Posts Tagged ‘getting customer’

How to Predict Customer Churn Before It’s Too Late

Monday, May 29th, 2017

Predicting churn is one of the most important things you can do for your business, but it sounds far-fetched, like a concept ripped from a science fiction novel.

How can you predict when a customer is about to leave?

Should you consult a Magic 8 Ball?

Image Courtesy of MemesHappen

For SaaS businesses, there are actually several big warning signs, in flashing neon colors, that indicate churn probability. Even though these warning signs are hard to miss, if you don’t know what to look for, they can easily be misinterpreted or brushed aside.

Let’s look first at the top warning signs that predict probable customer churn ahead. Then, we’ll discuss how to use these signs to prevent churn from happening. Let’s get started.

Here’s a checklist of what to do to minimize churn.

App Usage Has Declined

App usage is one of the easiest predictive metrics to track. If a customer isn’t getting what they need from your app, they’ll stop using it. App activity may end weeks or even months before the customer actually cancels. But make no mistake– cancellation is coming.

When you see a decline in app activity, jump on it right away. Your immediate course of action should be a re-engagement email series.

In this series, I recommend educating the customer on how to use your product. Also, send case studies that align with the customer’s stated goal for using your product. Finally, have your customer success team reach out personally to each disengaging customer to offer ways to improve the customer’s experience with your app.

They’re Not Opening Your Emails

If you send out email after email but are met with dismal open rates, churn is on the horizon. Customers who are highly engaged with your product are likely to open up your emails… at least some of the time. You’re never going to get 100% open rates, but you should never be satisfied until you do.

Email marketing is one of the best ways to deter churn and remind people to come back and use your product. It’s especially crucial in the beginning stages when the customer is still trying to understand your product. If you’re sending the wrong emails, they won’t get opened, and your customers will slowly drift away.

Low open rates across the board could indicate that your email content isn’t resonating with your audience. In other words, your emails aren’t helping your customers solve their problem. Don’t make the mistake of trying to speak to all of your customers at once, through the same email.

Instead, segment your email list into groups. You can slice and dice your list in different ways, including: app activity level, job title, user end goal, trial user, customer pricing level, and more. Segmenting your email list allows you to write more targeted and relevant content that will appeal to your users.

Through your emails, you can help your customers succeed with your app.

The right message can be compelling enough to pull them back to your product and remind them why they signed up with your product to begin with.

Administrative Changes Within the Account

Are you a B2B Saas? When you work with an entire business and not just a single consumer, churn is often a result of an internal change within that business account.

Let’s say your key contact for a business account leaves the company or gets promoted to a new position. Now, you have to work with a completely different contact– someone with a different personality, who may not “get” your SaaS, or may be looking to switch things up and cut costs.

Sometimes change is swift, and you’re not always privy to the internal operations of your business customers. But, if you establish a solid relationship with your customers with the help of your customer success team, your contact may give you a heads up.

Being prepared is crucial. If you know that there are internal administrative changes within an account, your customer success team can reach out to the business and offer to host a webinar and train new employees on how to use your product.

If you haven’t already, forge relationships with all the key contacts for your business accounts. Follow them on social media (especially LinkedIn so that you may know if the contact changes jobs). Send personal (not automated) emails to them periodically, asking how you can improve their experience. Or actually call them on the phone (it’s a dying art and a surprising gesture).

Expired Credit Cards

Credit cards expire every three years on average. That sounds pretty innocent, but here’s what should worry you: expired credit cards are among the top reasons why customers churn.

It’s not that the customer actually wants to leave, it’s just that their credit card expires, and they forget to update their information. Or, in another scenario, the customer isn’t notified that their credit card is about to expire. So, they’re blindsided when they attempt to access their account and find out that they’ve been locked out.

That’s not a good look for your customer service.

And now, your customer has to go through the headache of updating their information, reactivating their account, possibly paying a late fee, etc. For your customers, it may be easier to just leave. Yikes.

Don’t let an expired credit card be the reason for your customers to leave. Use pre-dunning emails to ask customers to update their billing information before their credit card expires and the payment fails. This can help you prevent unintentional churn and improve positive sentiment. Customers like when businesses are proactive and not reactive.

