Churn is arguably the single most important metric for the longevity, growth, and profitability of a Saas business.
Starting from the beginning, churn isn’t really something you think about in the early stages of your Saas. Churn starts to become noticeable and possibly even problematic around the second year in business. The logic behind this in my experience, is that your first adopters giving you a shot and will likely stick around. These are the clients who know you’re a startup, expecting issues, but are truly hoping and rooting for you to succeed and evolve. It’s pretty unlikely you’ll see much churn in the first year, unless you really screw something up.
There are several ways you can tackle churn and get ahead of the problem that often cripples the growth of Saas companies:
Proactive Engagement with Clients
Catching your clients at the critical point where they may start to think about cancelling is vital in preventing churn. These critical points are usually when clients stop engaging with the app, or haven’t logged in your app in a while.
It’s very likely, that if a client is not logging into or using their app, they are not seeing much value, and are paying you for no reason. They will eventually realize this when they have to update their credit card.
There are many data intelligence tools that you can plug into your app that will give you useful triggers and analytics, such as Mixpanel.
There are a tonne of useful and relevant communication triggers you can fire off to your clients. For example, a simple and useful event based trigger such as who hasn’t logged in your app in the past 30/60 days, can dramatically reduce churn. Think about how you would feel if a company called you, sent you a quick email or SMS to simply ensure everything is okay. That simple touch point will affect your client’s psyche, which they won’t forget easily. It’s not very often, if ever, that happens.  By making these quick touch points, you will not only catch a big handful of clients at that critical point, but also save several of them who might have been thinking about cancelling.
Every Saas is different of course, and there could be an array of specific event based triggers you could use to be proactive in your client communications. Get creative, and start engaging!
Good Retention Skills
Many might disagree, but simply disallowing clients to cancel their subscription within your app can significantly reduce churn. This means that every client who wishes to cancel has to reach out to you either by email or phone, to inform you of their cancellation request.
This simple hack gives you the opportunity to reach out to every single one of these clients, gather their feedback, and of course try and retain them.
More often than not, all it takes is a two-minute conversation with a client to understand their concern, and give them the reassurances they want to hear in order to retain their business.
Sometimes clients need reminders about the value your app provides, and get them excited about using it again to help their business grow.
Saving Clients in Dunning
As your user base grows, it quickly becomes impractical to manually reach out to clients whose payments have failed. It’s inevitable that clients will have to update their credit cards during their tenure of their business with you.
Implementing an effective dunning strategy will help save a significant amount of possible lost revenue, and reduce churn. Most recurring billing systems have a dunning feature and recommended outreach flows. Of course every businesses clients are different, so your dunning strategy should reflect that.
An effective dunning strategy should be able to save over 90% of your clients, and a significant amount of revenue each month.
Upselling Existing Clients
Offering add-on features and additional package options in your Saas is important for many reasons. Of course, it allows you to increase revenue and ARPU, but it can also help with churn.
The deeper your clients are engaged with your products and services, the more value they will see, and the harder it will be for them to leave.
Using effective event-based triggers could help you reach out to clients that might be interested in particular add-ons. Being very relevant and targeted in your upselling efforts is much more efficient and will increase conversions, rather than trying to cast an aimless net across your entire user base.
Upselling not only brings in more revenue, but over time, it will increase LTV and help clients stick around much longer.
Positive Engagement
Effective communication with your clients is absolutely necessary in reducing churn. You need to constantly remind your clients of the value you are providing them. Using critical relevant touch-points and event-based triggers, you can congratulate your clients on successes, send important reminders that could help them grow their business, and keep them in the loop with updates that are relevant to them. Keep the dialogue open!
Amazing Customer Support
Chances are, you’re in a Saas that is highly competitive. In most cases, it’s very easy for clients to jump around to different providers and trying new apps. A key differentiator most of the time, is in the client experience (support). Make sure it’s super easy for your clients to reach you through multiple channels. Whether it’s through your website, live chat, in-app support, social media – your clients expect you to be there, and be there quickly.
Quick first response times are critical. With the apps and tools available, there should be no reason why your company can’t maintain a first response time 45 minutes or less. Fast and efficient support goes a long way in building trust and keeping clients from switching providers.
There is no magic formula in stopping churn. There will always be psychological factors that are nearly impossible to extract from your clients that will prevent you from understanding why they cancelled. The most pragmatic actions you can take are being aware that churn is inevitable, and applying some creative, proactive solutions to mitigate it. Good luck! 🙂
