Introduction
The recent introduction of artificial intelligence (AI)-powered features in many popular software packages has only intensified the already stiff competition in the Software as a Service (“SaaS”) industry.
While gaining market share is, and has always been, vital to the success and growth of SaaS companies, it is the ability to retain customers and inspire loyalty for decades that separates software giants like Google and Microsoft from various long-forgotten SaaS startups.
Central to this ability to retain hordes of loyal users is that their products are very sticky, especially when compared to their lesser-known competitors.
This article will explore the idea of product stickiness, its importance, benefits, and drawbacks, how to calculate product stickiness, and how SaaS companies can improve their product’s stickiness.
What is Product Stickiness?
Product stickiness is the user’s tendency to keep returning to your SaaS product because they find it engaging and continuously derive value from it. When a product is sticky, it becomes a part of customers’ daily lives, and they readily engage with new features and regularly renew their subscriptions. Product stickiness is therefore a good marker of customer satisfaction and engagement with your SaaS product(s).
The Importance of Product Stickiness
In the subscription-based model that most SaaS products use, the only thing more important than capturing a large market share is retaining it. Keeping customers engaged with and enamoured of your product’s features will pay great dividends, as the lifetime value (LTV) of each customer can be enormous and may even justify some earlier loss.
A teeming group of loyal customers can provide valuable feedback to aid your research and development (R&D) efforts, leading to improvements in your existing products and/or the development of new product line(s).
A strong customer base may also help you build and cultivate a strong reputation around the defining features of your product. This may attract more customers who are more likely to convert while boosting brand equity.
Understanding the Product Stickiness
Product stickiness boils down to establishing a strong connection between your product and its users such that they use it regularly. While what constitutes regular use will be industry-dependent and may be daily, weekly, or monthly, the goal is to ensure customers use your product as often as possible.
The following are fundamental factors that will determine how sticky your product is:
Value Delivery: Value delivery should be at the core of your customer acquisition and retention strategies, and getting it right will do wonders for your product stickiness.
When your customers have come to associate your products and brand with a certain level of value that you consistently meet and sometimes exceed, they will find it easy to stick with you.
A product that adds value to its user, makes life easier, and helps achieve goals effectively and efficiently is a product the user sticks with.
User Experience: A fluid, intuitive, easily accessible, and seamless user interface (UI) that is visually appealing across devices aids a superb user experience (UX). Few things will make a customer abandon a product faster than a choppy, laggy, or otherwise difficult user experience.
By offering a smooth user experience across devices, you will make your SaaS product stand out and well on its way to being stickier than epoxy.
Customer Experience: A recurring complaint about many SaaS products revolves around poor customer experience, especially customer service and support.
While bugs and glitches, no matter how rare, will be an inevitable part of a SaaS product user’s experience, being able to promptly report issues, get support, and make timely suggestions will greatly enhance product stickiness.
Adaptability: In today’s fast-paced market, SaaS companies that are unable to stay abreast of users’ needs will quickly find themselves losing vast amounts of their user base to nimbler competition.
You can improve your product’s stickiness by staying abreast, and even ahead, of users’ needs through feedback, market surveys, R&D, and beta programs. This will ensure your product remains adaptable and constantly evolves to meet changing user needs while staying relevant in a dynamic market.
Having examined some major factors in making your products sticky, we will now look at the benefits and drawbacks of having a sticky product.
Benefits of having a sticky product
- Enhances Customer Retention: Sticky products make customer retention easier and cheaper. The more customers you retain, the less you have to spend on customer retention and the more funds and effort you can devote to actively acquiring new customers. Having a loyal user base also guarantees a steady stream of revenue.
- Word-of-Mouth Marketing: Having a very sticky product means more customers are satisfied with your product. The more satisfied and engaged these users are, the higher the likelihood that they recommend your product to others.
- Reduces Churn: You can greatly reduce customer churn by having a sticky product, as fewer users cancel, fail to renew their subscriptions, or otherwise stop using your product. This eliminates the wasted effort and funds that customer churn would have represented, making your marketing spending more cost-effective.