More Complaints

Complaints are a part of doing business with the public. You can’t please everyone. But, have you noticed an increase in customer complaints recently?

For every one squeaky wheel that complains, there are at least two that don’t. They’ll just quietly take their business elsewhere. So, be thankful for the squeaky wheels, and don’t forget to find out why they’re squeaking. Their complaints can help you identify what’s not working in your product. By addressing these concerns swiftly, you’re not just helping one customer, you’re helping the ones that suffer quietly in the background.

By the way, squeaky wheels don’t always contact you directly. This is why social listening is crucial for any SaaS. What do people say about your product on social media platforms like Twitter or Facebook? Has anyone complained about your product in a blog post?

If you don’t know, you need to find out. Fortunately, tools like HootSuite or Google Alerts can help you monitor the web (automatically) for any mention of your brand or products.

Final Thoughts

Predicting and preventing churn is just as important as acquiring new customers. In fact, I would argue that keeping customers is even more important than constantly getting new ones. If your customers are canceling, you need to know why.

You need to get Retained. Retained will show you who’s in danger of churning and why. We look at key indicators, including sentiment and in-app behavior to make an intelligent prediction. Get email alerts before the churn so that you can stop it from happening in the first place. This is the one app that can help you predict churn before it’s too late.

Get an invite to Retained now.

Don’t forget to download this checklist for minimizing customer churn.

How to Leverage the Product Adoption Curve for a Successful Launch

Monday, January 23rd, 2017

Launching a product is the hardest part about running a SaaS business. Once you have a few people using your product, you can solicit feedback and referrals. You can iterate and refine. You can use your first users as sources of knowledge so as to capture and impress future users.

But how do you find those first users? How do you start from zero?

When the ride-sharing app Uber started, they were giving out free rides. Seems reasonable, right? It’s common for SaaS products to give something free to new users in hopes of turning them into paying users. But Uber took a slightly different approach.

Uber gave out free rides to people during Austin’s SXSW Conference. Attendees of the conference were young, tech-savvy people with money to experiment on new things. They were also struggling to get around a place that was short on taxis.

(If growth hacking is a subject that interests you, you should definitely read more about Uber. They are consistently used as an example in startups and business schools on growing scalable products.)

Instead of spending millions giving free rides all over the country, Uber focused on potential customers who were most likely to adopt the product. They could maximize their marketing dollars by focusing on the people who would help their product grow. Not only did they capture their first users, but they found the right users who would carry their product onward.

Uber took advantage of the product adoption curve.

Make users adopt your product faster by proving these critical benefits.

What is the product adoption curve?

Communication scholar and sociologist Everett M. Rogers learned that not everyone is willing to adopt a new product immediately, especially a disruptive product. But that doesn’t mean product adoption is unpredictable. We can group consumers based on how quickly they adopt (or are willing to adopt) a new product.

Some customers will adopt a product the moment it becomes available. They were likely anticipating the product and following its development before its release. On the other end, some people will adopt a product only once everyone else has.

As a whole, product adopters can be plotted on a bell-shaped curve (also called the Rogers Adoption Curve) that looks like this.

product-adoption-curve

Note that this curve only includes people who actually adopt a product – not all people. For instance, someone far removed from your target customer wouldn’t be included because people don’t adopt products that aren’t relevant to them.

Innovators the first 2.5% of users to adopt the product

These are risk-takers who are willing to try an unproven product. They are not guinea pigs or lab rats, however. They are well-informed followers of the brand or technology. Technically, they are taking risks by adopting the product early (which is likely incomplete and buggy), but they understand those risks.

Demographically speaking, innovators are usually young, financially stable, and have close contact with other innovators (it’s usually a close community).

Early Adopters the next 13.5% of users to adopt the product

Early adopters jump in based on the positive response of the innovators. Again, these are educated users. Many are industry opinion leaders with followings or audiences of their own.

These people are generally young, financially stable, and socially outgoing. They differ from innovators because they are discrete and focused about their adoption preferences. That is, they aren’t willing to try any product, just this product.

Early majority the next 34% of users to adopt the product

These are careful consumers who insulate themselves from risk by letting other people try products first. They don’t want to be the last adopters, but they aren’t willing to waste money on a buggy product or a product that never builds a user base to support itself.

