May 12, 2019

Offer Affiliate Programs

5. Referrals  >  Offer Affiliate Programs

Offer affiliate programs to reduce SaaS churn

The affiliate program works best to increase revenue and to acquire new customers for your app. The affiliates get paid whenever they invite someone to use your app. It’s a perfect example of offering a cash incentive.

● PERSUASION

Freshbooks

Freshbooks has a simple affiliate program that offers a commission on free signups.

Getresponse

GetResponse offers two different types of commission to its affiliates for more effectiveness.

Convertkit

Convertkit offers a flat 30% commission to its affiliates.

How to use the technique

  • Create an affiliate program for your app. Plan it. Set goals. Allocate budget. Plan estimated revenue, CAC, and LTV. Identify personas for targeting. Do the math. If you don’t know how to do it, grab our free churn optimization framework for details. 
  • Set a realistic commission without increasing the price of your software. Offer a decent commission to attract affiliates.
  • Promote your affiliate program. Reach out to top affiliates. Submit your program on affiliate networks. Use your networks. Send emails to customers. Promotion will make your affiliate program successful.
  • Target affiliates in your industry. Target influencers and invite them for partnership. Target micro influencers.
  • Give free access to your app so affiliates can try it. Start with your customers. Enroll them to your affiliate program. Give free (limited or unlimited) access to affiliates so they get to know your app better.
  • Build a network of affiliates. Engage with them. Send newsletter. Run an affiliate contest. Stay in touch with them.
  • Manage and improve your program. Use an affiliate tool to manage the affiliate program. Analyze and tweak your program based on feedback and performance. Use our free actionable guide for more details on testing and tweaking. 

Mistakes to avoid

  • Mixing affiliate and referral programs. An affiliate program is different than a referral program. You can offer both but these aren’t the same. Affiliates don’t have to be your customers necessarily. Don’t replace your referral program with the affiliate program.
  • Not promoting your affiliate program religiously. It’s essential to promote your affiliate program to maximize its reach. Make it visible to affiliates.

Research evidence

The Affiliate Marketing Report by Business Insider Intelligence revealed that affiliate marketing drives 16% of all US ecommerce orders (which is same as email marketing). Organic search drives 21% of all online orders while paid ads drive 20%. This reveals the importance of affiliate marketing in generating online sales.

16%

Affiliate marketing drives 16% of all US ecommerce orders (which is same as email marketing). Organic search drives 21% of all online orders while paid ads drive 20%.


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May 12, 2019

Give A Discount On Premium

5. Referrals  >  Give A Discount On Premium

Give a discount on premium in your referral program to reduce SaaS churn

Nothing works better than offering a discount to your customers. Use your referral program to increase retention by giving an instant discount on the premium plan. This will reduce churn and you’ll be able to increase LTV.

● PERSUASION

Typeform

Typeform allows its users to save up to 100% on your PRO, PRO+1, PRO+3 or PRO+5 subscriptions by inviting referrals.

Todoist

Todoist offers a smart premium discount. The referred users get two free months on premium and once they pay for premium, the customer who referred gets two free months.

Shoeboxed

ShoeBoxed offers up to 100% discount on the premium plan with it’s refer a friend program.

How to use the technique

  • Choose discount that won’t hurt revenue and LTV. Do the math. Check the history and finalize a suitable discount that you can afford to give on premium without hurting cashflow. Our free churn optimization framework is your best bet to get more info. 
  • Percentage vs. fixed amount. Offer percentage discount for small amounts (e.g. $2.5, $5, etc.) and amount when it’s of high value (e.g. $50, $100, etc.). Make discount noticeable even if it’s negligible.
  • Set discount limits. How much discount to offer per customer per month? Setting a limit is essential to stop cashflow from ruining. Set an upper limit for the discount.
  • Set expiry for discount. For customers who aren’t on premium yet but they received a discount, discount expiry will persuade them to switch to premium to avail discount.
  • Explain discount terms and conditions clearly on the landing page. It’s best to keep it simple and clear. Share limits and caps with your customers to avoid hiccups.
  • Remind customers who are not on premium yet. Send emails. Convince them to avail discount by switching to premium. Share the benefits of upgrading their plan.
  • Analyze and improve your referral program. What type of bonus works best? Are limits irritating customers? Test and tweak your program’s features and variables for optimization. Don’t know how to do it? Read our free actionable guide

