Did you know keeping your current customers is far cheaper than finding new ones? Retention can boost your profits by up to 95% with just a 5% improvement. Yet, many SaaS teams focus more on acquiring new users. Here's a quick overview of what you need to do to keep customers happy, loyal, and spending more:

• Track Key Metrics: Monitor retention rate, Net Promoter Score (NPS), and customer health scores to predict churn and improve engagement.

• Onboarding Matters: A personalized, clear onboarding process can increase retention by up to 30%.

• Educate Continuously: Use in-app guidance, knowledge bases, webinars, and live training to keep customers engaged and successful.

• Prevent Churn: Watch for early warning signs like low login frequency or poor feature adoption, and act quickly to re-engage users.

• Feedback Loops: Collect, prioritize, and act on customer feedback to improve your product and show you're listening.

Retention is about creating a seamless, valuable experience from day one. Start tracking metrics, refining onboarding, and listening to your customers today. Small steps can lead to big gains.

Mitigating Churn: A Masterclass in Customer Retention with Will Cureton, CFO of Nitrogen Wealth

Step 1: Track Key Retention Metrics

To improve your retention strategy, you need to start by understanding how your customers behave. SaaS companies typically aim for retention rates of 85–90% on average. But without proper tracking, you're essentially flying blind.

Instead of focusing on vanity metrics that don't help predict churn, concentrate on data that offers early warning signs and actionable insights. Below are three key metrics every SaaS team should monitor to build a data-driven approach to retention. These metrics form the foundation for the proactive strategies discussed in later steps.

Customer Retention Rate (CRR)

Customer Retention Rate is a cornerstone metric that shows the percentage of customers who remain with your service over a set period. It's directly tied to revenue growth and long-term success.

The formula is simple:
[(E – N) / S] x 100 = CRR

• E: Number of customers at the end of the period

• N: New customers acquired during the period

• S: Customers at the start of the period

For example, if you begin a quarter with 200 customers, gain 50 new ones, and end with 230, your CRR is 90%: [((230 – 50) / 200) x 100 = 90%]. Tracking CRR monthly and quarterly gives you a clear view of any emerging issues.

"If you have a good retention rate, then you don't have to work as hard to acquire customers over and over again. Positive brand interactions create a flywheel - when you give your customers a great experience, they'll come back for more and you'll get to understand them better. This customer data then allows you to build more relevant experiences."

• Veronica Saha, Head of Analytics, Zoopla

Keep in mind, churn rate is simply the inverse of retention rate. If your retention rate is 90%, your churn rate is 10%. While both metrics are important, focusing on retention offers a more constructive way to set goals and motivate your team.

Net Promoter Score (NPS)

While CRR tells you how many customers stay, NPS reveals how they feel about your service. Net Promoter Score measures loyalty by asking a straightforward question:
"How likely are you to recommend our product to a friend or colleague?"

NPS is a strong growth indicator, as companies with high scores grow more than twice as fast as their competitors. Here’s how it’s calculated:
NPS = % Promoters − % Detractors

• Promoters (9–10): Loyal customers who actively recommend your product

• Passives (7–8): Neutral customers

• Detractors (0–6): Unhappy customers who may discourage others

For example, if 70% of respondents are Promoters and 10% are Detractors, your NPS is 60. The SaaS industry average is 31, with scores above 50 considered strong.

The real value of NPS lies in acting on feedback. For instance, when Hootsuite launched a platform update in 2018, they received a negative NPS score of –2 due to issues with support and pricing. By introducing a self-service support portal and flexible pricing, they turned things around.

"Measuring NPS is essential for any SaaS business that wants to grow and thrive. It provides invaluable insights into customer satisfaction, loyalty, and advocacy."

• Karen Peacock, CEO of Intercom

Two-thirds of Fortune 1,000 companies rely on NPS. The key is not just collecting feedback but showing customers you’re listening by closing the loop.

Customer Health Scores

If CRR and NPS provide a snapshot, Customer Health Scores offer a predictive view of churn risk. These scores combine various data points to help you identify which customers are thriving and which ones may leave. Yet, only 42% of customer success teams track them, giving you an edge if you do.

A robust health score blends both numbers and qualitative insights, including:

• Product usage

• Support history

• Service utilization

• Loyalty and satisfaction ratings

• Team feedback and risk assessments

Here’s a framework for interpreting health scores:

Tailor these scores to fit different customer lifecycle stages and aim for five to seven factors per score. Tracking trends is just as important as the score itself. For example, a drop from 85 to 70 over two months is a red flag, even if 70 seems okay on its own.

