You don’t buy a SaaS product once and forget it. There’s no true autopilot or end of the journey, just a SaaS customer lifecycle that continues to grow and evolve, generating the recurring revenue that you need to survive.
It’s a cycle that seems very straightforward but proper execution requires a lot of smart timing and knowledge. In essence, you’re finding a customer, getting them to sign up for your SaaS offer, and then trying to keep them. In practice, there are a variety of considerations during and between each step that can lead to success or frustrated customers who leave.
There’s even a SaaS growth ceiling you can hit with your customers, which is lower if you don’t pay attention to this lifecycle.
So, let’s walk through it together and understand what each of the seven steps are, how they impact your business, and what your customer is thinking or needing when they reach each step.
The 7 SaaS Customer Lifecycle Stages
1. Build Awareness
The start of the customer lifecycle, whether you’re a SaaS provider or any other company, is when your customer first becomes aware of an issue they have. Through marketing, referrals, demonstrations, and other tactics, you also make them aware that your solution solves their problem.
Think of this as the educational stage. You’re just trying to inform someone about your offering, and that can mean providing a lot of context. Content marketing allows you to create blog posts and videos that specifically demonstrate the issues you tackle. The clearer you are here, the better — honesty always counts, even when you admit that you might not be able to help.
If you’re struggling on where to start with awareness, there’s one content trick I’ve used with successfully with companies from startups to some of the largest cloud security companies in the U.S.: turn each question in your FAQ into an individual post, graphic, video, or other element.
Answer the questions people have and demonstrate your capabilities, and they’ll be aware of you and what you do.
2. Qualify Customers
Building on awareness is the qualification of leads and customers. In this stage of the SaaS customer lifecycle, you’re taking a potential customer and determining if they’re a good fit for your business. At the same time, the customer is looking through your materials or perhaps trying a demo to see if they think you’re a good fit.
Part of qualifying can involve tracking the interest that people demonstrate. You might be able to see how many pages someone looks at on your site to learn about you, or they could sign up for an eBook.
For many SaaS providers, this is also when you’re giving someone a trial version of your product. You want to nurture the relationship and show what you have to offer. Demonstrating your value is essential.
If you’re in a new software category or have a very different take on functionality and workflows, make your support information and teams available to help. Treating the qualification stage as the start of your onboarding will help your team deliver quality service that can boost conversions.
3. Customer Purchase
Your customer has made it to the first major milestone, congrats!
Carve out purchase decisions as their own step when you’re mapping your customer journey. This helps you test and validate the process as well as see why customers do or don’t buy from you. Closing the deal is also an appropriate time to evaluate your marketing and other efforts so far, plus perform audits on documentation and payment methods.
When the interested party becomes a paying customer, thank them. Introduce your team again and remind the customer of your dedicated support and services. Be helpful and ask for your first round of feedback so that you can make the qualification and purchase steps easier for potential customers to complete.
4. Onboard and Activate
After the purchase decision is made, the SaaS lifecycle shifts. You’re dealing directly with fewer managers and C-Suite leaders. Instead, your focus becomes the daily user. This is the person who needs training and support to figure out how to use your software.
Your training materials first come into play here. The courses you build, explainer videos you share, demos, and more are going to be used most in stage 4. It is, surprisingly, a make-or-break moment for SaaS.
The benefit to thinking about this stage as a shift in your target customer is that you and your teams will focus on making a good “first impression” with daily users. Actively listening to their needs and being responsive during the onboarding and training process can keep them happy. (Happiness equals use achieving the benefits your software promises, and that trickles up to leadership).
In many cases, SaaS contracts can be cancelled at any time. Competitors are also waiting to grab frustrated users from you. This is your first big customer filter and you want to get on the good side of users to keep their whole organization happy.
5. Regular Use
The next phase in the SaaS customer journey is when the customer and their teams become regular users of your service. You become part of their daily operations and need to treat this with the respect that it deserves.
For demonstrating that respect, your mission is here to give your customers the tools, information, and support they need to properly implement change management. By understanding customer workflows and how your product disrupts them, you can determine the best way to position your SaaS capabilities. CIOs and CTOs and even team leads all need different things to ensure they reach their goals.
Ask your customers what they hope to achieve with regular use and provide tips and guides for how to accomplish this.
Turn to services like Zight (formerly CloudApp) to create simple videos and its GIFs creator app that demonstrate your functionality. Break things down into easy-to-use chunks and put them on your own server so all clients can keep coming back when they need help.
Making your knowledge base accessible and searchable is a major customer service win and might even reduce the calls or emails to your help desk. It’s the thing we all want from software, so it’s the thing you should definitely provide.
