Customer Segmentation & Lifecycle Management
(SaaS industry)
The company faced a significant challenge in their SaaS business, experiencing a noticeable increase in churn rates, impacting customer retention. Our proactive approach to customer management resulted in a 50% reduction in churn.
Approach
Recognizing the need for a proactive approach to customer relationship management and an increased focus on customer analytics, we executed a comprehensive strategy that encompassed:
Customer Segmentation: Leveraging SaaS usage and spending metrics, we established a robust customer segmentation framework with three tiers of engagement:
Transactional Engagement: Customers who only used the platform for data access
Insights Seekers: Customers utilizing the platform to discover valuable insights
Active Business Growth: Highly engaged customers actively using the platform to drive their business's growth
Customer Lifecycle Management Programme: Employing various communication channels, including email, SMS, in-platform messages, and Customer Success channels, communications were designed to encourage "customer interactions" that we hypothesized would positively impact retention. These interactions included app downloads, conversations with Customer Success Managers, participation in training sessions, business health checks, and attendance at events. There were two key types of communication events:
First 90-Day Onboarding: Pre-set communications triggered from the day of sign-up through the first three months of service. They encompassed five possible customer journeys based on individual responses.
Propensity and Event-Based Contact: In addition to onboarding, we initiated a series of communications that were triggered by specific customer events, such as segment transitions, declining usage, and an annual health check on the anniversary of sign-up.
Results
To draw statistically significant comparisons and conclusions, we established a 20% control cell. Results included:
A headline 50% reduction in churn
The three segmentation tiers were found to be closely correlated with customer engagement and future spending patterns
All forms of customer interactions demonstrated a positive correlation with improved retention and growth rates
Communications effectively encouraged customers to advance through the segmentation tiers and significantly reduced the number of account downgrades. Within just 12 months of onboarding, 60% of new accounts had progressed to the most engaged level within the segmentation framework