Whereas innovators and early adopters are waiting for triggers to adopt (product release or innovator approval), the early majority has a longer adoption period. They rely on recommendations from the two earlier groups and each other.

Late majority the next 34% of users to adopt the product

These people only accept products once they become commonplace, as they approach product adoption with a high degree of skepticism. They aren’t just skeptical about a particular product. They are skeptical about all innovation.

Demographically, they aren’t willing to take financial risks. They do not easily accept recommendations from earlier adopters, and offer little opinion leadership (meaning their recommendations to other people don’t hold much value).  

Laggards the final 16% of users to adopt a product

This is the final group to adopt a product. At this point, the product has been available and commonly used for quite some time. People in this category often have an aversion to change. They aren’t willing to try new things and tend to be older in age.

Laggards have little to no contact with anyone who would be considered an innovator or an early adopter. They only adopt the product out of necessity (example: “I have to use Facebook because it’s the only place to see pictures of my grandkids”).

Keep in mind that people only fit into these categories in the context of a particular product. Just because someone was the first to buy the iPhone doesn’t mean they’re the first to install solar panels, or try that new hamburger restaurant. Adopters can be innovators for one product and laggards for another.

How can you take advantage of the product adoption curve?

Hopefully you have an ideal customer profile (also called a buyer persona) put together. This profile should describe your perfect customer – the type of person who would receive the most value from your product.

To take advantage of the product adoption curve, focus on a subset of your ideal customer. You want to target people who will receive the most value and be likely to try new things. If you sell a disruptive product (a product that changes the way a problem is solved or solves a new problem), you need to drill down as deep as possible because most people resist fundamental change.

This focus should happen early in your product development. When you envisioned your product, you likely thought of a dozen features that would create a robust platform, and then had to scale down to your minimum viable product.

Consider your innovators and early adopters when you plan development. What type of features do they need? For instance, UberEATS is Uber’s food delivery service. They could have started with food delivery before ride-sharing, but they had to consider the adoption curve. Innovators and early adopters needed rides more than food and could be targeted.

Notice Uber’s growth on this chart. They grew steadily until July of 2013, then took a sharp upturn. At this point, the innovators and early adopters had drive product adoption to the point where the early majority jumped in.

uber-product-growth

Image: uber.com

Furthermore, develop your product and prioritize features that drive adoption. Your product should be easy to use and share, and simple to understand. It should fit seamlessly into your customer’s’ current lives (as much as possible, that is).

Most importantly, you can drive adoption by making your product more valuable in some way than the alternative. The difference doesn’t have to be economic. It could offer more social prestige or save time, but it has to be better in some way than whatever else is available.

Drive adoption of your product by building these important features into your product.

If you consider your ideal customer and develop your product so it’s likely to spread, you’ll position it nicely for quick adoption. The faster a product is adopted by earlier adopters, the quicker it will move through the remainder of potential users. The trick is to please the innovators first so they adopt quickly.

That isn’t the end of your struggle, however. SaaS products have another hurdle: customer retention. Retaining customers is a critical way to acquire new ones, as happy customers spread your message to their friends.

When you’re ready to focus on retention, get your invitation to Retained.

How to Build a Better Knowledge Base

Monday, October 31st, 2016

featured_how-to-build-a-better-knowledge-base

How close to 24/7 does your SaaS have team members available to answer queries or support tickets? If you’re like most, the answer is nowhere near 24/7 which means you better have a viable alternative to actual humans for answering important customer questions.

Your customer support can make or break a SaaS as far as encouraging retention of customers so it’s important you’ve put the effort into making their lives as easy as possible. They don’t want to search for how to get help; they want easy options which allow them to find answers quickly themselves.

A good knowledge base can provide a solution that both you and your customers can live with. The key though is that it must actually be useful and it must be easy to use.

Customers who click around forever or who come up with too many irrelevant hits for their typed searches will probably give up in frustration. How can you build a better knowledge base?

Which tools help create a good knowledge base? Check out our quick guide:

Assign an Owner

Let’s face it, some website knowledge bases you come across are a complete mess, rendering them ineffective to users. Some companies have taken a kind of scattered approach where they try to have their knowledge base come together “organically”, meaning no one takes real ownership of getting it together.

