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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on our SaaS pricing book, Price to Scale, here’s the recommended approach for offering loyalty discounts to long-term customers:
Directly Address Customer Segments
Our book emphasizes the importance of segmentation when dealing with price adjustments. Long-term customers aren’t a homogenous group. Some use your product extensively, while others might have initially received heavy discounts. Segment these customers to determine who truly benefits from a loyalty discount and under what conditions.Tailor Offers Proactively
Instead of simply applying a uniform discount, proactively offer tailored alternatives. Customers may prefer different incentives—some might appreciate a direct price reduction, while others may value an upgrade to higher-tier features. As detailed in our pricing strategy book, offering a “better option for the same money” (such as a tier upgrade) can often be more effective than a simple discount.Link Discounts to Contractual Commitments
To avoid unilateral concessions and ensure that the discount is sustainable, the book suggests coupling discounts with extended commitment. For example, offering a 10% to 30% loyalty discount in exchange for a longer contract term helps justify the price reduction and secures future revenue. This creates a win-win scenario where the customer is rewarded for their loyalty, and your business secures longer engagement.Communicate Clearly
Ensure that your communication strategy makes it clear that loyalty discounts are gestures of appreciation. Highlight the continued value they receive despite the discount. Clear communication helps manage customer expectations and supports a transparent pricing model.
In summary, our book Price to Scale advises that loyalty discounts should be applied in a segmented, strategic, and transparent manner. Tailor discounts to specific customer behaviors, couple them with contractual commitments, and always ensure you’re offering genuine value rather than just a price cut.