Ways to Increase Your SaaS Renewal Rate

4 minutes

The fortunes of your SaaS business are inextricably tied to customer renewal rates. If you can increase renewal rates and add new customers or revenue streams, you’re more than likely to continue to grow and have success with your business.

It’s a pretty simple formula in theory, but much harder to pull off in practice. The reasons why are many. Is your product priced too high? Is your customer service lacking? Are there issues with your product? It can be tough to pinpoint why your customers are bailing if you don’t know where to look, and if you don’t know what’s broken, you can’t fix it.

Every business has different reasons for customer churn, but here are some reliable ways to source the reasons why and begin to increase your SaaS renewal rates.

Gather Data

Data is your best friend. Gathering the right data can give you the most honest and helpful insights into your SaaS business and what causes customers to churn — and renew. But what kind of data should you be looking for? It really depends on your business, but a few simple user behavior metrics can be enormously helpful in telling you who is most likely to churn. Once you have that data, you can target those customers more closely to help them find solutions to the issues they’re having with your software.

One SaaS startup divided their customers into two groups: those who canceled after 30 days, and those who didn’t. They discovered that there was a huge difference between the two groups in how long their first session was and how often they logged in: predictably, those who canceled were far less active. They were then able to send targeted emails to those less active users in the first few weeks of their subscription, to try and increase customer engagement and therefore reduce the likelihood of cancellation.

Given that “lack of usage is the number one churn driver” for SaaS businesses, it pays to know as soon as possible which customers are the least active so that you can target your efforts at those most likely to cancel.

Target Likely Churners

Once you’ve identified those customers who are most likely to quit, you can send them targeted communications to see what’s going wrong and whether you can fix it. It may simply be a matter of them needing to see more clearly the value they can get out of your solution. Or, they may be having trouble with one aspect of their account setup. No matter what it is, you need to find out and work with the customer to find a solution.

When you’re trying to increase renewal rates, it’s not cost-effective to offer promotions to all of your customers for taking actions like renewing early, for instance. Targeting the customers who are most likely to cancel is a better use of your resources, and can give you insights into the customer experience that can decrease churn on a larger scale.

Survey Your Best Customers

Your best customers are one of your greatest resources. Tap them for insights on why they do business with you, what their top priorities are, what they want for future improvements, and what their biggest peeves are, and offer special promotions for their time. By doing so, you’ll be able to tailor your business to attract more customers who have the same priorities and needs as your best customers. You’ll also increase the likelihood that those excellent customers will refer others to you, and customers who have been referred by someone tend to have higher renewal rates.

Not sure who your best customers are? Look for accounts that renew often, don’t file a lot of support tickets, and who have a high LTV (lifetime value). It’s crucial to make sure that you’re satisfying these customers and making your business more attractive to them over time.

Survey Your Customer Support Team

No one knows the ins and outs of your business better than your customer support team. They interact with your customers every day and can tell you where common issues are, alert you when trending issues arise and can offer insights into common feature and improvement requests that your customers have. All of these are critical to maintaining a healthy and happy user base.

Plus, if your customer support team knows that you value them and their inputs, they’ll feel more involved in the company and will provide better support to your customers. It’s a win-win-win.

Reducing churn is both a science and an art. Gathering data is crucial, but you also have to use that data effectively to work with customers who need help getting value out of your solution. With the right insights, you can target your efforts in a meaningful way that will maximize renewal rates by showing your customers you’re paying attention to their needs.

Avangate powers modern Digital Commerce, solving the complexity of online commercesubscription billing, and global payments for SoftwareSaaS and Online Services companies. Backed by a proven cloud platform, unmatched expertise and a depth of digital commerce services, Avangate helps digital business leaders drive the fastest path to revenue, maximize the value of every customer, and expand global reach.


Contact us for more information about how our digital commerce services can help you grow your business.

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