You’ll find that assigning one owner, even if the knowledge base is just one aspect of their job, will help to create a better experience. Having that one person as an owner can have advantages because:

  • They are familiar with the knowledge base and can ensure there is a cohesive system without any double-ups.
  • They can uphold standards for the content of the knowledge base.
  • They can monitor for issues and ensure that any new information is added to the knowledge base.
  • They can prioritize and assign content (there’s nothing to say they have to do it all themselves!).

The aim is that you create a resource that is actually useful, rather than a “we did it because we thought we should” kind of approach. That one person can be your gatekeeper.

Include the Right Content

Documenting your processes and best practices can seem like a real drag, but it’s one of those things that if you put the time in upfront, you can save a lot of time later on. Let’s say you have a particular “how to” question which is always coming up as a support ticket or customer service request; how much simpler would it be if you documented a clear, step-by-step answer to that question which you could direct people to in your knowledge base?

You’re busy with a million things running your business, but don’t underestimate the power of good documentation to take a load off your plate in the long run. Good knowledge bases have been shown to reduce support tickets and (as this Zendesk infographic shows), customers actually prefer self-service options over contacting a support agent.

zendesk-self-service

It’s not just customers who will find your knowledge base documentation helpful, it’s employees too. If you’re growing your team, a lot of your time can be taken up with answering questions or training people on your product. Creating good knowledge base information will help new employees to learn on their own.

You might wonder where to start and which content you should be creating. The simple answer is to start with the basics. Go through your software and explain each little piece and how it works. Keep track by having a master list of topics which need content created and assign to others where you can. You should also keep a list of customer support questions that come up — these may be prime candidates for new content or to update what you already have.

Structure Documentation Well

If you want your knowledge base to really be effective for users, you need to uphold standards for how you structure documentation. Everyone has had that experience where they need to follow instructions or learn about something through reading, but find that the formatting of the document or instructions are so bad that it’s a chore to get through. (Instructions for putting together furniture rate highly up there! Some are very illogical and certainly not user-friendly).

Your documentation for each item on your list should be logical and start with the natural starting point for the user. For most software examples, that would involve an instruction such as “from the home screen click on the X tab.” Never assume that someone will know — you need to write as though they are a brand new user and structure in logical steps.

Format and language should also be considered. Large, wordy paragraphs may put people off or lose them. Use formatting such as headers, bullet points and numbered lists to help break content up. With regard to language, be as plain as possible and use a consistent tone across your content.

Multimedia is a great idea to spice up your documentation and acknowledge that there are different learning styles among your users. For example, visual learners will appreciate images, gifs, video walkthroughs and screen shares. Having these different types of media will help reinforce the learning and reduce support questions later on.

zendesk-knowledge-base

Source: Zendesk

Make the System Simple

The structure of your knowledge base plays a big role in whether your customers will actually use it. There are a number of tools out there to help you build a good knowledge base system, but here are a few pointers as to what that actually means:

  • It should be easy to find and use language a user would expect. For example, via a “help” tab, “support center” or even simply “knowledge base.”
  • It should be well-organized. Users should find it is logical to search for what they need, such as by looking under categories for related topics.
  • Have a “getting started” section (or similar) near the top so that people can clearly see where to start with the basics and won’t be put off by your advanced content.
  • Make common questions prominent. You probably already know what those are, so highlight those with something like a “most popular” list.
  • It should have a good search function. We’ve all seen websites with terrible search functions. No matter what you type, you get two dozen unrelated hits, none of which answer what you were looking for. Test out your search function and make sure it comes up with logical responses, including related keywords where possible.

Promote Your Knowledge Base

Tell your users that your knowledge base is there! As part of onboarding, you should make it very clear to customers how and where they can get help, which should include directing them to your knowledge base.

As a bonus for creating all of that content, why not use some of it in “weekly tip” newsletters or even as quick tip social media posts? It’s a good way to maximize use of your content investment and remind customers about your knowledge base at the same time.

Need a good knowledge base tool? Check out some of our favorites:

Final Thoughts

As SaaS we often have limited time and resources, yet we need to ensure that we’re keeping our customers engaged and providing the support they need.

