Looking for customer retention strategies that drive results?
Search no further. In this article, we covered proven strategies to boost engagement and retention at every user journey stage.
Some of the things you’ll learn include:
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UI patterns to combine for contextual in-app guidance.
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Examples of how top SaaS companies are driving retention.
TL;DR
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Customer retention is your company’s ability to keep customers engaged and satisfied over an extended period.
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To calculate the customer retention rate, subtract the number of customers you acquired in a specific period from the total number of paying customers at the end of the same period. Divide the result by the number of customers at the beginning and multiply by 100.
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The average retention rate across industries is 75%. However, SaaS companies tend to be good at retaining customers and driving customer loyalty. It’s not uncommon to see SaaS companies enjoying as high as 90%+ retention rates.
19 Best customer retention strategies for PLG companies:
What is customer retention?
Customer retention is a reflection of your company’s ability to keep customers engaged and satisfied over an extended period. It’s a critical metric that measures the percentage of users who continue to use your product over time, typically measured on a monthly or yearly basis.
Retention is an essential aspect of business success as it directly impacts revenue, growth, and overall customer satisfaction. High user retention rates indicate that customers find value in your product, are loyal, and are more likely to renew their subscriptions or make repeat purchases.
How to calculate customer retention?
To calculate customer retention, subtract the number of customers you acquired in a specific period from the total number of paying customers at the end of the same period. Divide the result by the number of customers at the beginning and multiply by 100.
Imagine a company starts with 200 customers, loses 10 but gains 20 new customers in a given period.
The total number of paying customers at the end of the period is 200 – 10 + 20 = 210.
Retention rate: ((210 – 20) / 200) x 100 = 95%
If you’re wondering what a good retention rate looks like, understand that it varies by industry and audience. The average across industries is 75%. However, SaaS companies tend to enjoy high retention rates—90% and above
19 Best customer retention strategies for PLG companies
Increasing customer retention rates by just a few percent will remarkably impact your business.
There’s no single magic bullet, but with a combination of proven strategies and regular experimentation, you can boost retention. Here are some examples to help you get started.
Attract customers that are the right fit for your product
Customer acquisition plays a significant role in driving retention.
Targeting the right audience ensures you attract customers who are more likely to find value in your product and stay engaged.
Misaligned customers will churn quickly, so effective marketing and customer acquisition strategies are essential for long-term retention.
Additionally, it’s important to set the right expectations even when the audience is right. Doing this ensures customers see a reason to stick with you for long.
We asked some experienced copywriters who have helped SaaS companies present their products to convert and retain customers.
Eden Bidani of Green Light Copy couldn’t have put it better:
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Joel Klettke shares the same sentiment:
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Collect customer JTBD data during the signup flow
Identifying your customers’ Jobs to Be Done (JTBD) helps you understand their expectations and tailor the onboarding to their specific needs. As a result, customers will be more likely to stay and continue using your product.
When collecting JTBD data, avoid burdening users with too many questions or you risk creating signup friction. Stick to the data required to provide a personalized customer onboarding experience.
Here is how Notion uses a simple survey that asks the key questions so they can understand the users’s JTBD.
Notion uses a signup survey to gather data on users’ JTBD.
Retain first-time customers with a personalized onboarding experience
Following up on the point above, use the JTBD data you collected and build a branched onboarding experience that guides users through the key features for their use case.
With this approach, you’ll reduce the time to value and increase product adoption—both factors contribute to high retention rates.
Notion takes branched onboarding a notch higher, delivering onboarding flows based on individual user accounts or team accounts:
Notion’s branched onboarding.
If you select the team option, you’ll then be prompted to start with projects because that’s a major use case for teams using Notion:
Onboarding page for team account on Notion.
Similarly, users who click the individual account option are taken to a page more suitable for their needs.
Use gamified onboarding checklists during the free trial period
Gamified experiences provide the dopamine rush that encourages users to explore your product.
Adding gamification to your checklists is a good way to ensure users stay long enough to tick every item on the list. Do this by attaching progress bars to your checklists. Users will be more driven to complete their tasks when they see how far they’ve come and how many steps are left.
