Improving Retention in SaaS and Subscription

After a decade leading growth for subscription businesses, I've encountered a common challenge: teams often chase new user acquisition while neglecting retention activities.

I get it - acquiring customers is easy. Dump another couple grand into Google Ads, and boom - new subscribers. But are you acquiring the right subscribers that are providing LTV and durable growth??

This is why I push to create growth models for new consulting clients - it shows very clearly where your growth really comes from (spoiler alert, it's often retention, which builds a base for monetization efforts).

While acquisition might seem like the quickest and easiest path to growth, I've learned through experience that retention is where the real leverage exists for improving Net Dollar Retention (NDR) and achieving sustainable business outcomes in SaaS and subscription.

The Challenge

When I joined one subscription company, we faced a common subscription business problem: our growth was primarily driven by aggressive acquisition tactics, while our retention metrics remained stagnant.

Acquisition volume looked good, as did CPAs, but our approach to retention was reactive - we didn't tend to subscribers to keep them engaged and active until they canceled. If you wait to talk to users until after they cancel, it's often too late.

The Discovery

When I dug into the data at this company I saw a surprising trend -- the reasons people subscribed were often different from why they stayed. At WWE, for instance, many subscribers initially joined for a specific Pay-Per-View event, but those who remained long-term were deeply engaged with our exclusive features.

The Retention Framework

Based on these insights, I've developed a retention framework that I've successfully implemented across multiple subscription businesses. These principles have worked for me time and time again across 10 years in subscription:

Personalized Engagement Strategy: At one company, we implemented a behavioral data-driven approach to communication. Instead of sending generic marketing blasts, we crafted personalized content based on viewing patterns and engagement history. The results were spectacular - engagement rates and content consumption both increased substantially.

I mentor several marketers who are earlier in their careers, and something they've heard me say time and time again is that good marketing is like a relationship, or a conversation - you want to be timely and relevant to establish a connection with the target you're speaking to.

Community and Exclusivity: At another subscription company, we launched "Exclusives" - behind-the-scenes content and member-only virtual events. This wasn't about artificial scarcity; it was about creating genuine value. Members who engaged with exclusive content showed a FAR higher retention rate than those who didn't.

Everyone likes to feel special, and feel like they're getting exclusive goodies. Don't skimp on the good stuff! Surprise and delight your subscribers, and that will increase loyalty.

Scaled Personalization: At another company, despite having millions of subscribers, we tried to maintain a personal touch with our user experience. Our data showed that subscribers who received personalized milestone celebrations had retention rates almost double that of others. As you're choosing what activities to reward, look at your data and see which actions correlate to high LTV.

For example, at WWE, we ran regression modeling that told us the highest LTV users watched a Pay-Per-View event in the first 60 days. Much of our growth efforts centered around this activity, and we rewarded people that engaged in it.

Value Evolution: Like any healthy relationship, how you interact with your subscribers will evolve. Find ways to add value to people's subscriptions, and be sure to find a way to tell them about the new features. Not only that, give them personalized examples showing them how the new features will make their lives easier or better.

Here's a summary of the key retention principles:

- Data-Driven Personalization Works: A structured, thoughtful approach to personalization, backed by behavioral data, consistently outperforms generic engagement strategies.

- Community Matters: Subscribers stay longer when they feel part of something bigger than just a transaction.

- Scale Personalization: Even with millions of subscribers, personalization should be extremely important. To you, Sally Smith may be one customer in a million, but to Sally, she wants to feel special and valued.

- Evolution is Key: The value proposition that acquires a customer is rarely the one that retains them. Continuous evolution of your offering is crucial for long-term retention.

I help subscription/SaaS businesses with growth strategy and execution so they can grow in a predictable, repeatable way. I have 20+ years of experience leading growth at startups like Curiosity, mid-sized companies like WWE, and large companies like Viacom/Nickelodeon.?

I help subscription/SaaS businesses with growth strategy and execution so they can improve acquisition, retention and monetization and grow in a predictable, repeatable way. Let's connect if you're working on similar challenges, or check me out at https://chiefgrowthadvisor.com/