A big part of the customer experience is how well they feel supported and how easy you make it for them to get that support. Rather than waiting to get in touch with a representative or hear back from a support ticket, customers want self-service options and an effective knowledge base will serve that purpose.

Have a good plan and assign someone to be in charge of looking after your knowledge base. Create good, logical content using different mediums and promote its availability to your users. An effective knowledge base might take work, but it will save you even more in the long run.

SaaS Pricing: When Is The Price Right?

Monday, October 3rd, 2016

featured_saas-pricing-when-is-the-price-right

There is a lot to consider when it comes to pricing your SaaS. You need to figure out what the optimum pricing will be to attract the right customers and, of course, keep your business afloat!

The short answer to the question “when is the price right?” is; when you are able to bring on board your ideal customers and sustainably grow your business.

Unfortunately, while the answer sounds simple, the practice of getting there is far from it. There is no universal “formula”, nor is their any rule saying that once you’ve priced “right” the first time, you’re safe from having to re-evaluate your pricing.

Is your SaaS underpriced? Grab our quick questionnaire to find out:

Let’s take a look at considerations for your SaaS pricing:

Charge Early?

There are so many SaaS startups out there that do not charge their customers from the get-go. Sure, you’re looking to generate buzz, gather feedback and just get some users on board, but you’re opening yourself up to possible problems by not charging. For example…

How do you know that you’ve nailed product/market fit until people actually pay you for it?

We suggest that you charge early and ensure you have a product people will hand over money for. As SaaS founder and entrepreneur Jason Lemkin states: “if you don’t charge, you have no idea what people will actually pay for.”

He also points out that if you’re not charging, that early feedback you get may be entirely useless to you. How do you know those people are really “customers” until they’re willing to pay? Plenty of people sign up to something that’s free just because “free” is the right price to them.  You might have impressive-looking numbers signed on, but those really are just vanity metrics if those people aren’t handing over cash.

If you’re going to need to experiment with pricing (as many SaaS do), early on is the best time to do so. Steli Efti suggests being bold with price experiments early on. Most SaaS are their own worst “complainer” when it comes to pricing, often envisaging that “no one will want to pay that much.” What if they do?

The other thing about free is the perception it can create. Without a price tag, there’s a good chance people won’t see value in your product – a point which leads us nicely into a look at value-based pricing.

Value-Based Pricing

Value-based pricing is about coming up with a price that your customer is willing to pay. As Marketing Donut discuss, there’s no right or wrong answer and it’s a lot to do with the perception of the customer. Why do we pay more for a brand name over a home brand?

While you’re not selling groceries, your SaaS has to figure out what “value” means to your target customers too. As Lincoln Murphy says, your SaaS pricing model should be built around what the customer values which means staying away from any “commodity” metrics like storage.

Your customers only care about what’s in it for them, not considerations like how much it cost you to develop certain features. This means that the place to start with any SaaS pricing is always going to be your market, that “what’s in it for the customer.” Murphy further states: “if you base your pricing on something people find no value in, your value proposition will not be aligned with their value perception.”

Here are a few considerations that should go into value-based pricing:

  • What customer do you want to attract?
  • Where do you want to position yourself in the market?
  • Are you priced to achieve goals for the long-term value/retention of the customer?
  • What unique value do you provide that customers are willing to pay for?
  • How do you differentiate any tiers? Are those things perceived to be valuable by customers?

As we indicated earlier, you might find you need to experiment early on to find your sweet spot with pricing. The key to making it work and retaining paying customers for the long-term is to really be delivering value as it is perceived by the customer. People will pay for something which they comprehend unique value from, but will easily switch to a competitor if that is no longer the case.

What About My Competitors?

The temptation can often be for SaaS to put a lot of focus on what their competitors are doing when it comes to deciding on pricing. If you’re simply matching competitors, you’re looking at a market-based pricing model and this is often unsustainable.

How do you differentiate yourself from the rest? If it’s not based on value, you’re another “me too” SaaS and you may find this doesn’t bode well for your longevity.

What About Pricing Structure?

