Gaining customer loyalty is vital for the success of any startup business. And that’s pretty true in the case of SaaS. However, attracting that loyalty can be more challenging in this industry. Let’s look at what it entails and find out how you can effectively earn the love of your users.
Understanding Customer Loyalty In SaaS
While it might seem straightforward, there are nuances to customer loyalty in the context of SaaS. Understanding these nuances will help you better assess if you are indeed earning the loyalty of your patrons.
Customer Loyalty VS. Customer Retention
These two might seem similar, but they have significant differences. Retention simply means that a customer decides to renew their subscription. It does not indicate the commitment that defines their loyalty to you.
For instance, customers might renew the subscription simply because your service is their only option. On the other hand, a loyal customer would willingly stay even if there are other options. Note that retention is essential for developing loyalty, but it can be considered just the starting point of your effort.
Customer Loyalty VS. Customer Stickiness
Another element that relates to customer loyalty is customer stickiness. it refers to a customer returning to your service because it offers higher transactional value. Again, this does not immediately translate to loyalty.
The customer is simply staying with your product because they get the value. They have no emotional connection to your brand. As such, they are still likely to leave when they find another product that offers a better incentive than yours.
So Where Does Customer Loyalty Begin?
As you can see, the above two ideas serve as a foundation for developing customer loyalty. But they don’t directly lead to it. You need another element to build that loyalty. That would be the strong emotional connection that customers have with your service.
This is often something you might find hard to wrap your head around. After all, the SaaS customer relationship can seem pretty straightforward. People will use your product as long as it matches their needs.
However, capturing their emotional investment can significantly boost their interest in your brand. Here, they see you as more than just a provider. You now become a partner that will help them accomplish their work. This point is where customer loyalty truly begins.
How Your Startup Business Should Measure Customer Loyalty
Given the dimensions defining customer loyalty, you might wonder how you can measure it. Here, you don’t just follow one metric. Instead, you track several key ones. When all of these come together, you get an idea of how loyal your customer base truly is.
Net Promoter Score
The first metric you want to follow is the net promoter score. It assesses how likely people are to recommend your service to others. A high promoter score indicates that a user is confident in your product enough to share it with their peers. Meanwhile, those in the median range are customers that like your product but are not yet ready to recommend it.
Retention Rate
As we have said earlier, retention is the foundation of customer loyalty in SaaS. Thus, it is vital that you track it. Measuring the retention rate is straightforward. You just follow the number of customers that remain after a given period. A constant retention rate means that people are staying more. Meanwhile, an increase indicates that you are gaining their trust.
Customer Loyalty Index
This is a metric specific to customer loyalty. Here, you ask the following three questions.
- How likely are you to recommend the service to a friend?
- How likely are you to use the service again?
- How likely are you to use our other services?
Customers answer these questions on a scale of 1 to 6, with 1 being the most likely and 6 being the least. You then take the average of all three questions based on the assigned points. A high CLI indicates that your customers are more attached to your brand.
Negative Churn
Negative churn refers to the increase in spending by your remaining customers. That offset the revenue lost from leaving customers. Such an increase indicates that those remaining customers are patronizing your brand more.
How Your SaaS Startup Business Can Boost Customer Loyalty
Once you know how loyal your customer base is, it is time to boost that loyalty. The various loyalty-boosting strategies that other businesses use work here. However, you should consider the unique aspects that SaaS has.
In particular, you should understand that SaaS is already a pre-built experience. Customers come in with clear expectations about your product. To command loyalty from them, you need to go beyond those expectations.
Creating Their Roadmap To Success
The first thing that you want to do is to make sure that customers’ journeys to meet those expectations are easy. Creating a roadmap for them will help you achieve that goal. The roadmap provides them with all the information they need.
You should also mark the important milestones that they should meet. This gives them a clearer idea of where they are headed with your service. Be ready to guide them through each milestone and encourage them to explore your product more.
Creating The Right Rewards For Your Startup Business Customers
Giving your customers rewards is one of the most effective ways to increase their loyalty. But you might wonder what would fit them. After all, getting a great user experience is already rewarding enough for many users.
Thus, the reward you provide should be something that will help them get more out of that service. For instance, you can provide regular discount codes for your most loyal users. Or you can give more storage space.
You should also be ready to evolve your rewards program as customers mature. Consider their changing needs and develop ways that would best meet those. When they see that the rewards they get are becoming more useful, customers will be more invested in your service.
Strengthen Customer Loyalty To Your SaaS Startup Business
In all of these efforts, your startup business needs the support of an expert in customer engagement. Virtua Solutions is ready to provide you with that team. You will get agents that will constantly be in touch with your customers and ensure they are getting the attention they deserve. Contact us today and get ready to build your loyal fanbase.