It’s a SaaS world out there. Everywhere you look, there’s a SaaS designed for every problem. But this very same scenario which makes it a win for the SaaS industry also makes for a fickle business.
Churn has become the enemy. Losing customers became a small death sentence that marches a company to doom bit by bit. Which is why retaining customers has become the new holy grail.
According to studies, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. And not only that. According to the research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score), increasing customer retention rates by 5% increases profits by 25% to 95%. Now that is a statistic that can help turn any SaaS company into a unicorn. All you have to do is keep your customers happy. In a perfect world, that would have been easy. In this one, it’s a tall order. So, how do you go about making your customers happy?
With that said, here are proven ways to reduce customer churn for your SaaS company.
Reach out to your customers
Constantly communicating with your customers makes your customers feel that they can rely on your product. No matter where you are on your product development, reaching out means that you have not abandoned your product and they can continue to use your service in relative peace. Relative being the operative word. Because the moment they detect a weakness, they will churn. The only way you can get hints of their intention is through their feedback. That’s why you have to be on your toes, reaching out to them often.
Use targeted emails
There are so many reasons to reach out, but it’s important to be relevant. Ensure that your communication is related to the customer’s use of the product.
Categorize your customers into segments and then map out how to contact the different segments. The content of this message should be engaging and informative, giving your customers more reasons why they need your product. For instance, if you notice a customer is not using a specific service feature, send a quick reminder to help the customer get more of your product. Or send emails to customers who haven’t logged in for a while. If youre suffering from activity churn, invite them to log back on. Entice them with new update. Or simply ask them why they’ve not been using the product and the reason why. You’ll be surprised with the answers. And more importantly, they can be eye openers on what your clients think are important. Hint, then may not be about your lack of new features.
Reach out to customers at risk of churning
Customers at risk of churning don’t give prior notice, but they do leave tell tale signs. When was the last time they logged in to use your service? Did they finish your onboarding? Use your data to figure out who are at risk. Most importantly, figure out the “why”.
If you are able to answer that question, you might be able to raise that retention rate.
Here are other ways to spot customers who are at risk of churning:
- Customers whose use of your product is declining gradually
- Customers who feel reluctant to sign up for new services
- Customers who ignore your targeted mail
Create your action plan
Once you have gathered all the information above, it’s time to set up a churn strategy. Your churn strategy should be a working document, which is reviewed periodically at least once every six months (or annually) to find out what needs to be changed and what needs to be updated.
Your churn strategy should never be sleeping, just like retaining customers should always be alive and dynamic.
So, to write your churn strategy, you can focus on the following things:
- How to improve your onboarding.
- How to improve every point of the customer journey.
- How to make use of personal feedback.
- How to decrease passive churn.
- How you will use complaints to bolster your customer retention.
Consider Taking on a Churn-Reduction Partner
And by this, we don’t mean collection agencies, as most of them have tactics that could kill your business. Collection agencies normally try to frighten your customers. For example, they threaten legal action and scare and intimidate the customer into paying what’s owed. This will only serve to scare away your customers — and they’ll never come back.
Collection agencies are also known for waiting too long. In terms of churn, the old saying that the early bird catches the worm is spot on. Most collection agencies can wait up to 90 days before they start contacting your customer.
The effective, modern and reliable way to identify a churn-reduction partner is to find one that has a full-time focus on reducing churn in your business. This partner needs to have a proven communication process, which would personalize follow-ups that act as a buffer and a human face to dunning software.
Lastly, your churn-reduction partner should also have visibility, which allows your business to be relatable to your customers and provides measurable payment recovery so you can focus on measuring everything else in your business.
Gravy, a startup helping subscription-based businesses recover failed payment provides all these services and more.
If you can reduce customer churn rates for your SaaS product, you are a step closer to making your business more profitable. A good customer retention strategy is an excellent way to stand out. While there is no single successful method for reducing churn, exploring these methods above should come in handy.