7 Ways to Help Prevent Churn for Your SaaS Company
Customer churn is a crucial metric to every SaaS business that Product managers, account executives and sales reps try to keep as low as can be. Churn is obviously a metric that can change over a company’s life-cycle, for example a company in the early stages of launching a product with one engineer will most likely have a great deal of user experience issues and may experience higher churn rates initially than a company like Salesforce or ServiceNow that is much more established. For a company in the earlier stages who is defining product market fit like a new remote work tool, or marketing automation solution a 5% churn rate is acceptable and something that the product or strategy team would obviously work on to get even lower.
- So if you have 100 paying clients with a 5% monthly churn rate that means your losing around 5 clients each month
- For a company like basecamp or Jira a monthly churn of 5% is a large amount of customer cancellations each month. According to basecamps website they have around 3 million paying teams, so if they have a monthly churn rate of 5% that would translate to losing 150,000 teams each month!
To learn more about churn as your company scales check out this post.
In this post we are going to delve into 7 Ways to prevent and try to keep churn as low as possible.
- Cross-departmental product — This won’t necessarily apply to every product and company but if you can provide some cross-departmental functionality it minimizes the chance that your clients will churn. For example Nifty — tends to be a cross departmental project management tool so a marketing team, development team and product group of a company will all be included under a Nifty subscription making it quite difficult to transition your organization and each department off.
Given the extent of its applicability especially during Covid times — First Base is a great example of this as well given there offering is company wide, cross-departmental and specifically intended to improve remote team communications and infrastructure. - Emphasis on Customer Success — Have a help center with real people and not automated bots. If your customers feel like they have a relationship with your company it will be tougher for them leave and go elsewhere. Its also better to get transparency from your clients on how you can improve your service than receive no feedback because your company never truly got to know its clientele. At Nifty our support teams does its best to make sure that our clients receive responses within 30 minutes of a request, its not easy an easy task but is extremely beneficial in minimizing churn and provides a more personal feel to your business than using automated chatbots.
- Place promotions and incentives for annual contracts — Getting your clients to pay on an annual basis is tough for first time customers who generally don’t want to commit to something for a year after a 14 day trial period. It is for that reason many companies incentives annual contracts at steep discounts — such as sign up annually and get 2 months free or 20% off. This is one of the go-to annual strategies that companies large and small use for minimizing churn, and it tends to bring it down by at least 1% point across the board.
- Keep track and interact for their first 6 months as a paying client — Its very important to track of the usage from your paid accounts, their journey just begins when they become a paying client and one should manage their interaction and usage on the service that they are paying for. If a large company uses the corporate card and then stops using the software they are paying for, it is only a matter of time before they cancel your service. This is also an issue that can be tracked early on by monitoring your clients usage metrics.
- Use customer feedback to help form your road-map — Customer feedback is crucial for perfecting your product and making it the best possible solution for your customers and potential new customers. An efficient way to do this is center your product about what your clients love most and add features based on your core functionality. Mopinion does an excellent job by helping brands collect concise and valuable feedback through email, text, and web tools that makes gathering feedback a lot less time consuming.
- Assist with Importing from competitors — If your clients are coming from a competitor encourage you customer success team to manually help them with importing their data. This is something we do at Nifty quite often and have never had a churned team that imported their existing workflows with one of our customer success reps. Importing can be challenging and often done poorly with automated options - due to misunderstandings of common industry jargon that differs slightly among similar products, or due to not importing all of the data and projects properly. This is another great example how sometimes hand- holding users can go a long way in the future.
- Integrations to give your product more elasticity — Integration strategies are a great way to extend your product and create a number of additional use cases that make it more difficult for clients to seek alternative solutions to your offering. Shopify is a great example of this, to keep users engaged and reduce churn they built an app-center that none of their competitors can adequately replicate, where the products listed must integrate and become an add-on option to your Shopify solution.
Final Thoughts
Unfortunately churn is a part of every SaaS business and keeping it low is what sets apart companies from being great and good. These 7 tips should serve as a guide for areas where a product team can focus and perfect there customers experience eventually leading to an enhanced product experience a long with lower churn.
