5 Ways to Improve Customer Lifetime Value for Your SaaS Business

Customer lifetime value is one of the most important metrics to measure for any company wanting to improve sales or scale-up. SaaS companies find it is even more critical to their success than anything else. Every type of software relies heavily upon the customer experience, measuring every aspect of it from usage of the app to customer service itself.

Customer Lifetime Value (CLV)

With happy customers and a low churn rate, SaaS companies can achieve incredible CLV and revenue growth.

There are several different ways you can calculate customer lifetime value. You could use the Customer Service Metrics Calculator offered by HubSpot. Or you could take a more straightforward approach by calculating your annual earnings and dividing it by the number of customers that your company served over that time. The total amount that you get will be your CLV.

In a modern world, any business looking to outperform its competition needs to embrace the advantage of making data-driven decisions. The best way to do this is to come up with a goal customer lifetime value to hit. This will ensure that you stay focused on the results you seek.


Now that you have a measurable goal to hit, here’s how to get there:

1. Know What Your Customers Want and Value

If you cannot deliver on what your customers want and need, you simply won’t hit your goal CLV. You’ll end up losing more customers than you retain them, which means you’re spending more money on these new users and not making a profit.

However, if you know what your market wants before you get started, you’ll be able to serve them better and deliver on your promises.

There are several ways you can go about really getting to know your customers. You should start by identifying who your target audience is and then researching studies and surveys about your market’s behaviors and needs. Additionally, you can survey your customers directly to get to know them better.

Here are some ideas of questions that might indicate their values and needs:

  • Are they single or married?
  • Do they have children or pets?
  • What industry do they work in and what is their job?
  • Are they introverted or extroverted?
  • Do they recycle?
  • Do they live in a city or a rural small town?

2. Collect Actionable Customer Feedback to Determine Where You Can Improve

If you find yourself dropping customers left and right, it’s probably past the time to improve your product. But first, you need to obtain customer feedback because, without it, you won’t know where to begin.

Sure, you could manually send out email surveys or cold-call customers, but as a tech company, you need a more efficient, tech-way to get this data. One way to do so is with a customer satisfaction survey software that sends questionnaires or pop-up requests to customers as they are using your software. That way, users have their opinions fresh in their minds and the software right in front of them.

As a rule of thumb, just put yourself in the customer’s shoes. What steps and traits are within the customer experience? Make sure you include these elements in your surveys and gather the data in a way that’s not only insightful but also clear your team members. Use the power of archiving and storing the information in a secure database to your advantage.

Implementation isn’t as difficult as it may seem, so don’t let it overwhelm you. If you use a reputable PX software, most provide training and learning materials for you and your team to start using the survey software.

3. Make Customer Relationships a Priority

In order to excel, it’s critical that your customers feel valued. Consider providing around-the-clock support, as it ensures they get the help they need when they need it the most. This not only provides a competitive edge, but it speaks for your company’s commitment to quality service.

Open communication also allows you to be proactive. If a user is moderately unhappy, you can identify them, or they can contact customer service. That way, you can get ahead of the issue before you lose them. Remember, retaining users is more cost-effective and offers a higher CLV.

Customer retention by nurturing relationship

4. Reward Loyal Customers

So, you know a high CLV comes with loyal customers, and we’ve provided a few tips on how to build loyal customers, but it doesn’t end there. Just because a customer is dependable for a while, doesn’t mean a competitor can’t catch their eye. This is why you reward loyal customers.

You should be thanking returning users for sticking with you through the good times and the bad.

This can be done by:

  • Sending them personalized surprise gifts,
  • Unlocking premium features within your software, or
  • Creating a points system where users accrue points to redeem for discounts, perks, gifts, and more.

5. Create a Product Experience Better Than Your Competitor’s

In a world where business is more competitive than it has ever been before, loyalty has become rather rare among customers. They have more choices as the business landscape broadens with new startups daily. This alone makes it critical for businesses to stand out.

This is the golden key to the door of opportunity sure to unleash a prosperous future for any brand willing to take an in-depth look into the product experience. This isn’t the same as the customer experience, which refers to the brand’s overall experience that customers have. It is directly related to the product(s) that the brand provides. From the ease of use to the documentation that outlines how the product(s) can be used, every aspect creates the overall product experience within the SaaS industry.

But how do you make your product experience better than your competitor’s? You start with a competitive analysis. Determine what they are doing and how you can one up them. One way to do so is by implementing product experience software. The software will track every step of your user’s journey and how they interact with your software. With this information, you can:

  • Streamline user workflows,
  • Analyze customer satisfaction levels,
  • Increase session duration,
  • Decrease churn rate,
  • Create a more engaging design,
  • Push specific features that are underused,
  • And more!

Increase Customer Lifetime Value by Improving Customer Satisfaction and Retention

It’s as simple as this, without loyal customers, you cannot achieve a high customer lifetime value. But in order to foster loyal customers, you have to keep them satisfied. Follow these steps to retain your users and increase revenue.


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