Mistakes to avoid

  • Not explaining the benefits of the premium plan. Don’t make this mistake. It’s not just about the discount rather it’s about customer retention and LTV. Use discount as a base to promote the premium plan.
  • Setting a limit on the number of invitations per customers. Don’t limit the number of invitations rather limit the discount percentage that can be availed per month. Let customers utilize the remaining discount next month. This works best.

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Research evidence

Jonathan Krieger conducted a study on referral marketing best practices. The findings revealed that non-cash incentives are as much as 24% better than cash incentives in terms of enhancing referral performance. Non-cash incentives work best at engaging, retaining, reducing churn, and increasing repeat purchases.

24%

Non-cash incentives are as much as 24% better than cash incentives in terms of enhancing referral performance.


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May 12, 2019

Offer Limited App Resources

5. Referrals  >  Offer Limited In-App Resources

Offer limited in-app resources in your referral program to reduce SaaS churn

Offering limited in-app resources instead of cash (or credit) incentives is a great way to decrease the depreciation effect discounts have on a perceived product value. This will boost engagement and increase revenue in the long-run.

● PERSUASION

WorldOfWarCraft

World Of Warcraft gives a lot of in-app resources (e.g. exclusive pets) to users who invite their friends.

Dropbox

Dropbox has a perfect referral program where customers get free space (a limited resource) for inviting friends.

Sugarsync

Sugarsync offers free space to both the parties, which is an app resource that’s valuable.

How to use the technique

  • Select bonus and resource for the referral program. The best technique is to use behavioral analysis to figure out what resource customers use (and value) most. Offer a bonus on the same. The resource needs to be valuable. Read more in our free churn optimization framework
  • Use data to find the right resource that will motivate customers to participate in your referral program. Better yet, conduct a survey and ask customers.
  • Make sure the resource is valuable. If it’s already freely available in your app, it won’t work. Give bonus on your app’s core feature that’s only available premium customers.
  • Make it exclusive. Tell customers the bonus they will get is exclusive. Share its benefits. Show how useful it is.
  • Share bonus details. Clearly explain and share all the details and terms of the bonus and resource that customers will receive.
  • Tweak and improve. Finding the right limited and valuable resource is challenging. You need to test multiple variations. Grab our free guide on testing and analysis.

Mistakes to avoid

  • Giving bonuses on an invaluable resource. It’s all about the value of the resource. Is it really worth trying? If the resource is merely an add-on or an invaluable extension, it won’t motivate customers. Focus on value.
  • Not highlighting the benefits of the resource. If it’s a premium resource, it’s highly likely that a lot of customers won’t have access to it. So clearly explain its benefits in the referral program.

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Research evidence

The State of Business Customer Referral Program by Amplifinity reported that B2B customers engage with peers and help them decide what to buy. As much as 80% of buying decisions in the B2B sector are influenced by peers. Giving customers access to bonuses will persuade them to not only use your app but refer it to friends and colleagues.

80%

As much as 80% of buying decisions in the B2B sector are influenced by peers (colleagues, friends, and family).


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May 12, 2019

Offer Reward Credits

5. Referrals  >  Offer Reward Credits

Offer reward credits to reduce SaaS churn

Offering reward points is a perfect way to increase repeat purchase. When customers get credits in their account, they're more likely to use them and stick with your app. The same is true for referred users.

● PERSUASION

Airbnb

Airbnb gives credit to customers and referred users which can only be redeemed in-app.

iPage

iPage has done a great job of defining credit in terms of dollar value.

Mailerlite

Mailerlite has as smart two-way credit reward where customers get the reward when the referral upgrades.

