are essential for user success, and yet users don’t use them often enough.

This means the resources you allocate to developing and maintaining them aren’t well spent. Why support features that nobody needs anymore or develop new features if you don’t help users activate them?

To avoid it, use product analytics to monitor feature usage. Modern analytics tools allow you to tag them without coding from the front end, so even non-technical team members can handle it.

Use churn surveys to learn and proactively fix churn reasons

Churn surveys are normally a part of the cancellation flow. That’s your last chance to get a bit of your user attention before they disappear for good.

One way to use them is to gather feedback on how to improve the product experience and eliminate causes of churn.

You may also be able to prevent the user from churning. For example, if they find the price too high, you could offer them a discount for a limited time so that they can experience a bit more of your product goodness.

Conclusion

The 20 customer retention strategies don’t fit into a single stage in the customer journey. Instead, they help you engage your customers throughout—from the moment they sign up through primary onboarding, adoption, and advocacy, until their last click.

If you’d like to learn how Userpilot can help you implement the strategies, book the demo!

FAQs

What is a customer retention strategy?

A customer retention strategy is either a specific tactic used to drive retention or an overarching retention program.

What are the 3 R’s of customer retention?

The 3Rs of customer retention are retention, related sales, and referrals.

What are the 8 C’s of customer retention?

The 8 C’s of customer retention are community, care, convenience, customer connection, cultivation, customization, character, and choice.

What are the 4 stages of customer retention?

The 4 stages of customer retention are acquisition, onboarding, engagement, and retention.