By Reena Aggarwal
SaaS businesses measure growth and success in different ways, with one metric greatly outweighing the rest.
The customer lifetime value, or LTV, is the total amount of money a business generates from a customer throughout their time as a customer for the business.
LTV impacts every area of a business and determines long-term success. This is because once you acquire a customer, it becomes cheaper and easier to retain them than to replace them.
By working to improve the experience of your existing customers, you encourage them to spend more on your business, thus improving the customer lifetime value.
For this reason, you won’t have to spend a lot on customer acquisition to drive revenue since you can generate greater revenue from existing clients.
As a B2B SaaS company looking to optimize different aspects of your business, increasing the customer lifetime value should be a key part of your SaaS startup strategy.
Here’s how to go about it.
Provide a Great Onboarding Experience
If you want to retain your B2B customers for a long time, your efforts should start at the beginning of your interaction. In fact, onboarding is an important part of any SaaS sales strategy.
Customers will only renew their subscription if they can use your product effectively to solve their problems.
For this reason, your onboarding process should help new customers get up to speed with your product and start using it with ease.
Create a special training program to help new users learn how to use your product. You can provide one-to-one demos to explain the features of your product and how customers can gain maximum value from your amazing tool.
Lastly, create a knowledge hub that customers can visit to learn more about your product.
Add all the new users to your email list and use e-commerce tools to deliver helpful product information straight to their inbox.
These moves will help you reduce churn and increase your customer lifetime value.
Run Targeted Email Campaigns
Keeping your B2B clients engaged through email campaigns is an effective way to increase their lifetime value. Provide them with helpful information through your emails in the form of industry news, production information, useful tips, and product offers.
Additionally, when you publish helpful information through blog posts, make sure to send them to your clients in your email blasts.
By providing such valuable information, customers will look up to you as an industry leader and stay engaged with your brand for a long time.
The measure for success with email campaigns is the open rate. Use analytics to find out how many people open your emails and find areas for improvement.
For example, you can experiment with subject lines to see how many more people open your emails. You can also change your sending frequency and try different times for delivering your email communications.
Offer Custom Packages
With a B2B SaaS business, you need to provide flexibility to your clients. They should be able to choose the features they want and ones they don’t. That’s where custom pricing comes in with subscription based contracts.
While this can complicate accounting for you, B2B subscription billing solutions, as Younium mentions, can help you track your revenue well and manage client billing too. This can enable you to deliver a smooth customer experience.
Another advantage of using automated billing software is that it boosts your customer retention efforts. Customers will not take the steps to cancel their subscriptions if they are happy with your product.
This means you will have long-term customers for your business as long as your products meet their needs, thus enhancing your customer lifetime value.
Notify Customers Who Need to Renew
With a recurring payment system in place, customers are charged a standard fee after a set period. However, credit cards can expire or get canceled because of theft, resulting in failed payments.
So, when a payment doesn’t go through, you need a system in place to remind the affected customers to renew.
SaaS clients only pay a portion of their total potential LTV upfront, the rest comes in as future revenue. That’s why it’s crucial to send those reminders to encourage your clients to renew their contracts.
An automated system with notifications and reminders will help you generate goodwill with your clients, thus encouraging them to renew their subscriptions.
Your customer service team can also connect with clients and inform them about renewals. This process will help you save time, reduce churn, and ultimately improve your LTV.
Find Upsell and Cross-sell Opportunities
We have already established that it’s easier to sell to existing clients than new customers. This makes finding upsell and cross-sell opportunities effective ways to improve your customer lifetime value.
Upselling is the act of encouraging buyers to buy a pricier version of the product they are about to buy. For example, if a client is about to buy the standard version of your SaaS product, you can give them the option of getting a more expensive version with more features.
Salesforce has different pricing plans for its service cloud. While it’s easy for clients to go with the cheapest plan, they are reminded that the most popular option is the Enterprise plan that offers customizable CRM services.
On the other hand, cross-selling involves offering clients products that complement what they’ve already bought. You can bundle the products together and give a discount should a customer buy the two products.
Customer lifetime value is paramount to the success of your business.
Improving the onboarding process, implementing email campaigns, and offering a custom subscription model are all effective ways to improve your LTV.
Upselling, cross-selling, and encouraging users to renew their subscriptions are other strategies you can implement to improve your LTV.
Which of these mechanisms will you use to increase the lifetime value of your clients? Let us know in the comment section.
About the Author
Reena Aggarwal is Director of Operations and Sales at Attrock, a result-driven digital marketing company. With 10+ years of sales and operations experience in the field of e-commerce and digital marketing, she is quite an industry expert. She is a people person and considers the human resources as the most valuable asset of a company. In her free time, you would find her spending quality time with her brilliant, almost teenage daughter and watching her grow in this digital, fast-paced era.