How to use the technique

  • Create a reward point system. Define each credit/point worth? How it will be earned and redeemed? How it will be integrated into the referral program? Develop a complete system. Get our free churn optimization framework for more information. 
  • Decide with a suitable value of a single point/credit. The best practice is to link it to the cash value. For instance, one point equals a dollar. This makes the calculation easy for customers.
  • Get feedback from customers about the reward system. Get suggestions for improvements. If your customers don’t like it or don’t consider points to be valuable, they won’t participate in the referral program.
  • Gamify the experience. Allow customers to earn points through multiple actions (including inviting a friend). Enhance the value of the points with gamification.
  • Simplify the reward system. Keep it simple yet attractive. It should be easy enough that your customers could explain it to friends without hesitation.
  • Share and explain it. Create a page on your website to explain the reward system. Explain it in-app. Share its details via email and social media.
  • Analyze and improve. Is your reward system motivating enough? Is it working? Are your customers participating in the program? Analyze data and tweak your program for improvements. Read our free guide for more details.

Mistakes to avoid

  • Not making it clear for referred users. Don’t make it challenging for new people to understand your point system. Make it clear to them before they sign up. Keep it clear.
  • Not defining credit value in terms of money. Define credit/point in terms of its dollar value so customers can make sense of it.

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Research evidence

A Nielsen Harris Poll conducted for Ambassador found that 88% of Americans say that they would like to receive some kind of reward for sharing a product or recommending it on the social network. The reward, according to respondents, could be money, points, early access, or something else, but it has to be there.

88%

88% of Americans say that they would like to receive some kind of reward for sharing a product or recommending it on the social network


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Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.

May 12, 2019

Provide Two-Way Benefits

5. Referrals  >  Provide Two-Way Benefits

Provide two-way benefits in your referral program to reduce SaaS churn

Offer reward to both referral and referrer. This will motivate your current customers to invite several new people. Referrals will complete the signup and will follow program guidelines to get reward quickly.

● PERSUASION

Evernote

EquityFeed

LastPass

How to use the technique

  • Choose an appropriate reward. Discount on upgrade, percentage off, gift voucher, or anything else. Link it to your customer needs. Get feedback from customers and ask what type of reward will excite them. Grab our free churn optimization framework for more details.
  • Decide when to disperse reward. Giving it too early (or immediately) will increase churn. Your customers will exploit your program for fake referrals. Decide with caution.
  • Make it easy-to-achieve. The reward needs to be challenging yet achievable. Don’t make it too hard to achieve. Don’t delay it.
  • Link reward to actions. For instance, when a referral completes a task or converts to a paid plan. This might reduce conversions but it will boost engagement and will reduce churn in the long-run.
  • Communicate it. What reward two parties will get, how they will get it, and when it will be dispersed need to be clearly communicated.
  • Tweak and analyze rewards. If it isn’t motivating customers to take action, change it. Track performance of different two-way rewards for conversion optimization. Get free access to our PDF for step-by-step instructions.

Mistakes to avoid

  • Make them earn the reward. It’s a big mistake that you should avoid. Don’t send rewards unless you’re sure that the referral will stick and won’t churn.
  • Unclear referral program description. This is one reason why your referral program will fail to deliver. Set expectations without hype. State all terms on the landing page to avoid ambiguities.

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Research evidence

Bressan and Crippa published a research paper on the role of dopamine in reward and pleasure. They found that dopamine is released when humans expect a reward which then motivates them to take action to get the reward. This is what exactly you should do with your referral program: Offer reward to both the parties for motivation.

Dope

Dopamine is released when humans expect a reward which then motivates them to take action to get the reward.


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May 11, 2019

Engage On Social Media

3. Retention  >  Engage Customers On Social Media

Engage customers on social media to reduce SaaS churn

Utilize the power of social media to build a powerful relationship with your customers. Engaging with customers on social media is a perfect approach to reducing churn and creating loyal customers.

● PERSUASION

Salesforce

Salesforce is actively involved in social listening and responds to customer query right away on Twitter.

Hubspot

HubSpot posts relevant content on LinkedIn to engage with its ideal customers.

