Starbucks is not what it seems. The recession is fast approaching. How do B2B SaaS companies survive in an era of low customer acquisition and churn.
Whether you take your coffee with two shots and no sugar or with a jittery heart as the whiff of coffee passes, you will know what Starbucks is.
But ‘Starbucks is not what it seems,’ claims an article from 2022, which digs deeper into the company's origins, started by Jerry Baldwin, Gordon Bowker, and Zev Siegl. What was initially created to trade coffee beans and tea leaves grew into a global chain of coffee houses, but that is something everyone knows. The article scrutinizes a little-known fact about Starbucks that people do not pay much attention to.
It is claimed that the deposits made on Starbucks Loyalty cards are greater than those of some of the biggest banks on wall street. The article further explores how the money deposited into the card can only be used to make purchases from Starbucks and cannot be withdrawn.
Apart from this system opening up an avenue for easy interest-free cash flow for the company, the reward system has helped multiple customers repeat purchases for extra points and lucrative personalized gifts that can be redeemed.
Starbucks' loyalty program is an excellent retention strategy that benefits the company and its customers.
The intensity of customer retention strategies depends on the stage of the company. While it is advisable to look at retention from day one, Shopify came up with a graph to decode the level of importance companies of different sizes need to place on retention, which would help positively impact their revenue.
While you can focus on retention campaigns and one-off rewards when you build traction, full-fledged retention strategies like loyalty programs would benefit as the company gets well established. This is also when you have time and the budget to accommodate this.
You Mon Tsang, the CEO of Churnzero, which helps companies manage other companies, got the box seat view into the upcoming recession. In a recent Harvard Review article, he elaborated that focusing on existing customers is the best way to cope with the dwindling acquisition and leaking churn that we are to witness in 2023.
This got us thinking if your customers threatened to churn today, what can you do to retain them?
Customer data’s unheralded benefits lie in letting businesses be more human. Knowing your customer’s spending patterns can help you understand them.
Take the example of McDonald’s.
A small timely handwritten/typed-out message can strike a chord with your customers.
Offer your customers gifts and discounts from time to time. Surprising your customers will make them feel good and motivate them to share the news, which leads to good reviews and word-of-mouth marketing.
The Customer Success Collective interviewed 86 SaaS professionals from around the globe, with 88% from B2B SaaS.
They found that 84% highlighted customer onboarding as one of the customer retention strategies.
A good onboarding process keeps the customer engaged from step one, helping them understand the value of your product and, in turn, use it to its full potential. But it is also essential to provide the correct information to the right people during onboarding and make the experience easy to access and understand.
Trainn’s onboarding process is very straightforward and emphasizes people feeling free to ‘play around’ with the tool. It also marks a tick and a cross to denote the progress while showing explainer videos that help understand each step in precise detail. You can check our Trainn’s onboarding process to understand in detail.
Most SaaS companies build a community around their products for four main reasons,
While most communities around SaaS lie in support, some of them overlap. Zapier, for example, has a community where people can share the zap automation recipes they have created.
The level of exclusivity varies in these communities as some are open to everyone while others can be particular with specific rules. This decision is dictated by what your company expects out of its communities.
Email marketing is one of the best avenues for customer retention. It can start with a ‘Thank you for availing our service’ to, ‘‘We miss you, here’s a coupon to continue to the paid plan,’ or ‘Here’s a new feature that made us think of you.’
Customizing drip email campaigns based on user activity can help send a timely message to your users and lead them to the next action step.
Crate & Barrel, a home furniture store, sends mail with related products to buy, cross-selling within their product range.
Another way of interacting with your customers is being active on social media and interacting with your followers. This makes them feel heard and builds a bond between the user and your company beyond the comments section of a post.
And sometimes, it's okay to have fun with your customer service experience as Sainsbury did.
The recent report by Customer Success Collective noticed that SaaS always keeps a close eye on retention metrics. In fact, a majority of the respondents track their metrics weekly.
Three of the critical metrics to track concerning retention would be
Churn rate: which helps you understand the customers you have lost in a particular period.
Churn rate = Total Customers lost during x time/ Total Customers at the start * 100
Customer lifetime value: this refers to the total amount of money a customer will spend on your business throughout their tenure with you.
CLTV = customer value x average customer lifespan
Net promoter score: it is a measure of the satisfaction of your customers.
A net promoter score of above 50 is good, while a score above 80 is said to be world-class by Bain & Co. It is usually calculated by subtracting the % of promoters from the % of detractors.
But there are many other metrics that companies use and above are some of the top metrics businesses in SaaS find solace in.
For SaaS businesses, a 35% retention rate is good. However, it all comes down to how one calculates retention and the metrics they use that matter to their business. Overall, a company should be wary of its health and the general feeling of the customers concerning its offerings.
An omnichannel customer education plan would support customers with the correct information through all means. Let’s grab a coffee and discuss how customer education can help your company’s retention.
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