SaaS Churn Rate Reduction: 5 Ways to Take Action for Your Digital Business

Long gone are the days of acquiring a customer in-store, building a personal relationship over time, and ensuring their ongoing satisfaction with your product or service with a series of frictionless touchpoints.

Few companies have the brand strength or large enough market share to assume a purchase or subscription sign-up is the end of the customer lifecycle. And as the savvy consumer builds up a near endless arsenal of resources to find the most satisfying option at the price point they want, a digital business’s set-it-and-forget-it approach simply won’t be effective enough for reducing churn.

Download this helpful infographic to see which subscription metrics you need to track now.

The more intel you have on your customers and what makes them tick (and churn), the more likely your business will grow. Unlike traditional ecommerce KPIs, subscription metrics are centered around recurring revenue. Check out this infographic to see which metrics you should be tracking (and why). 

Here, let’s take a deeper dive into some other tactics your business can apply to turn a one-time customer into a lifetime customer.

Educate Customers Early in the Buying Cycle

According to intercom.io, 40-60 percent of customers who sign up for a free software trial log in and never make a purchase. And even ones who do may not trigger the installation process or build a satisfied relationship with your brand. A drop-off this early in the buying cycle may be attributed to a lack of education around product value and product functionality.

When selling to customers of all ages and technical savvy, education is particularly key. Make sure potential customers understand exactly how the product operates, why it’s beneficial to them, and how it differentiates from the competition. Provide a series of video tutorials, an FAQ page addressing users’ most common issues, or launch an email campaign exploring key concerns.

Segment Your SaaS Customer Lists

When it comes to the outbound marketing methodology, it’s vital to send specific messaging to your customers based on buyer persona and position in the buying cycle. A one-size-fits-all email marketing approach will feel impersonal to your base, likely ending in the tempting “unsubscribe” button, and ultimately, a failed retention opportunity.

For example, a customer who has used your software for five years should receive different messaging than the customer who purchased a couple months ago, or is still in the freemium stage. A richer understanding of what your customer needs from your product can reduce the chances of a short- or long-term customer fleeing to a competitor who can offer a more personalized experience.

Market to Current Customers (Not Just Prospects)

Digital businesses tend to invest much of their marketing ad spend in finding and nurturing prospects. This is obviously an important part of the customer acquisition process, but just because someone becomes a customer doesn’t mean they’ll be a customer for life. If a competitor offers a more versatile product or compelling price point, don’t expect a current customer to stick around.

Using email campaigns and social media as a delivery service, offer content that reminds current users why your product provides the greatest value – product updates, new features, or news of your company’s recognition by a respected association or awards program. Or, position yourself as a thought leader in your industry by providing blog content, ebooks and white papers, and other collateral that shows how your company has its finger on the industry’s pulse.

Stop Churn Before it Happens; Identify At-risk Customers

After a customer churns, they’ve ultimately decided that your product no longer meets their needs (if voluntary), or factors not associated with action they’ve taken have derailed their subscription (if involuntary). Either way, once a customer churns, it becomes exponentially difficult to get them back.

So, since the nature of a SaaS business allows a richer understanding of customer behavior, why not use that information proactively to prevent an at-risk customer from churning before it happens?

In his blog on churn threat, marketing, sales, and customer success though leader Lincoln Murphy lays out a few red flags indicating that a customer might be ready to churn:

– Downloading data: This may indicate a customer is backing up their data with intent to cancel their service. Have your customer success team reach out.
– Unusual website behavior: Is a customer not utilizing your website, or are they spending some time on the “cancel subscription” page? It may indicate a desire to end their subscription. Use the other tactics we discussed above to prevent them from doing so.
– Widget removal: Many SaaS businesses have a widget with an embed code for users’ sites – for chat, surveys, opt-in forms, pop-overs, analytics/tracking. The removal of any of these tools should be flagged as a significant churn threat.

Read Lincoln’s blog for more churn threats for at-risk customers.

Maintain Competitive Advantage, and Know When it’s Time to Improve

A digital business can take any and all measures to mitigate voluntary churn, but the most effective one remains offering a quality product with a strong competitive advantage. Customers won’t churn when you don’t give them a reason to.

In the SaaS market – or any market for that matter – there’s always a company positioning themselves as of a higher standard for a lower price. So, follow suit. In your messaging, including email campaigns, blogs, promotions, sales collateral, etc., communicate specifically why a customer should choose your product over someone else’s. A case study, price/benefits comparison, or other points of differentiation keep your value top-of-mind.

If your competitive value proposition isn’t immediately clear, it’s time to do some work and find out where you can improve. If your business or merchant of record operates customer success and customer service teams – and it certainly should – survey the most customer-facing groups to identify common frustrations. What are your customers saying? The software is too expensive, no auto-updates, poor user experience? Once you understand end-user complaints, your business can work backwards from there.

According to Divante, 91 percent of unhappy customers will simply leave and never come back, and 96 percent don’t complain at all. So, it’d be wise to heed the call of those that do.

Keystone

Every SaaS company experiences churn, no matter what you might do to avoid or reduce it. But the efforts you take to minimize both voluntary and involuntary churn are fairly straightforward, not to mention more than worth the investment. Deploying these tactics can enable your business to focus on acquiring valuable new customers, instead of playing catch-up with the ones that jump ship.

Interested in learning how cleverbridge can help your business reduce churn? Reach out to us!