Anton Cherkasov

Retention is a King: How to Improve Retention in SaaS

Introduction

Anton Cherkasov

Anton Cherkasov

Anton is a co-founder of Aworker, which is a blockchain platform for Recruitment. He is also a co-founder of Kepler Leads, is a lead generations software for eCommerce. Previously Anton has worked in Wildberries (#1 eCommerce store in Russia). He is falling in love with growth hacking and product management.


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Retention

Retention is a King: How to Improve Retention in SaaS

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SaaS companies have two big problems. Firstly, how to attract new customers. Secondly, businesses attract people in their applications, but a lot of them don’t use the product. And I believe that the second problem is more important than first.

Retention is King. I am truly convinced that retention is more important than acquisition. Jamie Quint is Managing Partner of Quint Growth, and Dan Wolchonok of Hubspot have told the same. Excellent user acquisition with rapid user attrition is a sign of significant problems in a product. At the same time, with good user retention and low user acquisition, you will increase your user base step by step. Strong user retention is an indicator of product market fit.

Let’s face it. Retention is more important than acquisition.
Based on my experience in Aworker and Kepler Leads I decided to write an article about segmentation. How segmentation can increase retention for SaaS. There you can find examples and tools which help you improve retention in your business.

Now when switching cost so low, especially for SaaS, it’s easy to lose customers. That’s why I want to talk about ways of communicating with your users. Great customer engagement and experiments are the key areas for good retention.

What is customer engagement?

Customer engagement is a business communication connection between customers and a company through various channels of correspondence.

Or to put it even more simply it’s sending right messages to the right people at the right moment with the right context. It’s mean that the necessary steps required to engage them are:

1) Identifying the audience for messages by segmenting users according to behavior and actions;
2) Creating unstoppable messages for maximum impact;
3) Choose the right time to better results;
3) Use right triggers to send messages with the proper context.

In this article I talk about the first core point, one of the powerful technics to reach the right people.

Segmentation

One of the biggest mistakes which companies make is a common conversation with all user base. Messages that don’t consider unique recipient’s experience. It’s a huge mistake writing emails for the mythical «average user». Always thinking that the «average» person has 1.99 pounds and 69.5 inches. I don’t know a lot of people like that. And you? Write for people, not for averages.

Simple segmentation is better than nothing. Segmentation helps to talk with each person about things that care for this specific person. It’s when you send different messages to each segment of your base. Segmentation is like Holy Graal in the modern world with many advertising messages and hollow conversations. Sending messages for more targeted groups gives you better results because users will find your words more personal.

There are several segments every product should think about:

1. Active users
2. Inactive users
3. Free users
4. Customers
5. Cancelled customers

Let’s talk about these groups.

1. Active users

These users frequently log in into your product. They know you, your product, and understand value. They are loyal. The core goal of communications with this type of users is to provide the best service as you can.

How often should you message them? It depends on the product. Applications, where users log in every day, may communicate with users more often than applications where users are just logging one or two times per month. Think about Facebook and Data Storage Application. If first may send an email every day after each action, second must be more prudent. Meanwhile, Intercom recommends taking a break between messages at least two days.

Don’t sell them a product they’ve already used. Don’t pitch them too often. These users are the core of your community. Taking their looks on what you think they should try. Channels almost depend on the context of communication.

Channels for communication: email, in-app messages, live chat.

2. Inactive users

These users haven’t used your solution as you want. There are several reasons why it should be. Firstly, they haven’t understood your product at the onboarding’s time. They have thought that your product doesn’t solve their problem. Secondly, maybe they haven’t liked your product. However, you must try to return them to the application. That’s why you should show them how your product could make their job done. You need to focus on what your product can do for them. Show them product’s improvements since they last used you.

For example, you may send them messages «How can you get a better house in 10 minutes?» (for rent application), «Now you will get more leads in the last update». The frequency of messages depends on the types of company. In Kepler Leads we are sending recovery messages to anyone who hasn’t been active in 30 days or more. It gives us 7% resurrected users.

In Aworker we increased engagement up to 30 (thirty!) times after focusing on this segment. To get this, we had sent different emails to four targeted groups.

Channels for communication: email, push messages, retargeting.

3. Free users

Freemium has become the primary business model for many SaaS companies. Despite on low conversion rate to paid customers which depend on industry and type of company, this business model gives a massive amount of free customers. For instance, for SaaS or B2B Web Apps it’s 3% of conversion rate to paid customers according to Lincoln Murphy from Sixty Ventures. More freemium conversion benchmarks you can find here.

The goal of freemium is attracted new customers to the company, so drip strategy should reach to affect on people do the upgrade. The main trick is to understand when users get the value from your product because it’s the best moment to show them how they can increase power to their job through paid plans. Firstly, it’s a common way to make paid plans based on the volume of actions or website traffic. In this case, you can remember users to upgrade they plan to get more opportunity with more traffic.
Secondly, you can remind users that they get more value if they use a premium plan with additional features like predictive reports for an analytical application.

In Kepler Leads we increased sales by 23% by creating email messages for users who get first leads via our popups and bars. We had started to show them how they can improve the number of leads with A/B testing with relevant use cases.

Channels for communication: email, in-app messages, live chat.

Triggered email emails for free users at Kepler Leads

 

4. Customers

These are the most important users in your business. Depending on your business model you may want to upgrade current customers on higher plan or segment them in different cohort groups. After all, it doesn’t make sense to send customers information about the new feature if these customers have already used it. Also, if you have limited proposal with bonuses for your customers, definitely you want to send it to better and highest paying customers first.

For example, in Aworker we decided to send presents to our customers with merchandise T-shirts. All customers could buy it, but we want to make a gift to the most loyal and highest paying customers. For this purpose, we created a targeted segment of the highest paying customers.

Channels for communication: email, in-app messages, live chat.

5. Cancelled customers

I recommend separating these users into two groups:

– Recently cancelled
– 15 days and more

Firstly, users who recently cancelled your product. The crucial part of the information what you can get from this group is why they did it. Why they cancelled is a more important message than trying to convince them how you are great. The best time to persuade them in your greatness is probably not instantly after they cancelled accounts. Try understanding why they did it and improve your product to prevent it in future.

Secondly, users who cancelled 15 days and more. It’s time to convince them that you have a great product. You need to focus on what your product can do for them now. Show them product’s improvements since they last used you. If you don’t have improvements let them know key benefits they get using your product.

Channels for communication: email, retargeting, live chat.

Conclusion

Retention is the most critical component of any SaaS company. Use segmentation to make relevant communication with users. It helps you to create genuinely personal messages. Don’t be these companies which send basic messages to anyone in 2018. Define segments of your target audience and send them personal messages in right time through the relevant channel is the best way for improving retention and building genuinely successful SaaS company.

Tools which help you to build your Awesome Segmentation Machine:

Base Analytics: Google Analytics
Event-Based Analytics: Heap, Amplitude, Mixpanel
Communication and Segmentation: Intercom, Drift, UserEngage, FreshChat
CRM: Hubspot, Salesforce, MarketoZoho
Email Marketing Software: MailChimp, Aweber, MailerLite

Anton Cherkasov

Anton Cherkasov

https://aworker.io/

Anton is a co-founder of Aworker, which is a blockchain platform for Recruitment. He is also a co-founder of Kepler Leads, is a lead generations software for eCommerce. Previously Anton has worked in Wildberries (#1 eCommerce store in Russia). He is falling in love with growth hacking and product management.

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