Grammarly

Grammarly publishes relevant quotes on its Facebook account for engagement with average likes over 2K per post.

How to use the technique

  • Use buyer personas to choose appropriate social platforms. Be on social networks where your ideal customers are. If your ideal customers only use Instagram, be on Instagram. Grab our free churn optimization framework to find out more. 
  • Socialize. Social media is all about socializing. Focus on long-term growth. Engage customers by building a relationship with them.
  • Be active on social networks. Have a social media manager handle your accounts. Respond to customer messages, queries, feedback, and mentions without any delay.
  • Offer customer support on social media. This is what customers expect. They use social media to interact and engage with their favorite brands. Use chatbots to respond quickly to common customer queries.
  • Publish informative and interesting content regularly. Use a scheduling app. Publish fresh posts on a daily basis. Avoid promotional content.
  • Publish video content. Videos are far more engaging than images and text. Post high quality informative videos on social networks for engagement and reducing churn.
  • Get feedback for improvement. Collect data from customers who accept the upsell offer and those who don’t. Use feedback for improving your offer, pitch, and other issues. Focus on conversion optimization. Get access to our free churn optimization framework on conversion optimization.

Mistakes to avoid

  • Publishing promotional content. It’s OK to promote your app and features every now and then but using social media solely for the purpose of selling won’t work.
  • Poor social listening. Not monitoring brand mentions, customer feedback, and not participating in discussions will impact your business negatively. Active social listening is the recommended approach.

Research evidence

According to Sprout Social Index, social media is the top choice of consumers for customer support. When a brand connects with its consumers on social media, 70% of people are more likely to use that brand’s products, 65% of people said that it increases their loyalty with the brand, and 75% of consumers are more likely to share a positive experience with the brand on their profile. That’s how crucial social media is for any SaaS business.

70%

70% of customers that have been engaged on social platforms are more likely to use that brand's products again in the future.


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Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.

May 11, 2019

Upsell Higher Plans

3. Retention  >  Upsell Higher Plans

Upsell higher plans to reduce SaaS churn

Selling to existing customers is easier and cost-effective. Upselling higher plans and upgrades to current customers is the best technique to increase revenue, retention, and revenue – and it helps you reduce churn because customers who upgrade are more likely to stay.

● PERSUASION

Qualaroo

15Five

CloudApp

How to use the technique

  • Use customer history for offering upsells. For instance, sending an upsell offer when a customer completes a milestone or when a customer refers your product to a friend. Use data and behavioral analysis for pitching upsell offers at the right time. We have crafted this amazing free churn optimization framework. where you can find more details.
  • Send emails with upsell offers. Again, use segmentation to send upgrade offers to appropriate customers. Add prominent CTA, highlight benefits of the upgrade, and share customer testimonials.
  • Use in-app upsell notifications. This works great for reducing churn and improving engagement. You can lock advanced features, notify customers to upgrade so they can unlock them.
  • Offer a free trial of the upgraded version. Upgrading plan for free is a great way to retain customers. Let customers explore the upgraded version and once they get value from it, they will switch to it.
  • Share the benefits of the upsell. Make it appealing. Use emotional triggers. Share testimonials. Show how they will get value.
  • Get feedback for improvement. Collect data from customers who accept the upsell offer and those who don’t. Use feedback for improving your offer, pitch, and other issues. Focus on conversion optimization. Get access to our free churn optimization framework on conversion optimization.

Mistakes to avoid

  • Upselling to unhappy customers will make them churn. Don’t do it. Use data for upselling and only target happy customers.
  • Upselling at the wrong time. Upselling to a customer who has an open ticket with customer support isn’t a good idea. Choose an appropriate time for pitching the upsell to boost conversions.

Research evidence

A survey conducted by Pacific Crest and For Entrepreneurs on SaaS growth rates, CAC, churn rate, and other metrics revealed that fastest growing SaaS companies rely more on upsells and a major percentage of their revenue comes from existing customers who opt for upsells. The faster a customer moves from free trial to paid customer to repeat customer, the likelihood of that customer sticking with your app increases significantly.

