Customer stickiness is the propensity of customers to return to your product or use it more frequently, which is particularly important in an increasingly competitive environment. A sticky product has characteristics that deepen the relationship with the customer over time, driving that customer to use your product more frequently. In this post, we’ll look at the differences between stickiness and retention, discuss some ways to impact stickiness, and talk about how a sticky product benefits your business.

 

Customer Retention vs Customer Stickiness: What’s the Difference?

Do some searches on these terms, and you’ll find that some people view these as interchangeable concepts, while others differentiate. Sequoia defines retention as getting people to come back to your product, while stickiness is about getting them to come back of their own volition. So you can think of stickiness in terms of the depth of engagement that a customer has with your product, as well as the level of friction that would prevent them from discontinuing use of your product.

Retention is as a measure of the percent of your customers that continue to use your product month after month, or year after year. Another way retention is often measured is by looking at how much revenue is retained from one period to another. Retention is a fundamental health metric of a SaaS business. So while increases in stickiness can lead to increases in retention, they are not the same thing.

 

How to Make Your Product More “Sticky”

Onboard and deliver the Aha! moment

In order to drive that stickiness and depth of engagement, set yourself up for success by ensuring that your users are onboarded well and have a great experience from the beginning. Every great product has an “aha!” moment, when the real value becomes clear and the customer says “aha!”, now I see how this will make my life easier. Your onboarding process should be designed to guide your users to that moment. Break down the process that a user needs to go to get to that moment. And then build email nurtures, support docs, and live or self-serve training materials to help your customers get to that aha! moment sooner.

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Engage customers through ongoing training and support

Your job isn’t done after customers are onboarded. Now is your chance to really deepen that relationship by providing continuing education and engagement to your customers. There are a number of reasons why this is important. Your customers will hire new team members who need to learn about your product, existing users will want to level up their understanding of the product, and you’ll continue to release new features. All of this means that you need to provide continuous training and support resources. And this training not only will make your customers stronger at using your product, and thus more committed, it will also deepen your engagement with them. All of which contributes to a stickier product experience.

 

Become an essential part of your customers’ business

Would you rather your customers consider your product a “nice to have” enhancement to their business or a “need to have” required solution? Nice to have products are purchased when companies budgets are flush, when times are good, and often when the decision is driven by a single stakeholder. These are also the first products to be cut when times get a little tough. By working to make your product a “need to have,” you’ll become an essential part of how your customers do business. As an example, most SaaS companies are so reliant on their CRM to do business that they wouldn’t think of cutting it, even when budgets become tight. Also, the deeper that your product is embedded with your customers’ processes and other systems, the more essential it becomes. So integration with those core tools like CRM, marketing automation, or support can make your product even stickier.

 

Create advocates beyond your original champion

Related to the point above, if you only have one stakeholder in your customer’s organization who believes in your product and is dependent on it, your product will be far less sticky. “Champion churn” is what happens when that advocate leaves the company, and now you don’t have anyone there to advocate for the use of your product and renewal of the contract. So think about ways that you can get more users to reach that “aha moment” and how you can increase usage and visibility beyond the department of your original champion. The more users you have, and particularly the more senior advocates you have, the stickier your product will be.

 

Enable users to guide the roadmap

Another great way to drive stickiness is to continue to build your product to be the one that customers want. After all, your customers are the ones using your product, so they’re one of the best sources for input into your roadmap. Make it easy for customers to make product suggestions and feature requests right in your app. To make them know their input is valued, provide visibility into what’s happening to their feature request. And be transparent about your near term roadmap. Even if a customer’s most recent request isn’t actively being built, we’ve found that often when customers see the things you are focused on building, they’ll feel that it’s actually more valuable than their request.

Preview and Validate New Features

As you build your roadmap with your customers’ input, you’ll want to get more user input on the features that you’ve shortlisted for development. Use feature previews to show users what upcoming features might look like and get feedback to let you know how well those features will resonate. And use a feedback management system to validate the prevalence of particular feature requests and the impact that it will have on your users. For example, how much recurring revenue is associated with a given feature request? How prevalent is that request? Using validated and prioritized user feedback will lead to a much more impactful product roadmap, and it will increase product stickiness.

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Create a direct link between product & customer teams

At Parlor, we spend a lot of time talking to customer and product teams. We’ve found that the working relationship between these two teams is consistently strained. Customer leaders often feel that they know the customers best, but have a hard time convincing product teams to build the things that customers want. And product teams feel that they know the product best, and want to build what’s best for the customer, but they mostly receive anecdotal feedback, which doesn’t make a clear case for what to prioritize. By implementing a feedback management system, you can better align your customer and product teams around that user feedback. And when customer and product teams unite around the improvement of the product leveraging user feedback, the product becomes much stronger and much stickier.

 

Be there when customers need you

You can’t control everything that happens in your product, nor can you control everything that happens to your customers. But you can be there for your customers when they experience challenges, either with your product or otherwise. An incredibly powerful way to build a sticky relationship with your customers is to show them that you’re there for them. If they have a tough experience with an aspect of your product, often it’s a good idea to go out of your way to show them that you want to make things right. So first, address their issues, but then think of unique ways to follow up. Maybe you credit their account against a future invoice as a token of goodwill. Or maybe you have the CEO reach out directly to apologize. You customers will know when your efforts are sincere, and they’ll reward you with their loyalty. Which, of course, increases your customer stickiness.

How Customer Stickiness Helps Grow Your Business

As we mentioned above, customer stickiness and customer churn aren’t the same thing, but customer stickiness does impact churn and helps in other ways. Here are a few:

 

Reduce Churn

As you increase customer stickiness, your churn will naturally decrease. No matter how effective you are at selling subscriptions to your SaaS product, if your churn is unhealthy, you can’t grow a healthy business. When your churn is high, you’re essentially trying to fill a leaky bucket. As new customers and revenue come in, almost as much or even more is going out. So driving customer stickiness is one of the best ways to reduce churn and increase the fundamental health of your SaaS business.

 

Up-sell/Cross-sell Opportunities

The more your customers’ value your offering and as it becomes an important part of their business, you’ll have more opportunities to upsell those customers into your more full-featured and higher level offerings, as well as cross-sell into other parts of their business. While your success in doing this is partially driven by your account management team, customer stickiness has an even bigger impact.

 

Increase Customer Lifetime Value

Increasing customer stickiness will reduce churn, and increase your upsell and cross-sell opportunities. Together, these increase the lifetime value (LTV) of your customer base. As your LTV increases, you can further accelerate your growth, since you can now afford to spend more to acquire each customer. Lifetime value / customer acquisition cost (LTV/CAC) is another fundamental health metric of a SaaS business and as that numerator goes up, you can afford to spend more on the denominator.

 

Referrals

Customer stickiness means you probably have a lot of happy customers. And happy customers will refer more business to you. Referrals are one of the best, and most cost-effective, ways to earn more business. This growth in referrals is just one more benefit of a sticky product.

 

A Sticky Product is a Tailwind for Your Business

Hopefully this post helped explain what customer stickiness is, why you should care about it, and how you can impact it. A sticky product becomes a significant tailwind as you grow your business. We’d love to hear from you. What are some other ways that you drive customer stickiness for your product?