How SaaS start-ups are going wrong with growth and on-boarding

aka “How to increase customer LTV for only $5 and 15 minutes.”.

I am a big supporter of SaaS start-ups; in fact, I’ve paid for dozens of subscriptions in the last few years. I’ve clicked on promoted tweets, those cleverly-crafted PPC ads, well written blog posts, signed up for countless free trials, and handed over my credit card details to some of the luckier products.

Now that I am officially a startup founder myself, in the B2B SaaS space, I know the hours of effort that goes into tuning your growth and on-boarding new trials or customers. Wow, it can be lots of work.

It can literally cost wads of cash, depending on the product and target audience, to get the prospects attention, and give them enough motivation to hand over their details and convert them to a free trial.

Not all products are under $10 a month either; some have been in the $500 per month category, but guess what?

Most of them have made me feel a little cheapened once I start receiving my monthly receipts.

Why?

Because I mostly (not always) only ever receive automated monthly receipts from these startups.

Heck, you’ve spent a bit of your runway getting that growth hack, those PPC campaigns, that flashy landing page and the great drip email on-boarding. You’re watching (possibly a little obsessively) the conversion rates, the email open rates and the clicks.

But once I paid my money, many of these companies never took the effort to thank me. They chatted me up, I eventually relented and bought them dinner, now they aren’t speaking to me.

Is it really that hard to do? To reward your actual paying customers? It goes a long way to customer loyalty and retention (Yep, I’ve cancelled many subscriptions over the last five years too).

Since we launched our employee survey start-up in late March of this year, I’ve been conscious how we treat those customers that hand over their coins.

I want to share three things that we do, and would love to hear anything that you’ve found works for you. I want to encourage every start-up out there (particularly the ones I am paying) to consider doing at least something once a customer starts paying, besides sending an email receipt.

Before we begin, yes, we’re in the small traction stage of only having a small customer base (it’s early days for us still), however we are bootstrapped as well, so we are well aware that every cost really counts.

Those who argue you can’t do this with a $500,000 MRR, or with so many customers signing up each day are missing the point. You can stop reading now if you like.

So here are three low cost activities we do at 6Q to say thank you to every new paying customer.

Method 1: Send a personal email from the founder.

Yep, that’s me. It isn’t time intensive for me, and sure, when we on-board 100 customers a week, I may feel differently, however I know many of these startups I have used haven’t been any bigger than we are now.

It takes me all of 1–2 minutes to shoot out a ‘Hey Customer, thanks for signing up with us. I’m happy to have you join our journey, and please reach out if you need anything! Regards, Miles’. I have all their details in our system, so I don’t have to research anything.

Heck, when we hit 100 signups a week, I could even template it if I wanted, or worst case, delegate it to one of the team to send on my behalf.

Time: 2 minutes per customer
Cost: 2/60th of my hourly wage.

Method 2: Send a real (yes, paper!) card in the mail.

I always get so excited when I open my mailbox to find anything other than junk mail or paper invoices. There’s a little giddiness you feel, when you get a real-life, hand-written envelope in the mail. Especially if you don’t expect it.

I went out one day, and bought a bunch of greeting cards that say thank you, and a roll of stamps. We hand write in each one and send it within a week of a new sign-up.

One of our ‘thank you’ cards we recently sent.

This is obviously a little labor intensive; a few minutes of effort, as well as a $2 card and envelope, and postage, which varies from 70 cents to $2.70 depending on where we’re sending it.

(As an aside, see the coffee cup in the above picture? We had a handful of these made, and handed these out to our first customers, as a way of saying thanks; sure they cost $10 each, but we wanted to spoil the first few customers who invested in us).

Time: 5 minutes per customer
Cost: Up to $4.70.

Method 3: Send emails to that ‘special list’

We have a special list, just for our paying customers, or our Very Important People (in fact, I prefer the term co-creators or partners).

Screen grab of opening of recent ‘VIP News’ we send.

This email goes out every couple of months to our paid customers. It’s called VIP for a reason; these customers are handing over their hard earned dollars, so the least I could do is share some behind-the-scenes knowledge with them.

In fact, I use it for feature validation — I share details about what features we’re thinking about adding in the short term, and ask our customers for feedback on them, and best of all, we listen to what they say. Why wouldn’t we? They’re paying for our product.

Time: 30 minutes per newsletter
Cost: A few cents per customer.

Summary

These are just three ways we’ve found that make customers feel special, and (we hope!) continue using our product. All up, in total, they take under 15 minutes per new customer, and under $5. Even on our cheapest monthly subscription, it’s only a small slice of their first months income.

Sure, it adds a little to our costs, but I see these activities as more of an investment; if these simple things help keep our retention high (therefore increasing LTV), then they have more than done their jobs. All we set out to do really, was make these people feel a little special for trusting in our startup and product vision.

Do you have any suggestions for other low cost ways to thank your new customers? If you aren’t making an effort to say thank you, perhaps you should?

UPDATE: I’ve posted a new article about one start-up that has done an amazing job.

Go on, start today, don’t leave it for another month.