Good question, and this is something you may need to experiment with before you find the pricing which is “right.” Usually, SaaS are working off some kind of tier-based pricing structure, so you need to determine what those tiers look like and how they are valuable to the customer.

rsz_5

Here are some common strategies and thoughts on them:

User-based – Increasing the number of users allowed per tier is a frequent tactic of SaaS. This can work well for getting into companies, but Lincoln Murphy pointed out a flaw where it can lead to the old-fashioned view of “shelfware”, where a company has too much software sitting on a shelf. For example, if the company needs 3 users instead of the 2 users available on their current tier, they might go to the next tier which allows 7 users. They only need 3 so those extra 4 might be seen as “shelfware.”

Storage space – Apps with storage associated often offer extra for higher tiers. Again, this is very much going to depend on how valuable that is to users. You could end up with another case of perceived “shelfware” if there is a big leap in storage space that isn’t really needed, for example.

Features-based – Usually, this means customers get more features available in return for upgrading. For example, an invoice app might offer customization instead of standard, software-branded invoices. Getting this right involves a lot of research. What features do your customers care enough about to upgrade for? What do they see as valuable?

Freemium – Plenty of SaaS offer a certain set of features free, but more to customers who upgrade. This could even take the form of more storage space or users allowed to collaborate. The key to this working lies in delivering enough value at the freemium level that your customers are hooked, however, not so many features for free that they don’t upgrade.

Hubstaff illustrated this point well when they discussed their own mistake in offering a free plan. They found that free users simply brought more free users, then collectively they took up a lot of support time. One of their major conclusions? If someone values a product, they’ll pay for it. When they changed their freemium plan to $15/month, they didn’t lose all their users, they now have people happy to pay for the value they provide.

Could your SaaS be underpriced? Find out with our quick questionnaire:

Final Thoughts

There is no set “rule” or formula to follow when pricing your SaaS, however determining what value looks like to your customers and pricing based on that value is a better bet when it comes to a sustainable strategy.

If you use market-based values to come to your pricing decisions, the chances are you aren’t differentiating what you offer based on value to the customer at all. Also, you might find yourself dragged into a price war which is only heading in one direction…

Consider who your target customer is and what will really mean value to them long term. Finally, don’t be afraid to charge early and experiment with your pricing to find what works.

5 Strategies For Getting Customer Upgrades

Monday, June 13th, 2016

FEATURED_Strategies-For-Getting-Customer-Upgrades

Your SaaS probably spends a lot of time trying to get new sign-ups, right? Obviously getting people through the door is an important activity, but even more important is what happens once you have them there.

Do you have robust strategies for encouraging your customers to upgrade?

If you’re not getting the upgrades, you’re probably spending a lot of money to see people either exit, or linger on your freemium tier.

It makes sense to do what you can to boost the lifetime value of the customer and ensure you keep them around for longer. After all, it costs much more to acquire a new customer than to hang on to the old ones.

So what can you do? We’ve got a few strategies to help encourage those customer upgrades.

Find out what other SaaS are doing to get upgrades. Grab our tipsheet here.

#1. Master The “Soft Sell”

“Buy our product” hardly ever works unless you’re selling ice cream in a heatwave. This is where the “soft sell” comes in. If you’ve successfully got people signed up to your free trial or freemium tier, the next step is to ensure activation happens.

Activation means that they’ve started to use your software and to realize value from it. It means you’re being proactive about customer success and ensuring that new signups get through key milestones in order to see that all-important value.

Why? Because the soft sell means that customers know and love your product first, even before it’s time to upgrade.

Dropbox is often used as an example, mainly because they are a SaaS who do the soft sell so well. There is no immediate insistence for an upgrade, though most new users will quickly find that they need more space.

Instead, Dropbox has provided users with several ways to earn free space, including “take a tour of Dropbox” – a genius way to ensure new customers know where everything is and how it works.

One of the best ways to work on that soft sell is to ensure that new signups actually are using your product and know how to do so to achieve what they’re looking for. The idea is that you want to quickly become indispensable to them, so that upgrading is simply a natural next step for them.

rsz_dropbox-free-space

#2. Track Usage

When is the perfect time to ask users to upgrade? Of course the answer is going to vary between SaaS, but tracking usage will provide you with a better idea of the optimum time to ask.

