Explained: SaaS Customer Lifecycle to grow your business
Life is marked by cycles in all aspects of it. If you look closely enough, you'll notice that everything, from nature to business, has a logical sequence, and your SaaS business is no exception. In order for your SaaS business to operate, many different cycles must be in sync. SaaS customer lifecycle is an example of such a cycle.
Customer Lifecycle in SaaS
Understanding the SaaS customer lifecycle is essential before we can explore how to leverage it. What is it, exactly? What is the procedure? What's more, why does it matter?
Customers' relationships with you follow a specific path, which is outlined in this lifecycle. It tracks each step of one's journey from visitor to prospect to customer.
You can get a comprehensive view of your customer's engagement with your product by tracking their journey through the customer lifecycle. This includes what pulls them in, what propels them through the sales pipeline, and the manner in which the connection between the business and the customer is established.
Why is it important to understand the SaaS Customer Lifecycle?
Understanding your customer's lifecycle can assist you in optimising your business operations. For example, optimising the SaaS customer lifecycle enables you to cross-sell and upgrade your SaaS product more effectively. As a consequence, you'll be in a better position to build long-term relationships with your customers and improve customer retention.
What Factors Go into Determining the Customer's Lifetime Value?
In order to determine how effective your client lifecycle has been thus far; the customer lifetime value is an important metric to consider. It's a measure that indicates how much a client spends on your business throughout the course of their relationship with you as a customer. It is true that the larger the lifetime value of a customer, the more effective the customer lifecycle is.
What is the formula for calculating customer lifetime value? The two easy stages are as follows:
• Customer value equals average purchase value multiplied by average purchase frequency value
• Customer lifetime value equals average customer lifecycle value multiplied by customer value
Customer Lifecycle in 9 Simple (is it?) Stages
Consider the SaaS customer lifecycle as a series of stages that follow on from and are interconnected with one another in a constantly running system. It's useful to classify the nine stages into three main groups: acquisition, engagement, and retention.
Stages of Acquisition
These stages of the customer lifecycle are defined by the actions taken by customers to resolve their issues. The emphasis is on assisting consumers in comprehending their difficulties and demonstrating how your SaaS service can resolve them.
1. Awareness
Customers become cognisant of their problems at the initial step of the SaaS customer lifecycle. Their next step is to start researching the problem and finding ways to address it.
In the course of their research, they may come across your business and discover more about your services and products. At this point, the customer becomes informed that you may be able to provide them with a solution to their issue.
2. Consideration
During the second stage of the SaaS customer lifecycle, consumers are encouraged to think about the information they have collected and make decisions. They've defined their problem and reduced down potential remedies.
As a competing problem solver, you may want to maintain a position of prominence. The more time a customer spends thinking about your product, the more probable it is that they will choose you as their brand of choice.
You must identify techniques to improve the amount of time clients spend thinking about your product. Obtaining customer information in exchange for access to lead-generation content is an excellent approach to accomplish this.
3. Conversion-Based Qualification
Qualification is the final stage in the acquisition process. The content you provide in your lead generation efforts is being used by customers to decide whether the solution you provide is the one they require. "Qualified" users are more likely to contact your sales staff because they are well-informed.
This is the stage at which you can determine if a prospective customer is a good match for your business. You'll be able to monitor their activity—where they look and what they click or download.
Stages of Engagement
Customers going into 'buying mode' and making a purchase during this stage distinguishes it from the previous stages. The emphasis is on highlighting your product's genuine and tangible worth to your market.
4. Assessment
Customer decision-making comes to an end in the final stage of the SaaS customer lifecycle. Customers are nearly convinced that they will purchase your product, but they require a final push to complete the transaction.
They'll contact your sales staff to learn more about using your service or learning more about your company in general. Correct responses are the deciding factor in determining whether your product is the best solution to their problems.
Bear in mind that the evaluation stage is designed to address a single question: how will this product benefit my business? If you cannot demonstrate that your solution will improve the productivity and profitability of your leads' business, they will not advance to the next level.
5. Payment mode
Having made their choice, it's time for your prospect to go on to the next phase of the sales process: the buyer's stage. They go from being a potential customer to becoming a paying customer in a few of clicks and swipes.
Spend some time at this stage assessing your sales and marketing strategies to see where you can improve them. This allows you to determine which strategies were effective in converting them.
6. Onboarding and Activation
Stage six—onboarding and activation—comes once payment has been received and processed. This is the point at which clients are onboarded and begin utilising your solution to solve their problems. The emphasis is on the everyday user and whatever instruction or support they may require in order to reap the benefits of their purchase.
You'll need to put together personnel and/or resources that are solely focused on responding to their questions and concerns. They must keep the customers satisfied and avoid any frustrations that may arise while using your service.
Stages of Retention
These stages are distinguished by the depth and durability of your customers' interactions with your brand. The emphasis is on customer pleasure, providing highest benefit, and minimising churn.
7. Expansion
Customer loyalty has developed among your customers as a result of their conviction about the value of your product. The seventh stage is all about increasing your SaaS product's audience by enticing them to use it on a regular basis.
At this point, your customers may be interested in upgrading their subscriptions or adding new features at an additional fee to their existing ones. Any increase from the initial bundle they signed up for indicates that the consumer has reached the expansion stage.
8. Renewal of Subscription
At this stage, it’s expected that you've done enough to convince your customers that renewing the subscription of your product is worthwhile.
This gets us to the eighth step, Renewal of Subscription. When the customer's first contract period expires, they choose to continue using your service.
At this point, quality customer service is critical. Customers must be kept in the loop at all times.
9. Advocacy and Referrals
Referrals are the final step in the SaaS customer lifecycle. Your buyers have travelled a long road to become devoted customers. Now they're ready to spread the word about how happy they are with your services and how you should be included to their list of trusted SaaS.
