10 Ways to Reduce Customer Churn

TL:DR

  • Churn is the rate of customers cancelling their subscription to your SaaS service ❌
  • It can give you an idea of how sustainably your company is growing 📈
  • Customers changing their minds, poor customer support and unmet needs ➡️ churn
  • Invest in your support team, ask for feedback, and analyze every instance to reduce churn 🙌

Keeping customers happy is important for any business, but it’s especially critical for subscription-based SaaS companies. After all, if your customers churn too quickly, you’ll struggle to build a sustainable business, and it will be very difficult to maintain an upwards trajectory.

Fortunately. there are a few things you can do to dramatically reduce customer churn, so that you can keep scaling while ensuring that your customers are satisfied with your service. 

In this article, we will explain what customer churn is and how it can impact your SaaS business. We’ll also explain how to reduce churn so that you can keep your customers happy and coming back for more.

What is Customer Churn?

Customer churn is the rate of customers cancelling their subscription to your SaaS service. It’s an important metric to track, because it can give you an idea of how your company is progressing. If your churn rate is high, it could indicate a need for improvement in your SaaS product or service. A low churn rate, on the other hand, can indicate that your company is in a healthy place and customers are happy with what you’ve been providing.

Why is Low Customer Churn Important in SaaS?

Low customer churn is important in SaaS because it means that you’re retaining customers, which is vital for the long-term viability of your business.

A low customer churn rate means more revenue, which in turn means that you’ll be able to continue improving your service and attract even more customers.

It’s like a snowball, when customers are happy, they remain loyal, and more customers get on board. Likewise, when customers are unhappy, they will leave, post negative reviews, and more customers will leave. 

Main Causes of Customer Churn

There are several reasons why a customer might churn from your SaaS business. Some of the most common reasons include the following: 

  • Customers change their minds
  • Customer needs go unmet
  • Customer support issues
  • Pricing issues

Customers change their minds

Customers sometimes sign up for your SaaS product with the best of intentions – they’re committed to using it and benefitting from it. But then they change their minds, either because they no longer need the product or because they’ve found a better alternative. 

Customer needs go unmet

When a customer subscribes to your SaaS product, they’re hoping to achieve something. If their needs aren’t met, they’ll churn. Therefore, you should consider offering them a trial period, and you should have a new customer onboarding process in place to ensure each new customer understands how to use your platform. 

Customer support issues

Customers who can’t get satisfactory answers to their questions or concerns about your product in a timely manner are likely to churn. So, if your customer support team is unresponsive or unhelpful, then you should plan on having a high churn rate.  

Pricing issues

If your product is overpriced, or if the price doesn’t align with the value it offers, customers will churn in favor of a solution that meets their needs and is more affordable. 

10 Ways to Reduce Customer Churn

Now that we’ve gone over what customer churn is, why it’s important, and some of the most common reasons for customer churn, let’s look at how to reduce churn and keep your business growing at a steady pace. These 10 tips should help. 

  • Customer support is key
  • Lean into your best customers
  • Be proactive with communication
  • Define a roadmap for your new customers
  • Offer incentives
  • Ask for feedback often
  • Analyze churn when it happens
  • Stay competitive
  • Create a community around your customers
  • Have customer success managers for your most valuable customers

Customer support is key

One of the most important things you can do to keep your customers happy is provide excellent customer support. When you have customers who are having issues, need help getting started, or want to learn when and how they can use your product, you need to be there for them. 

If your customer support team is responsive and helpful, it will go a long way to keeping your customers happy and reducing the chances that they'll churn. Remember, customers expect companies to respond to them quickly, but they also want those responses to be helpful.

If you’re able to help customers who have questions or issues, you’ll build brand loyalty and reduce the chances of customers churning.

Lean into your best customers

If you have customers who love your product, who use it frequently, and who are enthusiastic about their experience, you want to nurture those relationships. Also, if you have beta customers who are actively using your product, you might want to extend their beta phase and keep them in your customer base. 

This will allow you to continue gathering feedback from these customers and improving your product. These types of customers can help you to mitigate churn from your less-engaged customers because they are more likely to advocate for your product and recommend it to others.