Say your product has some kind of built-in limit (for example, Buffer allows ten scheduled social media posts on their free plan). If you are monitoring usage and note that the customer is reaching limits of your free trial or freemium plan, that would be a good time to trigger an email which asks for the upgrade.

You could also trigger emails based on usage – where features which are only available with an upgrade are the logical next step for the customer. Using Buffer again as an example, their analytics tracking is not available on the free or tier two (“Awesome”) plans. Yet for someone who is using them a lot to schedule social media posts for business, analytics may be the next most logical step to ensure they’re optimizing their social media posts.

Tracking usage is about being relevant to the customer. Sure, you could blanket email everyone who is sitting on a certain level and ask for an upgrade. But, segmenting your audience so that only highly relevant messages are sent is going to be much more effective.

#3. Improve Your Activation Funnel

This is about looking at your activation funnel holistically – are there any speed-bumps which need smoothing out? According to Intercom, 40 – 60% of users who sign up for a free trial with your SaaS will use the software once, then never come back. Ouch.

saas-activation

Source: Intercom

Obviously, you’re never going to get the upgrade if people haven’t activated (AKA seen some value from your product) in the first place.

One method suggested by Kissmetrics to improve your activation funnel is to actually map out what your ideal customer flow looks like. This way, you can very quickly identify any signups who are off-track and reach out to offer assistance.

For example, here’s a flow Kissmetrics mentions for Airbrake:

  1. Signs up for Airbrake.
  2. Indicates which programming language they use.
  3. Installs and deploys a few lines of code in their app.
  4. Captures their first error.
  5. Marks their first error as resolved in their dashboard.

Once you’ve mapped out what your ideal flow looks like, you can also easily identify if there is any particular step where people are falling off. This is where you will want to investigate why – is there something “difficult” about the way it’s set up? Smoothing the activation journey will boost your odds of the customer seeing value and wanting your upgrade.

#4. Pricing Model

Pricing is often a painstaking thought process for SaaS. You don’t want to go so low that you lower the perceived value of your product, but you don’t want to price your ideal customers out at the same time.

When it comes to getting upgrades, the key is to be able to intelligently align user experience with your pricing. What extra features are people willing to pay for? How significantly is their experienced improved by moving to a paid tier?

As Lincoln Murphy points out, pricing really needs to be heavily tied in with value. What your competitors charge may be a consideration, but it shouldn’t be your main consideration. Assuming that you’ve built something which uniquely solves a problem better than others, the value you deliver to customers should be the main pricing consideration.

#5. Features To Encourage Upgrades

Of course features are heavily tied with pricing and with the likelihood that the customer will upgrade. There are a few different schools of thought when it comes to upgrades and SaaS features:

  • You could give them full access to your product on a limited-time free trial. Do your best to ensure that customers fully utilize the free trial and understand and use the various features available to them. Your aim is to have become indispensable to them by the end of the trial so that they are compelled to upgrade.
  • You could limit core functionality at the freemium level. For example, Dropbox limits storage space and Buffer limits the number of social media accounts connected as well as the number of posts which can be scheduled at once. Again, the aim is to give customers enough of a taste of your product features that they simply must upgrade to get unlimited (or less limited) access.
  • You could keep some features specifically for tier upgrades. This is one to be careful about, because how will the customer understand the value of the withheld features? If you take this option, you’re going to need very clear, accessible education options to let customers know (emails, videos, etc.). You’re also going to need to have tested and clearly understood which feature upgrades will be of value to customers, otherwise people will simply remain on the next tier down.
Find out what other SaaS are doing to get upgrades. Grab our tipsheet here.

Final Thoughts

Getting the customer to upgrade is usually the ultimate goal of a SaaS. Hopefully, once they’ve upgraded, you have a devoted user and have increased average customer lifetime value.

There are a number of ways you could encourage customers to upgrade, but one of the critical steps is ensuring that they see value from your product first. People don’t tend to impulse buy a SaaS product – they need to see themselves achieving some kind of goals from them.

Look at your pricing model and features, improve your activation funnel, and track usage so that you can send timely, relevant offers. It is often the “soft sell” which will achieve the upgrade.