Tools like Userlens can provide real-time insights into customer health. With 75% of businesses considering alternatives before renewing contracts, early action is key.

Step 2: Build an Effective Onboarding Process

Retention metrics might set the stage, but it's the onboarding process that truly drives customer success. A well-structured onboarding experience can increase retention by 15% to 30%. In fact, over 80% of executives report that effective onboarding positively impacts revenue, referrals, renewals, and loyalty. Clearly, getting this right is worth the effort.

Rather than relying on a one-size-fits-all approach, aim for a framework that feels personalized while still being scalable.

Create Clear Onboarding Milestones

Milestones are essential for guiding users toward their first moment of value. Without them, users can feel lost and may disengage before realizing the product's benefits.

Focus on actionable steps that predict long-term success. For example, instead of tracking vague metrics like "logged in twice", identify core behaviors that lead to meaningful engagement. Sked Social found that users who completed their four-step onboarding checklist were three times more likely to convert into paying customers. This highlights the importance of setting achievable, impactful milestones.

Here’s how to make milestones effective:

• Set deadlines. Time-bound goals like "Complete profile setup within 48 hours" or "Send first campaign within one week" help identify delays early.

• Segment by roles. Tailor milestone paths based on job roles or use cases instead of forcing a single journey for everyone.

• Celebrate progress. Acknowledge each milestone with a quick message or a progress indicator to keep users motivated.

This approach worked wonders for The Room, which introduced a self-serve onboarding flow featuring a "driven action" prompt. By encouraging users to click the "upload CV" button, they saw CV uploads jump by 75% in just 10 days (from 200–210 to 300–350 per week).

Once milestones are in place, you can guide users further with interactive experiences.

Use Interactive Product Tours

Interactive product tours are a powerful way to engage users and help them learn by doing. Unlike static tutorials or long documents, these tours guide users through your product while they complete real tasks - building both confidence and familiarity.

Key principles for effective product tours:

• Start with the basics. Focus on replicating the most successful user journey instead of overwhelming users with every feature at once.

• Provide context. Use tips and tooltips at the right moment to reduce confusion and keep things simple.

• Make it hands-on. Require users to complete each step before advancing, encouraging active learning.

Tools like Userlens make it easy to create interactive tours. The key is to experiment with different approaches and measure which ones lead to higher activation rates.

Customize Onboarding for High-Value Accounts

When it comes to enterprise customers or high-value accounts, a generic onboarding flow won’t cut it. These customers invest heavily and expect a more personalized, premium experience. In fact, 66% of customers are likely to churn if their experience isn’t tailored to their needs.

High-touch onboarding combines dedicated Customer Success Managers (CSMs) with personalized, often asynchronous, communication.

Strategies for high-value accounts:

• Engage CSMs early. Involve them during the sales process to build trust and showcase the strengths of your team.

• Centralize information. Use a unified handoff portal to prevent customers from feeling shuffled between teams.

• Adapt to preferences. Some customers appreciate frequent check-ins, while others prefer independence.

Step 3: Drive Engagement Through Customer Education

After nailing your onboarding process, the next challenge is keeping your customers engaged and helping them uncover value at every stage of their journey. Onboarding might get users started, but ongoing education is what transforms them into loyal power users and advocates.

Did you know nearly 90% of organizations report onboarding abandonment rates as high as 40%? Yet, self-service resources can increase engagement by an astounding 1,100%. Building on a solid onboarding foundation, continuous education is key to maintaining long-term customer involvement.

In-App Guidance and Tooltips

In-app guidance, like tooltips, provides users with timely, contextual help right when they need it. These features guide users through important actions without overwhelming them with unnecessary details.

For instance, tooltips within three-step tours boast a 72% completion rate, proving that simplicity works. Flowla experienced this firsthand - by adding tooltips and a product tour to their onboarding process, they boosted user activation rates by 24%. Instead of overwhelming users with every feature, they focused on the essentials.

To make tooltips effective, follow a few simple rules: keep them short and focused on one action or concept, position them near the relevant interface element, and ensure users can easily dismiss or skip them. The best tooltips don’t just explain a feature - they highlight the benefits, making actions feel valuable rather than like a chore.

Tools like Userlens make creating and managing these experiences easier. You can even segment users based on roles, experience levels, or behaviors to deliver personalized guidance.

Knowledge Base and Self-Service Resources

A well-structured knowledge base empowers users to find solutions on their own while easing the load on your support team. With most consumers wanting more self-service options, providing quality, accessible resources is no longer optional.