Be proactive with communication

Depending on the type of product or service you offer, you might have communication and education requirements. Customers who have purchased a service that requires them to take certain steps to use it need guidance and instructions. 

When you have customers who are struggling or not making progress with your product, you need to stay in touch with them and try to help them succeed. Not only will this help you reduce churn, but it will also help you prevent negative reviews and improve your product based on real-world feedback.

You can use a technology like session replays for this. Session replay tools record user activity within your app so you can actually see how your customers interact with it, and any issues or frustrations they may have. Software like this also highlights instances of rage clicking, so you know exactly what step a user became frustrated at and churned.

Customer support and product teams use Fullview Replays to reach out to users directly upon observing an issue before it causes that user to churn.

Define a roadmap for your new customers

If you have a customer base that is growing quickly, you should think about how you’ll move your customers from beginner to advanced. You want to guide your customers so that they can become successful with your product as quickly as possible. This will help you increase customer retention, but it will also help you acquire new customers by demonstrating the value of your product.

We've explored how to perfect your onboarding process in detail before, so make sure you read that article as a primer before you get started.

Offer incentives

If customer retention is a big concern for your business, you might want to consider offering incentives. People who pay for subscription-based services are making a long-term commitment. They may be hesitant to do so because they’re worried they’ll churn before they get their money’s worth. 

Therefore, offering incentives can help you reduce customer churn and increase customer lifetime value. You can offer customers discounts for paying annually instead of monthly, rewards for referring new customers, or special bonuses for reaching a certain milestone.

Ask for feedback often

When you’re actively trying to reduce churn, you can’t only focus on the customers you have. You also need to keep an eye on customers who churn and understand why they leave. Asking for feedback often will help you learn what you can do to keep your existing customers happy and reduce churn. 

Asking for feedback can also give you some insight into how you can acquire new customers moving forward. When you ask for feedback, you can learn what customers like and dislike about your product and what they wish you would do to improve your SaaS offering in the future.

Analyze churn when it happens

The best way to understand why customers churn is to analyze it when it happens. You might have customers who are paying on a monthly basis, yet they don’t renew their contracts at the end of the month. When a customer fails to renew, send them a message and ask why. 

Or better yet, review their recorded session replays to see exactly where they decided your product wasn't for them. You can do this by reviewing what events took place during their last session or when they rage clicked during a particular sequence or process.

By analyzing customer churn in this way, you’ll be able to understand what went wrong and how you can improve. This is also an excellent opportunity to reach out to your customers with an offer to try and retain them before they subscribe to a competitor's service.

Stay competitive

One of the best ways to reduce churn is to make sure you’re competitive. Customers will churn for a variety of reasons, but one of the most common is that they’re switching to a better product. When you’re trying to retain customers, you have to make sure your product is better than the alternatives. 

You need to be constantly monitoring what your competitors are doing and making sure your product is better. For example, if your product is 10% more expensive than a competitors’, that might not be a big deal if your product is better than theirs. But if you’re, for example, 30% more expensive, you’re may lose customers regardless of how much more you’re offering. 

Create a community around your customers

If you have an SaaS product, you might want to consider creating a community around your customers. Most SaaS companies have a small group of customers who are active with the product and are trying to help other people get started. 

If you have a way for these customers to communicate and collaborate, you could encourage other customers to participate and build a community around your product. This can be a powerful way to reduce churn, especially if you’re offering a skill or knowledge-based product.

Have customer success managers for your most valuable customers

If you’re having a lot of success with your product, you might want to consider offering customer success managers for your most valuable customers.

A customer success manager (CSM) can help you prioritize your time and focus on your most important customers. 

CSMs can help customers with their problems, provide support, and even help you retain and upsell customers. If you have a few customers who are using a lot of your time and resources, but are bringing in a lot of revenue, it might make sense to hire a CSM to manage their accounts.

Conclusion

Customer churn is a harsh reality in the world of SaaS, however, by following the tips and tricks discussed above, you’ll be able to keep your customers and keep your business on an upward trajectory.

Remember, the most important thing to understand is that customer support is everything. If your customers are happy then they will remain loyal, but the second they become dissatisfied, then they will leave you for one of your competitors. 

Want to reduce churn? Fullview can help. Learn how.
Author

Shifa Rahaman

Content Marketing Manager

Contributor