Loyal customers are often your finest sales reps. It's a great way to spread the word about your company and show customers that you deliver on your promises.
How to Make Use of the SaaS Customer Lifecycle?
Understanding your client lifecycle is beneficial, but being able to apply it effectively is game-changing. Here is a list of suggestions to help you get the most out of your customer lifecycle.
By optimising pre-market procedures, you may lay a solid basis for the customer lifecycle. As a result, before the first stage begins, make certain that:
Create a Unique Selling Proposition for Your Product or Service (USP)
You must have a unique selling proposition (USP) that distinguishes you from your competition. Your unique selling proposition (USP) explains why customers should choose your company over the competition when looking for a solution. To be effective during the acquisition process, it must differentiate itself from the competition.
Create Buyer Personas for Your Product
It's critical to understand who you're selling your SaaS to. What good is a grasp of customer lifecycles if the customer at the core of the cycle is unknown?
You must categorise your market to find your USP's target audience. Narrowing down forwards you to the next step i.e Creation of Buyer Personas.
List your Target Persona
After you've defined your unique selling proposition and buyer personas, it's essential to figure out your intended audience and the techniques you'll employ to reach them. Following that, you must personalise your customer experiences such that it speaks directly to your target demographic.
Raising Awareness
Generating interest in your goods is essential for launching the awareness stage of the sales process. Because this is the beginning of the SaaS client lifecycle, you must keep spreading the word that your solution is available.
Make sure you properly describe how you handle concerns of your customers. If you want to be successful, you must educate your target audience on what you have to deliver and why your product is the best option for them.
How? Using more efficient marketing and content methods. Blogs, Free trials or social media presence increase the probability of driving traffic to a company's site.
Keep Track of Your Customers
Measuring key performance indicators reveals areas for improvement, such as in the areas of customer acquisition, engagement, and retention. You may use metrics to identify and reinforce weak places in your cycle, allowing it to operate at peak performance.
Metrics assist your teams in honing their strategy to increase conversions. Consider implementing tools to track and evaluate the activity of your website visitors. Then, using these insights, guide customers through the sales funnel.
Thank Your Customers
Showing customers your appreciation for their support is beneficial during the retention phases. Whenever a lead converts into your actual customer, thank them sincerely since doing so makes the customer feel appreciated and important.
Inform customers about the help resources that are offered to them and who they can approach if they have any questions. They'll appreciate the effort and are more likely to remember the positive customer experience you delivered.
Developing a referral or incentives programs is an excellent approach to motivate customers to participate in the retention phases. You may, for example, offer them a discount on their renewing subscription or other relevant freebies as an incentive. LinkedIn does this well.
Make Onboarding a Pleasurable Experience
In many ways, the success of your SaaS business is dependent on how well you manage your customer onboarding stage. What if you spend money on a product that is advertised as the solution to your issues, but when the time comes for you to use it, you are unable to do so? Would you say you're happy with that?
From the beginning, you must ensure that your clients are satisfied with their purchases. Having a terrible experience will have an impact on your retention stages. Therefore, ensure that you assemble teams who are committed to listening intently to the customers' requirements and providing onboarding assistance.
Once a prospect converts into a customer, it's quite beneficial to have learning materials prepared for them, such as explainer videos or product demonstrations. Make certain that these resources are simple to grasp and accessible.
Ensure Product Consistency
Product consistency is critical during the retention stages. It influences subscription renewals, repeat purchases, and referrals.
Customers will not choose you again if your product does not give consistent quality. To make sure that customers receive what they really want, you must assist them in achieving their objectives for utilising your product.
Get to know your audience by questioning them about the benefits they hope to derive from utilising your product on a daily basis. Then offer additional advice or assistance to help them in achieving their goals.
Implement New Product Innovations Based on Customer Experience
Every stage of the SaaS customer lifecycle benefits from and is influenced by product innovation. As a result, the better your product is suited to your target demographic, the greater the likelihood that you will have of acquiring, engaging, and retaining customers.
Why Innovate?
An innovative product is one that improves upon an existing one. The goal is to improve the quality of your product. This is necessary to keep current customers motivated and to better attract prospective customers.
Customer demands and expectations are not static; they are always evolving. As a result, your product must adapt and evolve in order to remain relevant and important in their lives.
How Do You Come Up With New Ideas to Innovate?
Reflection, assessment, and action. Analyse customers' experiences to identify what might be improved, eliminated, or modified.
When doing so, consider the following questions:
• Consider functionality. Is the existing functionality adequate, or do you think it could be improved?
• Consider budgeting. Is it time to re-evaluate your pricing model? Is your product worth the price you charge?
• Consider communication. Is it time to ask your customers whether the product meets their expectations?
• Consider the customer's requirements. Is your product addressing the needs of your customers? Is it reliable?
Customer Follow-up and Feedback
You can keep an eye on the health of the SaaS customer lifecycle through checking up with them and soliciting their feedback. By asking tough questions and carefully examining the responses, you can gain valuable insights for improving all aspects of your SaaS.
Following-Up: What Should You Do?
When clients renew their subscriptions, inquire about their favourite features and suggestions for improving your service. Then, in reaction to their responses, deliver your services while taking their input into consideration to improve your overall service offering.
What Are the Best Methods for Gathering Customer Feedback?
Inquire about the reasons why customers choose your product over your competition's. Then, leverage their remarks in your marketing strategy to attract clients who are similar to them.
Final Thoughts
When the stages of the SaaS customer lifecycle are connected, it results in a great experience for customers. High customer satisfaction in one stage increases their likelihood of moving on to the next.
It's time to put yourself in your customer's shoes and walk through the cycle with them.
