How We Boosted Customer Lifetime Value in Fintech SaaS by Reducing Churn

In the fast-paced world of Fintech SaaS, customer retention is essential for long-term growth and profitability. As part of our ongoing work with a client in this sector, we looked at how we could increase Customer Lifetime Value (CLTV) to help boost profitability for the same budget. Our strategies led to a significant 25% boost in CLTV.

Understanding CLTV and Churn

CLTV is the total profit a customer generates during their time as a customer. We calculate it by multiplying the average revenue per user (ARPU) by the average customer lifespan, then subtracting the customer acquisition cost (CAC). For example, if a customer pays £100 per month, stays for 24 months on average, and costs £500 to acquire, their CLTV would be (100 * 24) - 500 = £1,900.

Churn refers to the rate at which customers stop doing business with a company over a given period. It's calculated by dividing the number of customers lost during a period by the number of customers at the start of that period. If a company begins the month with 1000 customers and loses 50, the monthly churn rate would be 5%.

Reducing churn impacts revenue stability and growth.

Keeping Customers in the Loop

To keep customers more involved with the product, we looked at how we currently communicate with customer. Better-informed customers are more likely to use the product effectively and provide valuable feedback.

We started a newsletter to keep customers informed about the product. This regular email update shared information about platform changes and new features.

We added a feature request system, letting customers influence product development. We also introduced Net Promoter Score (NPS) surveys to measure customer satisfaction and loyalty. This gave users a say in the platform's future and increased their investment in its success.

Building Features Customers Actually Want

Listening to customer feedback isn't just about making them feel valued—it's about creating a product they can't do without. Based on user input, we prioritised the development of highly requested features.

By aligning product development with customer needs, the product evolved to meet and exceed user expectations, making it a part of their daily operations and making it increasingly difficult to switch to a competitor. This direct response to user needs significantly reduced churn rates and resulted in a higher CLTV.

Refining User Targeting Strategies

We recognised that not all users contribute equally to long-term value. To refine our targeting strategy, we analysed data on customers who were more likely to stay long term, looking at particular sectors and locations. This helped us identify the characteristics of the most valuable customers.

By focusing on attracting users with similar profiles to these long-term customers, we improved retention metrics and acquisition efficiency. This targeted approach allowed us to attract users more likely to become valuable, long-term customers, improving the return on investment.

Fostering Continuous Engagement and Innovation

In the dynamic fintech sector, standing still is equivalent to moving backwards. We encouraged our client to implement a strategy of continuous engagement and product innovation to keep users invested in their platform. This involved regularly introducing new features to keep the platform fresh and engaging for users. We advised maintaining ongoing communication about updates and improvements to ensure users were aware of and excited about new capabilities.

We also recommended focusing on developing tools that met evolving financial needs, ensuring the platform remained an integral part of users' financial processes. By staying ahead of user needs and market trends, our client created a product that users were increasingly reluctant to leave.

Through these combined efforts, we helped our client increase CLTV by 25.16%. The lower churn rates meant that more users continued using the platform, and with targeted upsell and new feature rollouts, their lifetime value grew significantly. For a fintech SaaS business, this growth underscores the importance of retention-driven strategies.