Upsell

Fastest growing SaaS companies rely more on upsells and a major percentage of their revenue comes from existing customers who opt for upsells


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Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.

May 11, 2019

Send Educational Blog-Posts

3. Retention  >  Send Educational Blog-Posts

Send educational blog-posts to reduce SaaS churn

When customers are able to get value from your app, they're least likely to churn. Educational blog posts that show them how to get things done and achieve success with your app is a great technique for delivering value.

● PERSUASION

Dropbox

Dropbox sends a personalized email to inactive users and share a link to a tour of their product.

Groove

Groove creates a post on new features and intimates its users through a simple email.

Outbrain

Outbrain sends a great introductory email with links to tutorials where users can learn more.

How to use the technique

  • Use personas to craft relevant blog posts. What type of content your ideal customers prefer? Is it how-to articles, in-depth guides, case studies, or any other type of content? Create relevant blog posts targeting specific buyer personas. Not sure how to do it? Read our free churn optimization framework
  • Share new features. Create a blog post on the release of new features. Share its link with users so they can start using it immediately.
  • Share blog posts with customers via email. Don’t send all blog posts to all the customers. Focus on personalization. Only send blog posts to relevant customers who are most likely to read and engage.
  • Segment users and target appropriately with relevant content. Send how-to guides to active users and case studies to inactive users. Segmentation makes your emails personalized which boosts engagement and reduces churn.
  • Set goals for each blog post you publish. And ensure your email has the same goal. Use prominent CTAs to achieve the goal.
  • Educate and help instead of selling. Handpick educational and informative blog posts and include them in the email sequence.
  • Send one email a week. Don’t spam. Even if you’re sending educational blog posts, don’t overdo. Send a short email with summaries of blog posts published last week.
  • Track performance of individual blog posts. It will help you understand what type of content converts better. Use UTM codes and goal tracking. Refer to our free churn optimization framework for more details.

Mistakes to avoid

  • Sending one email to all the customers. Not personalizing emails and blog posts to the user’s current status is a big mistake. Link blog posts to customer preferences to reduce churn.
  • Sending too many emails. Even if you’re sending educational content with an intention to help, too much of it isn’t recommended. Stick with one email per week rule.

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Research evidence

HubSpot collected data from 13K+ businesses on how often they blog. The results revealed businesses that publish 16+ blog posts a month receive 3.5x more traffic than businesses that publish 4 or fewer posts a month. And businesses that blog 11+ times a month generate 4x more leads than businesses that blog 4-5 times a month. Blogging is a perfect way to educate and engage readers.

3.5x

Businesses that publish 16+ blog posts a month receive 3.5x more traffic than businesses that publish 4 or fewer posts a month.


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Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.

May 11, 2019

Free Upgrade To A Higher Tier

3. Retention  >  Free Upgrade To A Higher Tier

Provide a free upgrade to a higher tier to reduce SaaS churn

Upgrading customer’s plans and moving them to a better plan without increasing price is an awesome technique to reduce churn, increase engagement, and retain customers.

● PERSUASION

Drip

Drip has no free trial but it lets users get access to a premium plan for free. Users get to enjoy premium plan at no cost.

Buzzsumo

BuzzSumo has no free plan but users can enjoy any plan for a month before paying for it.

Canva

Canva allows its customers to use Canva for work free for 30 days.

How to use the technique

  • Develop a strategy with clear goals. Why exactly you need to offer free upgrades? Is it for engagement, brand awareness, loyalty, churn reduction, future cashflow, etc.? Better conduct a survey and ask existing customers as to what they expect. Read our free churn optimization framework on how to conduct research. 
  • Select customers for the free upgrade based on a set criterion. For example, engagement, in-app activity, usage level, volume, etc. Use health score and pick customers with the highest or lowest health score.
  • Share details via an email. Explain the free upgrade, the benefits it comes with, the duration of the upgrade, and what you expect them to do next (try certain features).
  • Help them get more value from the free upgrade. Share tutorials and help guides to help them get value from the upgrade quickly. Assign an account manager for assistance. This works best for retention.
  • Let customers use the upgraded plan for some time. The free upgrade should last for a few good months so that customers can get value from the upgrade. Three months is a good time for the free upgrade.
  • Track performance. Are customers using features of the upgrade? Are they enjoying it? Are customers getting used to free upgrade? Have you separated free-riders from real customers? Make them used to the upgrade. Read our free churn optimization framework to find out more on how to do it practically.