After you’ve become part of the customer’s new daily routine, you need to ensure that you’ve made the routine better. The months or year after first landing an onboarding is a big-time milestone and decision for many.
Your customer is looking at their budget for the next quarter or year and questioning if you’re worth it. You’re doing the same and seeing if you need to change your pricing structure or what features to provide to keep people happy.
In the SaaS customer journey, the specifics of renewals vary greatly by each package and company. The one overarching theme, however, is that success comes from quality communication and relationships. Being responsive to problems, asking customers what they want next, and delivering reliability as well as improvements all show your commitment to their business.
The customer also faces one of the biggest shifts in this journey from their perspective.
The purchase decision often relies on hopes for improved efficiencies and bottom-line gains: how will this help our business. The renewal decision, however, is focused on if those gains were achieved and how the customer felt about it. You have to not only be a benefit but feel like one.
To put this in perspective, think about a time before you had one of your go-to SaaS tools, like a CRM. In your pre-CRM days, you did all that customer management in spreadsheets and hand-written to-do lists and called or emailed when you remembered and had the time. Some people just fell through the cracks, even if they were good leads and customers.
Adopting a CRM automated a lot of this and even gave you tools to weed out the less lucrative clients so you could focus on the big wins that made your business successful (and hopefully landed you a nice bonus at the end of the year). You fell in love with the tech and what it could do, and now you had a name for the software: CRM.
If the company was a pain to work with, the system crashed often, or its helpdesk never answered a question right, you’d probably not renew. Even if it made your marketing and sales better, you’d take this knowledge that “a CRM is helpful to me” and use it to find a different provider.
The boom in SaaS means there are more providers and competition each quarter, making customer service a key differentiator when it comes to the renewal phase.
7. Referral and Advocacy
When the customer does renew, rejoice! And then, ask them to tell you why they chose to renew. Your customer is loyal and satisfied and you’re likely to get some messaging you can use in your marketing to make a pitch to similar companies.
What can make this marketing even better, however, is if your customer says it directly. Your job is simply to ask. Somewhere between 50% and 70% of customers will leave a review when asked.
For those satisfied customers, you should follow-up. Thank them for being a customer and ask if they would refer to you to colleagues, partners, or other businesses they know. If you want to sweeten the deal, create a referral program that allows them to save a little or earn some freebies when they make referrals that work for you.
In some rare cases, you’ll have a customer who loves your product. They want to tell the world about it, and you should help them do just that. These advocates or evangelists can bring new companies and plenty of revenue to your door. Because they like you already, the rewards you provide don’t need to be huge, they just need to be useful.
Adobe has always had a very loyal customer base and they really capitalize on this advocacy piece with their Ambassador Program. People who sign up get training and webinars and other tools, while being asked to make commitments to advocate for Adobe and evangelize its products at their office and in their community. You don’t need to immediately launch into this step, but it is a smart thing to think about for down the road.
A Note on SaaS User Onboarding
Onboarding is one of the most important parts in the SaaS customer lifecycle because it can cause the entire thing to breakdown, but you might never see it. This is especially true if you’re working in areas or with companies that are introducing software into a previously manual process.
The efforts you put into training and onboarding are what will decide if a company’s staff continues to use the software or if they try to find workarounds to go back to doing what they were used to already. If a team won’t use your tools because the UI is confusing or the training was lacking, their management won’t keep paying for your solution.
Your audience is likely using metrics to track their employees on a variety of productivity metrics. You won’t always know these either. So, you’ve got to position yourself in a way that makes your service useable, giving you the best chance to help meet those metrics.
Having written a few extremely lengthy user manuals in the past, I can safely say they’re terrible when presented on their own. Not everyone can read a book and figure out a process. Not every company is going to print out enough copies for everyone or keep the PDFs on the server to make them easy to find.
And when any update occurs, your old manual is almost immediately out of date. That leads to very grumpy users who can no longer find the yellow “Save” button that your designers replaced with the blue save icon.
Always back up your training with visuals and keep these items on your own portals for customers so that they’re never lost. Provide and record in-person training for large customers. Use services like Zight (formerly CloudApp) to screen record your entire demo and then cut it into bite-sized elements so users can find the one thing they actually needed. Annotate images, turn things into GIFs to break up the boring and provide multiple ways to answer the same question.
Try it out for your own service right now with a free trial of Zight (formerly CloudApp) and see exactly how easy it is. If you’re not convinced, just check out these pages for developers and our GIF creator app to see how simple the Zight (formerly CloudApp) team made training visuals.