The key to a successful knowledge base lies in its structure. Organize content into intuitive sections like "Getting Started", "Feature Guides", and "Troubleshooting." Ensure the search function is robust so users can quickly find answers by typing in relevant keywords.

Tailoring content to different user personas makes a big difference. For example, a marketing manager might need articles on campaign tracking, while a developer might look for API documentation. Including video tutorials alongside written guides caters to visual learners who prefer seeing features in action.

Keep your knowledge base up to date by revising content whenever your product evolves. Outdated instructions frustrate users and erode trust. Analyze which articles get the most views and track common search terms to identify content gaps and opportunities for improvement.

Make your knowledge base easy to access. Link to it prominently in your product’s header, footer, email signatures, and interface. Train your support team to use it as a teaching tool during customer interactions, turning support calls into learning opportunities. Pair self-service options with live training to meet all user needs.

Regular Webinars and Live Training

Live training sessions and webinars offer real-time solutions that self-service resources can’t always provide. They’re also a great way to demonstrate your expertise and show users you understand their challenges.

For example, Clay runs onboarding cohorts with a series of training webinars, helping users fully utilize their platform. These sessions don’t just teach individual features - they show how to combine them for maximum impact.

Choose a format that suits your audience. Webinars are great for introducing new features or advanced techniques, while office hours provide a casual space for users to ask questions. Customer case studies, where successful users share their strategies, offer both inspiration and education.

When inviting users to a webinar, focus on the benefits. Instead of generic titles like "Product Training", go with something specific, like "How to Save 10 Hours a Week with Automated Workflows." Make registration easy by including calendar invites in confirmation emails and sending reminders before the event. Record sessions for those who can’t attend live, but highlight the perks of joining in real-time, like getting personalized advice.

After each session, follow up with a summary of key takeaways, links to relevant resources, and details about upcoming training. This keeps the learning momentum going and deepens the connection between you and your users.

Step 4: Use Retention Strategies to Prevent Churn

Once you've established a solid foundation with customer education, it's time to focus on retention strategies. Why? Because keeping your existing customers is far more cost-effective than constantly acquiring new ones. In fact, reducing churn by just 5% can boost profits by up to 95% over five years. Considering that the average SaaS churn rate hovers between 10–14% annually, prioritizing retention is a no-brainer.

Monitor Engagement Trends

Keeping an eye on customer engagement can help you spot early signs of churn. Here are some key metrics to track:

• Login frequency: If users log in less than once a week, they’re three times more likely to churn. HubSpot tackled this issue and cut churn by 15% by targeting these less-active users.

• Feature adoption rates: Are customers finding value in your product? Mode Analytics reduced churn by 10% by encouraging users to adopt features tied to long-term retention.

• Session duration: Short sessions might indicate users aren’t achieving their goals. Intercom slashed churn by 25% by addressing the reasons behind brief visits.

• Onboarding completion rate: Poor onboarding leads to 70% of SaaS customers churning within 90 days. Intercom reduced early churn by 25% by redesigning their onboarding process.

• Training participation: Lack of training correlates with 20% higher churn rates. Salesforce tackled this by offering targeted training, cutting churn by 10%.

• In-app activity: Low activity often signals disengagement. BigCommerce reduced churn by 20% by encouraging users to engage more through prompts and feature highlights.

• Task completion times: Long times can indicate friction in the user experience. Groove retained 30% more at-risk users by addressing these delays.

• Customer feedback scores: A drop in Net Promoter Score (NPS) by 10 points can increase churn by 10%. HubSpot improved retention by analyzing NPS trends and acting on low scores with product updates and personalized outreach.

• Financial behavior patterns: Payment failures contribute to 10–15% of churn in early-stage SaaS companies. Stripe tackled this by implementing proactive payment recovery strategies, reducing churn by 20%.

Tools like Userlens can simplify the process by providing dashboards to track these metrics. Segmenting users based on activity levels and setting up alerts for early warning signs allows you to intervene before disengagement becomes churn.

Quarterly Business Reviews (QBRs)

Regular QBRs can be a game-changer for retention. Customers who participate in QBRs are twice as likely to renew their contracts, and businesses that conduct them see a 60–70% higher retention rate.

A successful QBR should focus on the customer’s goals, progress, and how your solution delivers value. Here’s how to make them effective:

• Share the agenda ahead of time to ensure meaningful participation.

• Highlight ROI and performance data with clear metrics that show how your product impacts their business.

• Use benchmarking data to help customers see where they excel and where there’s room for improvement.

• Discuss product usage insights to ensure customers are getting the most out of their investment. Health scorecards tracking metrics like user adoption and engagement can provide a solid foundation for these discussions.