Also, it’s a good idea to add the time it takes to complete a task under each task. Your users will know what to expect and won’t easily give up on tasks.
Your checklist items play a crucial role. Don’t select randomly—focus on 3-5 key tasks that are relevant to that specific user and will bring them to the Aha! Moment quickly.
Celebrate success and prompt action to engage customers
Task completed? Use modals to celebrate success but also prompt the next action to keep the momentum going.
Prodpad took gamification to the next level and gamified the entire onboarding experience. Part of their customer retention strategies was to offer trial extensions in return for task completion during the signup process.
To keep users engaged, Prodpad triggers celebration modals like the one below in between tasks to keep users engaged and confirm the number of extra free days they were rewarded with.
Adding a short prompt promising another extension for another short task will not look like a burden now.
Celebratory modal to encourage users.
Gamify the trial experience to shorten time to value
A shorter time to value means users start realizing the benefits of your product sooner, making them more likely to convert into paying customers and stay engaged.
Again, Prodpad understands this and uses it to their advantage. This is how the UI looks once users complete the gamified signup we discussed above and land inside the product for the first time.
How Prodpad reduces TTV and boosts customer retention.
By the time users reach this stage, they’ve already completed several tasks and experienced partial value, making it more likely that they’ll love and keep using the product.
This approach to onboarding is more effective than waiting for users to use your tool and figure out its value on their own.
Use funnel analysis to understand friction across the user journey
Employing funnel analysis helps pinpoint where users drop off or face challenges within the user journey.
Pair funnel analysis with other analytics data to really understand what’s going on. Once you have sufficient insight, launch in-app help guides to address friction and provide smoother user experiences.
Introduce existing customers to new features
By showcasing the value of these additions and how they can benefit current users, you encourage continued engagement with relevant features, which leads to retaining customers for longer. The customer lifetime value rises as a result, boosting your revenue.
Use modals, banners, tooltips, etc., to prompt discovery and educate users on the new feature. For example, native tooltips work well in signaling a UI change:
Using native tooltips for in-app messaging.
Improve customer retention with self-service support
A self-serve support center is a valuable tool everyone should add to their customer retention strategies.
Empowering customers to find solutions independently reduces the need for support tickets and ensures they can continue using your product effectively.
Do this by building a robust in-app resource center containing help docs, FAQs, tutorial videos, etc. Combine different content formats and arrange them properly so users don’t struggle to find information. Also, add a search bar to remove any friction users might encounter when finding information.
Here’s an example from Userpilot:
Userpilot‘s resource center to support and retain customers.
In addition to an in-app resource center, we have a how-to video guide library containing short, snackable videos that users and visitors can visit to learn more about Userpilot’s features.
Understand customer satisfaction and act on data to increase customer retention
Collect and analyze satisfaction data through CSAT survey triggered at different points in the user journey.
Using this data to make targeted improvements in areas that affect satisfaction can directly impact customer retention rates.
How to roll out CSAT surveys customers actually respond to?
First, ensure your questions are clear enough. Make it easy for users to respond by clicking on emoticons, numbers, or symbols that represent their feelings.
More importantly, trigger your CSAT surveys contextually. For example, the best time to survey users about your support team is immediately after they finish contacting support, not days after.
CSAT survey templates in Userpilot.
Close the customer feedback loop
Make customers feel heard and valued by acknowledging their feedback and sharing how you’re addressing it. This fosters a sense of partnership with your customers and increases their loyalty to your product.
It’s tempting to respond to just positive customer feedback, but all your customers deserve to feel heard, so still get back to them even if the feedback is negative. Addressing negative feedback is a good way to empathize with users and find ways to improve their experience.
You can automate this process using platforms like Userpilot to trigger in-app flows based on survey responses.
For instance, imagine you triggered a CSAT survey after support interaction, and a user rates their experience poorly. You could send an automated email or in-app message offering them an opportunity to provide more detailed feedback. Then get back to them with contextual answers.
Exceed customer expectations with contextual tips
Delivering proactive and contextual tips within your product will enhance the customer experience.
