3. Retention  >  Create A Loyalty Program

Create a loyalty program to reduce SaaS churn

A loyalty program can benefit your SaaS in several ways: Increase in revenue, repeat customers, churn reduction, engagement, and customer satisfaction. It’s a great way to build a community of loyal and satisfied customers.



Swarm Perks [https://www.theverge.com/2016/6/7/11870810/swarm-perks-app-rewards-update] gives interesting and useful reward to customers based on their location.z


Dropbox grew 3900% in 15 months with its customer loyalty program.


Swarm Perks gives interesting and useful reward to customers based on their location.

How to use the technique

  • Analyze and get feedback from current customers. Use data to figure out how your current customers use your app, what challenges they have, what’s your profit margin, etc. Get feedback from customers to understand what rewards they prefer, what features they like, how much they’d pay for an upgraded version, etc. Not sure how to collect data? Get this free guide. Refer to our free churn optimization framework to learn more. 
  • Devise a point and reward system. It has to be simple yet challenging. Link point system to usage or other crucial metrics. Rewards should be interesting and meaningful.
  • Create customer selection criterion. Is your loyalty program for all customers or do they have to qualify for it based on a criterion such as usage, volume, payment, engagement, etc.?
  • Integrate into CRM. It will make your loyalty program systematic and meaningful. You'll be in a better position to set realistic goals.
  • Communicate and promote your loyalty program. Share on social media, emails, and send notifications. Add a CTA within the software. Create a support document to explain the program.
  • Measure performance. Has it reduced churn? Are rewards motivating customers? What buyer persona participated actively? The loyalty program should achieve its goals. If it doesn’t, revise and improve it. Read this free guide for step-by-step instructions.

Mistakes to avoid

  • Making it complex. Do customers have to spend time to learn and understand your loyalty program? If so, it won’t work. Change it. Make it simple. Use terms, scoring system, and rewards your customers are aware of.
  • Poor rewards that don’t motivate customers. The rewards shouldn’t be meaningless. Nothing works better than monetary rewards (free subscription, free upgrade, gift cards, etc.).


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Research evidence

Frederick Reichheld conducted research on how loyal customers help businesses save cost. The findings revealed that increasing customer retention by 5% will increase profits by 25%-95%. The reason is simple: Return customers don’t cost a penny to your business. The customer acquisition cost has already been incurred and as they buy again, it reduces operating cost significantly.


Increasing customer retention by 5% will increase profits by 25%-95%. The reason is simple: Return customers don’t cost a penny to your business.

Related techniques SEE ALL THE TECHNIQUES >


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