Seventy-five percent of businesses that implement QBRs report better risk management and opportunity identification. These sessions aren’t just about solving issues - they’re about positioning yourself as a strategic partner. To make them actionable, create mutual plans with clear next steps, assign responsibilities, and set deadlines. Prioritizing high-value accounts for QBRs can also strengthen relationships and safeguard revenue.

Identify Upsell and Expansion Opportunities

QBRs don’t just help with retention - they’re also a great way to uncover opportunities for upselling and account expansion. Selling to existing customers is far easier (and more profitable) than acquiring new ones, with a success rate of 60–70% compared to just 5–20% for new prospects. For companies with annual recurring revenue (ARR) between $5M and $50M, expansion can contribute up to 44% of growth.

Customer Success Managers play a key role here. By maintaining close relationships with customers and monitoring their usage trends, they can identify when someone might be ready for an upgrade. Automated prompts triggered by usage thresholds can gently nudge customers toward higher-tier plans without feeling pushy.

Steve Jobs once said, "A lot of times, people don't know what they want until you show it to them". Offering limited-time trials of premium features allows customers to experience added value without immediate commitment. Cross-selling complementary products can also strengthen your relationship - just make sure to understand their workflows well enough to identify gaps your offerings can fill.

Segment your customers by usage patterns and business needs to tailor your approach. What works for a startup might not resonate with an enterprise looking for advanced integrations or analytics.

Finally, aligning your sales, marketing, and customer success teams around shared goals is crucial. Data-driven insights on customer health and usage patterns can lead to more effective and coordinated strategies. Companies that embrace data are 23 times more likely to acquire customers and 19 times more likely to be profitable.

Upselling and expansion don’t just grow revenue - they also deepen your product’s role in your customers’ operations, making it harder for them to leave.

Step 5: Use Customer Feedback Loops

Customer feedback plays a major role in keeping users engaged. In fact, increasing customer retention rates by just 5% can lead to a profit boost of anywhere from 25% to 95%. When you make customer feedback a key part of your strategy, it not only strengthens loyalty but also helps your business grow. Feedback loops are especially effective, as they turn customer insights into actionable improvements. Plus, when customers see their suggestions making a difference, they’re 21% more likely to participate in future surveys.

Collect Feedback Through Multiple Channels

To refine your products and services, you need a well-rounded feedback strategy. The best approach involves gathering insights from a variety of sources. For example, in-app surveys are particularly useful because they capture feedback while the experience is still fresh in the user’s mind. This often results in higher response rates compared to email surveys. Twilio, for instance, uses Qualaroo to anticipate customer needs and develop solutions that address them effectively.

Feedback widgets are another great tool. Unlike surveys that pop up at specific times, widgets let users share thoughts or suggest features whenever they want. A practical example comes from Dealfront, which added a "Report data issue" button to their dashboard. Over 180 days, this feature gathered 163 interactions and 70 actionable responses, helping the team quickly address errors.

User interviews add depth to your understanding by providing qualitative insights. While surveys can reach a broad audience, interviews allow you to dig deeper into the "why" behind the numbers. Social media monitoring also helps you stay on top of customer sentiment. It’s worth noting that over 30% of customers share negative experiences on social platforms, while nearly 49% share positive ones.

Customer support tickets are another goldmine for feedback. Analyzing these interactions can uncover recurring issues that might not show up in surveys. Tools like Userlens can help consolidate feedback from multiple sources, making it easier to identify trends and prioritize solutions.

Prioritize and Act on Feedback

Gathering feedback is only the first step. The real challenge lies in deciding what to act on - and then actually doing it. Start by creating a simple scoring system to evaluate each piece of feedback based on its potential impact and the effort required to address it. For example, rate both factors on a scale of 1 to 5. Look for patterns across multiple customers, as recurring themes often outweigh isolated comments about minor details.

Frameworks like the RICE method (Reach, Impact, Confidence, Effort) can help you focus on the feedback that aligns most closely with your business goals. For instance, feedback related to reducing churn or improving product adoption should take top priority.

Closing the feedback loop is just as important as collecting feedback. Companies that follow up with customers and address their concerns tend to see lower churn rates over time. On the flip side, failing to close the loop can actually increase churn by at least 2% annually. Acknowledge customer input through personalized follow-ups, feature updates, or public announcements. Quick fixes for simple issues go a long way, while more complex problems might require longer-term solutions.

Atlassian provides a great example of this in action. By using Thematic, a feedback analysis tool, they were able to consolidate customer comments from various sources, pinpoint the root causes of issues, and implement targeted improvements more efficiently.

