There’s so much buzz these days about growth hacking that it’s easy to forget a fundamental truth about marketing—winning a new customer costs a lot more than keeping an existing one (anywhere from 5 to 25 times more, according to the Harvard Business Review). Existing customers that spend more, come back more often, stay longer, and tell their friends are all contributing to higher CLV.
With this in mind, we asked ten leaders at successful SaaS startups about concrete things they did to increase Customer Lifetime Value (CLV). Their responses fell into two general categories: (1) Enhancing features with customers in mind, and (2) Making their products easier to use.
Enhancing Features with Customers in Mind
Sometimes startups fall into the habit of adding features for the sake of adding features. That’s to be avoided, no doubt. Strategically adding features based on customer feedback and testing them to see how users respond is where it’s at. This is an excellent way to keep your users renewing month after month, year after year.
Here are some of the ways startups have enhanced features to improve CLV.
Useful Integrations
“One of the biggest changes that we did to improve our CLV is working on our integrations. For example, a lot of our customers actively use Trello and we always imagined Trello as a competitor.
We decided to cave in and finally build an integration that was just amazing for our business. Lots of people now use Trello with our integration, and instead of turning people away from us, it got us more customers and increased our CLV.
Our assumption that the two products would be competing against each other was completely wrong. So many people have been using Trello for years now that our integration only made them stick around longer with us. It was one of the best business moves ever and we still get leads every day from the Trello marketplace.”
Malte Scholz, Product Manager, Airfocus
Get Advice from Customers — and Act on It
“Establishing a process for taking action on customer feedback is an easy way to boost customer lifetime value. Albacross uses NPS surveys in Intercom to understand which customers are happy and which are not. Every detractor receives an automated email follow up asking for their thoughts on how Albacross can improve. This feedback is incorporated into the product roadmap. 
We have deeper conversations with our customers to better understand them and subsequently create a better experience for them.”
Evgen Schastnyy, Marketing Specialist, Albacross
Add Complementary Features
“Whyzze offers business strategy workshops as well as a monthly membership subscription. However, I found that some of my entrepreneur clients were looking for something in between. So, I created a new service: business planning packages. Founders and leaders can now get a one-time analysis, quarterly, or annual feedback on their business action plans. This cross-selling strategy not only increases CLV for Whyzze but gives my clients flexible options for their business strategy needs.”
Misti Cain, Founder, Whyzze
“The easiest way to increase customer lifetime value is to add other complementary products and services to the core SaaS product that’s being sold. For example, Stripe started as a payment processor, and as time has gone on they’ve evolved and added more services like customer invoicing. They even recently launched something called ‘Capital,’ where you can get funding for your business.”
Jason Davis, CEO, Inspire360
Make Products Easier to Use
In the rush to create an ever-evolving product, it’s important to remember why you’re in business in the first place. SaaS products (like all products) exist to solve a problem. That’s why customers hand over their hard-earned money—because you make their lives easier in some tangible way.
On that note, one key strategy for increasing CLV is to make your products as easy to use as possible. Here’s how four SaaS startups accomplished that.
Educate Customers on How to Fully Use Your Product
“Educating your customers on how to use your product to its fullest potential is an absolute necessity for improving your CLV. The hard truth is that most of them aren’t likely using the majority of your features, which means they’re not necessarily attached to your product.”
Unless you genuinely solve their problems and help them achieve their goals, you’ll be a ‘nice-to-have’ product. Do whatever it takes to educate users on how they can better use your solution so you can move from the ‘nice-to-have’ category and become a ‘can’t-live-without’ product.”
Kamil Drążkiewicz, CEO & Founder, LiveSession
“KaiXR is an EdTech platform that provides immersive virtual reality field trips to young people. We found that parents and teachers loved the idea of virtual learning experiences, but were overwhelmed by the prospect of purchasing a VR headset. Too many choices and price points! To remove that pain point, we identified a relatively low-cost model and began selling it on our platform.”
Kai Frazier, Founder & CEO, KaiXR
“Lots of changes to the product–basically building features mentioned by customers on churn surveys and NPS surveys. Something else that has helped us improve retention + resulted in an increased lifetime value is the weekly live demo we host on Wednesdays. We invite new customers (many of whom are on a trial) to join and we teach them how to unlock the value of the product. Those who join usually end up adopting the product across their team/organization which means a higher LTV. Here is an example.“
Daryna Kulya, Co-Founder, OpenPhone
Make It Easy to Contact Customer Support
“Make your ‘Contact Us’ page on the support site as easy to use as possible [to find]. Some companies hide it—social media websites are good examples of this strange practice. And when customers do reach out, communicate with them ASAP. Do all of these things, and they’ll love you to death.”
Vern Weitzman, Founder & CTO at Cira Apps Ltd.
Incentivize Users to Signup for an Annual Plan
Note: This might not seem like an obvious “simplification,” but annual subscribers get to know your product better through repeated use, so incentivizing longer-term signups actually does make a product easier to use.
“One way [to reduce churn] is shifting customers to sign up for a lengthier subscription (e,g, an annual subscription instead of a monthly subscription). You can incentivize users by offering a discount or annual-plan only features.
When you pay for a more extended period, you have more time to test out the product, find its fit in your workflows—and of course, who doesn’t want to make the most out of an annual subscription they have purchased? And naturally, the longer the customer stays with your service, the higher the lifetime value per customer gets.”
Hung Nguyen, Marketing Manager, Smallpdf
Focus Your Road Map on Specific Industries
Note: This is another one that might not seem like an obvious “simplification” technique, but the more you narrow your target niche, the easier it becomes to create features (and produce use cases) that resonate with that audience.
“At AppInstitute, our product—an app builder—is used by a wide range of SMEs, from bars and restaurants to gyms and golf courses. Our subscription model means that we need clients to keep using their apps to keep our MRR growing.
The breadth of applications for our product has advantages and disadvantages. On the plus side, we have an almost infinite market to target. However, this can lead to a loss of focus in sales and marketing and also product development because every use case is unique.
To increase customer lifetime value, we focus our product roadmap on specific industries with proven demand and a use case that fits our product.”
Ian Naylor, CEO & Founder, Appinstitute
Here’s a list that summarizes everyone’s tips and ideas.
Top Ways to Increase Customer Lifetime Value (CLV) from Startup Leaders in SaaS
- Integrations with other technology platforms
- Get feedback from customers–and act on it
- Add complementary features
- Educate customers on how to fully use your product
- Make it easy to contact customer support
- Incentivize customers to signup for an annual plan
- Focus your roadmap on specific industries
It’s really not rocket science.
Making a highly usable product and adding strategic enhancements is a recurring theme for successful startups when it comes to increasing Customer Lifetime Value, which makes sense. Ease and functionality are the meat and potatoes of SaaS loyalty.
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