Whether you’re a SaaS marketer, product manager, or business owner, you need to understand the concept of the SaaS customer lifecycle. Put simply, the SaaS customer lifecycle covers the acquisition, engagement, and retention of your customers. It’s an essential tool for learning about your customers’ mindsets and the key to optimizing your customer retention, reducing churn, and maximizing your customer lifetime value.
What is the SAAS Customer Lifecycle?
The SAAS Customer Lifecycle is a method for examining the journey that a customer goes through from finding your business to becoming a customer. It follows the acquisition, engagement, and retention of customers with a specific software as a service.
Through this lifecycle, you can begin to understand your customers’ mindsets and help build strategies that will encourage them to engage further with your product.
SAAS Customer Lifecycle vs. Customer Journey
Another term related to the SaaS Customer Lifecycle is the customer journey. The customer journey details the stages people go through when interacting with your product and can be visualized through customer journey mapping. This method allows a SaaS business to identify flaws in its current customer experience by examining key interactions, pain points, and opportunities for growth.
What is customer lifecycle marketing?
Customer lifecycle marketing refers to the practice of strategically engaging prospective customers at every stage of their journey, from awareness to advocacy.
As opposed to general marketing strategies, lifecycle marketing personalizes customer communications based on what messaging and strategies work best for customers at different stages of their journey with a service.
What are the stages of the SAAS Customer Lifecycle?
In the next section, we will break down each of the stages of the SAAS Customer Lifecycle.
Stage 1 of the SAAS Customer Lifecycle: Awareness
In the first stage of the SAAS Customer Lifecycle, customers become aware of your business’s services. The main goal of this step is to create brand visibility and communicate to customers that your particular software will solve their problems.
The best strategies to attract attention are:
- SEO-optimized Content – SEO-optimized content includes website blog posts, CTA (Call-to-action) pages, and guides demonstrating your service’s benefits.
- Paid ads – Paid ads include Google Ads, LinkedIn, and Facebook Ads that are targeted at certain demographics and can attract the right customers
- Endorsements — Endorsements include customer testimonials, case studies demonstrating the product’s efficacy, and influencers who can speak to your software.
- Social Media — During the awareness stage, social media interactions should include guest posts, LinkedIn engagement, and industry reports.
Stage 2 of the SAAS Customer Lifecycle: Acquisition
In the acquisition stage, you want to turn potential customers into leads, free trial users, or subscribers. This step involves collecting their contact info, email addresses, or social media handles to create direct communication channels.
The best practices for increasing conversions are:
- Landing page optimization – Ensure that your main website page has a clear Call-to-action button, testimonials from those who have previously liked and bought your services, and a small number of form fields to fill out to learn more about your software.
- Lead magnets – Offer e-books, webinars, or free tools in exchange for contact info from prospective customers
- Email marketing — Send email marketing to those who sign up on your website. Prepare a list of possible contacts who would benefit from your services.
- Freemium/trial models — Free trials allow your potential clients to experience your services before committing and paying for them.
At the acquisition stage, key metrics to track are conversion rate (visitor-to-signup) and cost per acquisition (CPA).
Stage 3 of the SAAS Customer Lifecycle: Activation
During the activation stage, this is the critical moment where users first experience value from your software. Here, users transition from the onboarding step to actively exploring your services and experiencing the benefits of your software. Customers will quickly abandon your product if your software offers a poor onboarding experience.
The best strategies for improving activation are:
- Onboarding emails and walkthroughs — Make sure that you offer the customer intuitive, accessible tutorials and checklists so that they can immediately understand how your software can benefit them.
- Quick time-to-value – Ensure that the customer quickly reaches a key milestone within your product to demonstrate its efficiency.
- Customer success interventions—You should offer personalized setup calls for the software and set up live chat support if there are any difficulties with onboarding.
Key metrics during this stage include Time to first value (TTFV), user activation rate, and product adoption rate.