Use Feedback to Drive Product Improvements

Feedback isn’t just about solving problems - it’s about making meaningful changes that resonate with your users. A whopping 91% of people believe companies should use customer reviews and suggestions to drive innovation. Incorporate this feedback into your sprint planning sessions to guide the development of new features and enhancements.

Beta testing is another effective way to gather early feedback on new features. Salesforce, for example, uses its IdeaExchange platform to refine features before they’re fully rolled out.

Once you’ve made changes, monitor the results to ensure they’re delivering the desired outcomes. Keep an eye on key metrics like customer satisfaction scores, feature adoption rates, and churn rates. This data not only helps you fine-tune your feedback strategy but also demonstrates the return on investment to stakeholders.

Customer service quality is a major driver of loyalty, with 69% of people citing it as a top factor in their decision to stick with a brand. By systematically collecting, prioritizing, and acting on feedback, you’re not just improving your product - you’re building stronger connections with your customers, setting the stage for long-term success.

Conclusion: A Holistic Approach to Retention Success

Creating a successful customer retention strategy means addressing every stage of your customer's journey. The five steps in this checklist work together to form a framework that delivers measurable results. By tracking meaningful metrics, refining your onboarding process, educating your customers, addressing churn early, and consistently acting on feedback, your SaaS business can build a foundation for steady growth.

Consider this: improving customer retention by just 5% can boost revenue by 25% to 95%. Meanwhile, acquiring a new customer can cost five to twenty-five times more than retaining an existing one. These numbers make it clear - retention isn't just a priority; it's a cornerstone of sustainable growth.

Don't wait to take action. Every day you delay could mean missed opportunities to keep your customers engaged. As Cary Self from CustomerGauge explains:

"A big misconception is that there’s nothing a team can do to prevent churn. Not true! Once you know how to discover churn, you can identify the reasons behind it. We tell our customers all the time, start somewhere. One small action is better than no action and it will begin to retain customers, allowing you to focus on the next action."

- Cary Self, VP of Education, CustomerGauge

Start by focusing on the metrics that align best with your business goals, whether that's tracking your Net Promoter Score or setting up a basic customer health scoring system. From there, expand your efforts to include more advanced initiatives like detailed onboarding workflows, educational resources, and structured feedback programs.

Retention requires teamwork. Every department - from product development to customer support - has a part to play in keeping customers satisfied and engaged. Clear communication, sharing results, and educating your team about the importance of retention are essential steps. Help everyone in your organization see how their role contributes to retaining customers and driving long-term success.

FAQs

What are the best ways for SaaS teams to measure and improve customer retention?

SaaS teams can improve customer retention by focusing on clear communication, data insights, and proactive engagement. Start by setting clear expectations with your customers. When customers understand how your product meets their needs, they’re more likely to stick around. Misaligned expectations often lead to churn, so being upfront and transparent is essential.

To gauge retention, keep an eye on key metrics like customer retention rate, churn rate, and Net Promoter Score (NPS). These numbers reveal how satisfied and loyal your customers are. Tools such as in-app surveys and usage analytics can also uncover engagement trends and pinpoint areas needing attention.

By addressing customer needs, monitoring the right metrics, and fine-tuning your approach, SaaS teams can build stronger relationships, encourage product adoption, and reduce churn.

What are the best practices for creating a personalized onboarding experience to improve customer retention in SaaS?

To design an onboarding experience that keeps customers coming back, focus on making it personal and relevant to each user. Tailor the process to fit their roles, goals, or preferences so it feels like the experience was built just for them. For instance, you could offer personalized walkthroughs or let users choose an onboarding path that matches their specific objectives.

Adding interactive elements like checklists, tooltips, or guided tours can make a big difference. These features help users discover key functionalities without feeling overwhelmed, making the learning curve less steep and encouraging them to engage with the product more confidently.

Don’t stop at onboarding - keep the momentum going. Offer tools like progress tracking, rewards, or periodic check-ins to keep users engaged. These ongoing touchpoints reinforce what they’ve learned, keep them motivated, and strengthen their connection to the product, which can go a long way in boosting retention.

How does ongoing customer education help boost engagement and lower churn rates in a SaaS business?

Ongoing customer education is a key factor in keeping users engaged and reducing churn. When customers truly understand how to use your product and its features, they’re more likely to have a positive experience and stick around.

Providing regular training sessions, tutorials, and helpful resources allows users to solve common problems on their own, cutting down on support requests and boosting their confidence in the product. Informed customers tend to be more loyal and engaged, creating stronger relationships and setting the stage for long-term success in the competitive SaaS world.