- Competitive Advantage: Having a large number of satisfied, loyal users will provide the customer base and resulting revenue flows needed to improve your existing products, launch new products, and acquire a larger market share. All the above greatly increase your competitive advantage over your rivals.
- User Feedback and Ideas: Sticky products often have large user forums and communities where users interact with company support staff and each other. This provides a tight feedback loop as well as a treasure trove of user feedback, data, suggestions, and ideas. The feedback, data, suggestions, and ideas gathered can be processed and used to improve the product and/or design new products.
High product stickiness comes with lots of benefits; however, it is a double-edged sword and may lead to certain drawbacks.
Drawbacks of having a very sticky product
- Complacency: Having too much confidence in the stickiness of your product may make you develop blind spots, become lax with innovation, fail to constantly improve it, or fail to exploit new opportunities. This complacency may be fatal to your company.
- Limited/No Diversification: Having a sticky bestselling/flagship product may make you overdependent on it to the detriment of your other products. This can weaken your brand, leave you vulnerable to competitors using asymmetric marketing methods, restrict your ability to diversify your product offerings, or enter new markets.
- Product Bloat: The pursuit of product stickiness via user engagement and feature adoption above all else often leads to the addition of too many features too fast. Aside from increasing the risk of having more bugs, new features may negatively affect user experience, alienate old users, and deter new users.
- Competitive Stagnation: By focusing largely on retaining existing users, you risk neglecting customer acquisition. This may cause you to lose substantial market share to competitors and lead to flatlining revenues, which makes it difficult to later compete in both existing and new markets.
Having explored the benefits and drawbacks of having a sticky product, we will look at how we can improve the stickiness of our product.
Strategies SaaS (Software as a Service) companies can use to improve their product stickiness
- Understand your user: The first step to improving your product stickiness is to understand your users. This begins with market research and extends to comprehensive user research, profiling, and segmentation. By creating a user persona, identifying their goals and preferences, and tailoring your product offerings to their needs, you can increase your product’s appeal to your target audience.
- Education and Onboarding: By optimizing users’ initial experience with your product, you can set a good first, and often lasting, impression of it. Providing step-by-step guides, video tutorials, and tooltips will help users navigate your product with ease and increase their chances of sticking with it.
- Regular Updates and Enhancements: By keeping up with industry trends and new developments, you can stay abreast of users’ needs and keep your product up to date. Timely, feature-rich updates that improve user experience without negatively impacting speed and functionality enhance product stickiness.
- Community Building: Create a community around your product to foster brand loyalty. Community features like user forums, discussion boards, and chat support will encourage users to share their experiences and insights.
- Customer Support and feedback: Establish multiple customer support points to collect user suggestions and bug reports, address issues, and respond quickly to questions.
- Gamification and Rewards: Include award badges, achievements, or rewards for completing tasks or hitting milestones. This will improve user engagement and add a fun and competitive aspect to the user experience. You can check our article on gamification here.
- Data Security and Reliance: Using your product entails users entrusting their data to your company and, at times, its partner(s). Guarantee the highest level of data security with cutting-edge security solutions and strict compliance with industry regulations to ensure users’ trust that their data is safe with your product.
Conclusion
Increasingly strong competition for market share and an abundance of alternatives have made high-stickiness products the holy grail of the SaaS industry. Gaining more market share, preferably a competitor’s, while retaining one’s customer base is the name of the game.
We have seen how high product stickiness can help us win this game. We have also seen its benefits, its drawbacks, and how to attain this holy grail.
By understanding and properly onboarding and educating the end user, providing regular updates and prompt customer support, ensuring data security, building a community, and using gamification and rewards, you can improve your product’s stickiness and retain more users.
And that’s the end of the article.
Thanks for sticking with me so far.
Which of these factors is most important to you in choosing your favourite software products?
Which of them could you care less about?
Let me know in the comments.
