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3 Ways to Build Customer Lifetime Value

The business models of SaaS (Software as a Service) applications fundamentally differ from traditional software because revenue streams are spread over time instead of as an up-front lump sum. That means that the cost of acquiring customers is not offset immediately, but over the course of time as payments are received from subscribers.

Since that acquisition cost is not immediately recovered, keeping current customers happy so that they will stay for the long term is key to your success. There are a number of ways that you can earn customer loyalty and build the lifetime value of each one of your subscribers, including:

  • Additional functionality is the most obvious way to give customers continued value. Ongoing investment in development of the application will keep you ahead of competitors trying to lure your customers away.
  • Create complementary applications that serve additional needs of your customers. The more you know about the industry that you serve and the problems that your customers face, the more effective this strategy will be.
  • Build a community around your product. Provide and oversee a forum for your customers to share best practices and solve problems.

The success of SaaS application developers depends not just with the acquisition of new customers, but with long term retention. Your long term plan to earn customer loyalty is just as, if not more, important to building a prosperous business.