Stage 4 of the SAAS Customer Lifecycle: Retention
In the retention stage, you want to satisfy your customers and prevent churn. Loyal customers are how you can make your business successful and sustainable, as they will make repeated purchases, provide positive reviews, and act as advocates. Because of this, customer retention is even more profitable than acquisition in the SaaS customer Lifecycle.
The best tactics to reduce churn and keep users engaged:
- Proactive customer support – Just as with onboarding customers, there needs to be live chat, help center, and in-app support for loyal customers if any needs are unmet.
- Engagement emails — In regular messages, mention feature updates, usage reports, as well as nudges towards re-engagement with incentives.
- Community building – Set up forums, exclusive user groups, and platforms for user-generated content. This will encourage an engaged community.
- Personalization & product-led growth – Build recommendation systems to improve customer experiences and increase the software’s efficiency.
Key metrics during this stage include customer retention, churn, and net promoter score (NPS). NPS measures customer loyalty by looking at their likelihood of recommending a business.
Stage 5 of the SAAS Customer Lifecycle: Expansion
In the expansion stage, you will focus on turning existing customers into higher-value customers through upsells and cross-sells. You can identify growth opportunities by analyzing user behavior, preferences, and service usage patterns.
Expansion strategies that drive revenue include:
- Upselling to higher tiers – Take for example, a business like Hubspot, which offers multiple subscription tiers depending on whether the customer wants more performance-tracking options
- Cross-selling complementary features – Or, you can take the cue of companies like Slack or Zoom, which charge for integration options with productivity apps and cloud services.
- Usage-based pricing models—Amazon Web Services and Twilio are two companies that charge based on how much you use their products. A free trial or lower tier option offers fewer features than other tiers.
- Loyalty programs and annual subscriptions – Create loyalty programs and annual subscription systems that incentivize becoming more involved with your software.
During this stage, key metrics to keep an eye on are expansion MRR (Monthly Recurring Revenue), upgrade rate, and revenue per customer.
Stage 6 of the SAAS Customer Lifecycle: Advocacy
In the final stage, advocacy, the customer is exceptionally satisfied with the product. Because of this satisfaction, they have an emotional connection with the business and will become promoters.
How to leverage existing customers for organic growth:
- Referral programs – Set up referral programs that incentivize customers to tell others. Look to Dropbox’s wildly popular referral program that lets Basic and Plus users earn free storage by referring friends, family, coworkers, and clients.
- Customer success stories — Document case studies and record video testimonials that show your customers’ satisfaction with your product.
- User-generated content & community engagement – Encourage your customers to promote your software on social media platforms and in discussion forums.
- Exclusive rewards — Offer exclusive VIP programs, beta testing groups, and other rewards to your most loyal brand advocates.
During this stage, key metrics to track are referral rate, word-of-mouth-driven signups, and customer testimonials.
Does marketing according to the SAAS Customer Lifecycle really help?
Now that we’ve broken down each stage of the SaaS Customer Lifecycle and explored customer lifecycle marketing, the big question remains – does this approach truly make a difference?
The short answer is yes, but it’s fair to say that the SAAS Customer Lifecycle offers a comprehensive survey of almost any customer issue. By targeting your engagement with prospective customers, you’ll be able to reduce churn with your product and keep users from dropping off. Through the SaaS Customer Lifecycle, you’ll not only be building brand advocates but also increasing the value of those customers.
When you have satisfied customers, they want to evangelize about your product, which will only fuel organic growth. And with those satisfied customers, you have more opportunities for personalized upsells and expansions to drive more revenue from each customer.
Customer lifecycle marketing can feel overwhelming – let us help!
Customer lifecycle marketing can seem hopelessly complex, especially if you don’t have the time and resources to fine-tune each strategy stage. However, this is one of the most effective methods to securing quality leads that convert and become loyal customers.
But you don’t need to do this alone. Contact the experts who can leverage data-driven strategies to help improve your acquisition, retention, and advocacy practices. SEO-optimized content and automation processes are difficult, and with professional help, you’ll ensure the maximum return on your investment.
For white-glove, customized digital marketing strategies, look to the experts at Ranq.