Mistakes to avoid

  • Not setting clear rules. Without rules, free upgrades can backfire. If there is a duration for the free upgrade, clearly communicate it. Don’t hide anything. Give customers a freehand.
  • Degradation without prior intimation. If the plan will be downgraded after a few months and you already communicated it, send multiple reminders prior to degradation. The idea is to let customers switch permanently to the new plan.

FREE PDF

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We use this exact framework to get solid returns for Foundkit clients.

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Research evidence

Valarie Zeithaml published an article in the Journal of Marketing on consumer’s perceptions of price, quality, and value of a product. It was found that consumers consider price, quality, and value in the exact same order when making a purchase decision. Price is the first thing that a consumer will give importance to over quality and value. Even if a customer perceives a product to be of high quality and value, the high perceived price will prove to be a barrier.

$$$

Price is the first thing that a consumer will give importance to over quality and value. Even if a customer perceives a product to be of high quality and value, the high perceived price will prove to be a barrier.


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Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.

May 11, 2019

Re-engage Inactive Users

3. Retention  >  Re-engage Inactive Users

Re-engage inactive users to reduce SaaS churn

Re-engaging inactive users is the only technique that will reduce churn. Identifying inactive users and figuring out what made them inactive – and taking appropriate proactive measures to bring them back is the name of the game.

● PERSUASION

Animoto

Animoto sends a nice re-engagement email asking users to update their email preferences.

Grammarly

Grammarly sends re-engagement emails to inactive customers who haven’t used their app for a good number of days.

Groove

Groove sends an open-ended question via email to users who cancel their accounts.

How to use the technique

  • Define who is an inactive user. How does your SaaS define inactive users? Someone who hasn’t logged in for a week, someone who hasn’t used any app feature for 10 days, someone who doesn’t open emails, etc. It is best to segment inactive users based on different inactivity variables and treat each segment differently. Refer to our free churn optimization framework for more details.
  • Identify the reason for inactivity. Cure the cause, not the symptom. Use data and behavioral analysis to understand the reason. Get over the phone for an interview with the inactive customers to dig deep.
  • Manually onboard users again who have been inactive for a good number of days. It’s highly likely that they didn’t get value from your app. This will help reducing churn.
  • Send personalized emails. Send personalized emails for re-engagement to different inactive segments. Emails should be relevant to the reasons why a segment is inactive.
  • Help them get value from your app. Having paying inactive customers mean they haven’t got the value from your app (what they expected). Re-engage them by helping them get their problem solved.
  • Assign an account manager. Assign account managers to inactive users to reduce churn. These managers should help and guide users to get value from your app.
  • Get feedback and improve. Ask inactive users to share their feedback. Make appropriate changes on the basis of feedback. You can read more in our free churn optimization framework

Mistakes to avoid

  • Not taking timely action. Be proactive. Detect inactivity early and respond with an appropriate re-engagement strategy. Monitor customers constantly for inactivity.
  • Offering discount to inactive customers is a bad move. They're already paying you so it’s not about the money. They're unable to get value or make your app work for them. Help them.

Research evidence

Rajkumar Venkatesan in his article, published in the Journal of the Academy of Marketing Science, discussed how to execute customer engagement strategy. Customer engagement requires a systematic collection of data and information during pre-purchase, purchase, and post-purchase phases. The more you know about your customers, the easier it gets to create an engagement strategy.

1-2-3

Customer engagement requires a systematic collection of data and information during pre-purchase, purchase, and post-purchase phases.


Related techniques SEE ALL THE TECHNIQUES >

Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.