Set your tooltips to trigger when users are about to engage with a feature for the first time. This reduces confusion and eliminates trial and error, helping users gain value quickly.
Keep your tooltip content concise and ensure the tooltip doesn’t block any important elements on the interface or overlap with other tooltips.
Building contextual tooltips as part of customer retention strategies for SaaS.
Reward loyal customers and show your appreciation
Recognize and appreciate loyal customers through loyalty programs, exclusive discounts, or personalized messages.
Demonstrating appreciation reinforces their commitment to your brand and encourages ongoing loyalty.
For example, a customer made a joke about getting a dream user t-shirt during a support call. Since he was a power user, we went the extra mile to do something special that aligned with our brand and values and also made him feel heard and appreciated.
This example shows one thing: Personalized campaigns have a higher impact than sending a one-size-fits-all gift to all users. You don’t have to send t-shirts to your users or listen to everything they say in a support call, but ensure you go the extra mile to make your rewards thoughtful.
Happy Userpilot customer gladly sharing his experience.
Design customer retention programs
Create rewards programs that provide ongoing value to customers, such as exclusive content, access to new features, or VIP support.
These programs incentivize customers to stay engaged and loyal to your product. For example, by offering extra space to users for referring others, Dropbox achieves two things:
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Attract more quality leads
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Give existing users extra space to get more done with the platform and become even more sticky
Dropbox’s referral page.
Prompt contextual upsells to bring more value
Upsells provide more value to users and make them stay with you longer. However, timing and context matter if you want users to respond positively.
For example, Loom used a reverse trial to enable its AI features to all users. Once a user enjoyed and used the feature—and understood its value—they’ll see a message saying the trial is about to end.
The message is triggered right when the user has recorded the last available video that will benefit from the feature. This approach notifies the user that the feature won’t be available unless they upgrade. Considering the user might have gotten value the thought of losing access can increase the chance of an upgrade and help retain the user longer.
Loom’s reverse trial.
Prevent involuntary churn with in-app messages and emails
Proactively reach out to customers who may be at risk of churning due to billing issues or inactivity.
By using in-app messages and email notifications, you can help them resolve issues, update payment information, and keep their accounts active.
For example, use a notification banner like the one in this image to notify users that their cards will soon expire.
This ensures the user doesn’t forget and have to go through the pain of not being able to access their account when they need it most and even churn completely.
Use churn surveys to understand why customers leave
Implement churn surveys to gather insights from departing customers about their reasons for leaving.
From the data collected, you can immediately offer alternatives to canceling and win back customers. For instance, if users are leaving because they feel the product is too expensive, you could offer to downgrade their account and grant them access to only a few key features.
Even if you don’t win back customers, your churn surveys will give you insights to proactively prevent churn.
For instance, if your survey shows many customers are leaving due to a missing feature that is, in fact, available, ensure new users are guided to adopt it during the onboarding process.
Re-engage inactive customers using email
Identify and segment inactive customers who haven’t interacted with your product for a certain period.
Then send re-engagement email campaigns with personalized content, offers, or reminders to bring them back. Keep the re-engagement emails short and don’t forget to add a CTA that leads them back to your app.
Segmenting inactive customers with Userpilot.
Continuously optimize your customer retention strategy
Always have a plan for how you’re going to retain customers at every stage of the journey.
And don’t forget, your focus should be on both new customers and existing customers. Don’t choose one and leave the other.
Regularly review and refine your customer retention strategies based on data, feedback, and changing user behavior.
For example, with Userpilot’s Trends feature, you can analyze user behavior over time and see what’s keeping some users and factors making others leave. Armed with this information, you’ll know the changes to make and boost engagement.
Conclusion
A high customer retention rate isn’t an easy feat and certainly doesn’t happen overnight. However, what’s important is that you’re invested in understanding your users and providing the best possible product experience at each stage of their journey.
Userpilot can make it easy to apply the customer retention strategies discussed in this article. Book a demo with our team now and see how to use our platform to drive retention, customer loyalty, and revenue.
