With SaaS becoming a more and more competitive environment, attracting new customers and keeping them engaged in your product is more important than ever. Customer stickiness is the propensity of customers to return to your product or use it more frequently. A sticky product is designed to deepen the relationship with a customer over time, encouraging them to use your product more often and hopefully, make repeat purchases.
How do you actually go about designing a sticky product? Let’s look at the differences between customer stickiness and customer retention, how a sticky product benefits your business, and some ways to increase your product’s stickiness.
Customer Retention vs Customer Stickiness: What’s the Difference?
Let’s quickly define some terms. Customer stickiness has to do with a person who purchases a product more than once due to perceived product value, whether it’s pricing, convenience, product quality, or some other transactional aspect.
An important point in defining stickiness is that you know why a person is making the choice to repurchase, or continue using, your product. This is also why customer loyalty is considered to be a similar, but different, aspect of understanding a customer’s relationship to your product. Stickiness focuses on transactional value, whereas customer loyalty focuses on cultivating and strengthening emotional relationships with customers to encourage repurchase.
Customer retention is 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 Customer Stickiness Helps Grow Your Business
As we mentioned above, customer stickiness and retention aren’t the same thing, but customer stickiness does impact the longevity of a customer relationship. Here are a few ways that stickiness helps expand your business:
Churn Reduction
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 customer churn is high, your business is unhealthy. 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 product offering and the more it becomes an important part of their business, the more opportunities you’ll have for upsells. As customers purchase a low tier subscription and continue to engage with your product, make sure they’re aware of full-featured and higher level offerings, as well as cross-sells into other subscription packages you may have. While your success in doing this is partially driven by your account management team, customer stickiness has a big impact on ensuring customers are finding value.
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.
Referrals
A focus on 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. And while this is a fantastic way to grow new business, with User Success we take advocacy one step further. Not only should advocates refer other potential clients to you, they also should be so loyal that they’ll bring you along to any new company they join in the future. This is just one more benefit of a sticky product.
How Parlor Can Help Make Your Product More “Sticky”
Now that we’ve covered some of the importance of stickiness, let’s talk through how you can actually make your product stickier.
In-product communication
A 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. Parlor makes it easy for customers to make product suggestions and feature requests right in your app or product.
Let customers know their input is valued by providing visibility into what’s happening to their feature request as it moves through your ecosystem. 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 when customers see the things you are focused on building, they’ll feel that it’s actually more valuable than their request.
Announce new features and updates directly to your users
It’s crucial to keep your existing users engaged once they’re inside your product to help keep your product sticky. One of the best ways to do this is announcing new product updates, directly inside your product. Not only does it get users excited about new features or updates within your product, but it can be particularly useful for user onboarding so that new users see that you’re constantly updating your product and adding new features. Plus, if you’re launching a feature that a specific user requested, it can be exciting for them to see their request in action.
Transparency between your team and your users
We’ve spent a lot of time talking to customer and product teams and found that the working relationship between these two teams is often strained. 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 your users’ needs. All feedback types should be collected across different channels, tagged and organized in a single system of record, and then turned into prioritized product work to be done. For example, how much recurring revenue is associated with a given feature request? How prevalent is that request? Using validated and prioritized user feedback allows product and customer teams to unite and create a stickier product.
Provide ongoing training and support for your users
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.
Customer playbooks allow teams to create repeatable, scalable strategies for Customer Success teams at every stage of the customer journey. And this training will not only make your customers stronger at using your product, and thus more committed, but will also deepen your engagement with them, all of which contributes to a stickier product experience.
Guide users to become loyal advocates
A person doesn’t just become a product advocate for your product overnight. An incredibly powerful way to build a sticky relationship with your customers is to show them that you’re there for them and help guide them through their adoption journey into becoming loyal advocates for your product and business.
Parlor makes this process easy for you by creating a single system of record for customer feedback and user insights. You can use personas to track how similar users behave in your product, and then create playbooks to ensure the right customers are receiving the right resources at the right time. This creates a smooth and repeatable process for customers to adopt your product. As customers dive deeper into your product, you can report on long-term behaviors and send additional product surveys to those key user personas, using their feedback to guide product development.
By curating a culture of collaboration with your users through Parlor, you’ll be sure to delight customers and increase their lifetime value for your business.
Conclusion
Creating a product with strong customer stickiness is a key step to reducing churn, growing your company, and creating lifetime customer advocates. At the end of the day, we all just want people successfully using our products and to be excited with their experience. By understanding different groups of users, how they’re engaging with your product, and any friction points that may exist, you can create a stronger customer experience and stickier product.
