A high churn rate is a sign that your SaaS business isn’t doing well. According to SaaS Capital, a 1 percent difference in churn can affect the valuation of your company by 12 percent. So, reducing churn needs to be a top priority for every organization with a SaaS offering. Here are five proven methods to drastically reduce your churn rate.
1. Build a Better Product
If your SaaS rate is particularly high, there may be ongoing issues with your product that cause customers to leave once they’ve tried it out.
Take the time to look at your product from the perspective of the user. Is it easy to use? Does it make your ideal customer’s life easier or is it just another thing to add stress to their day? Does the price match what you’re offering? The more you’re able to dissect the shortcomings of your product, the quicker you can determine what needs fixing.
2. Fix Your Onboarding Process
Customers can be lost during the onboarding process. Maybe signing up is too clunky, or customers are unsure how to use your product, so they never progress very far. Whatever the reason, being able to retain customers simply by better engaging them when they first sign up is an easy win.
The education app Magoosh was able to increase its conversions by 17 percent by A/B testing its welcome message. The company recognized it was losing customers in the early stages of engaging with the app and decided to leverage data in order to fix it.
While your data will give you an idea of why you’re losing customers so early in the process, in most cases it just means you need to make it easier and quicker for customers to sign up.
3. Find Out Why Your Customers Are Leaving
If you can figure out exactly why your customers are leaving, the next steps will be easier. Something as simple as asking why they left can give you the answers you need. Simply send an email to customers who have unsubscribed and ask them to complete a survey about their experience.
In other instances, your data will tell you the story. Alex Turnbull, founder and CEO of Groove, shared on the Kissmetrics blog how discovering the red flags that preceded a user unsubscribing from the service helped reduce churn by 71 percent.
4. Communicate More
Sometimes your customers need to hear from you to help them through any hurdles they are experiencing with your product. Regular communication can go a long way to prevent customers from leaving.
Clement Delangue, chief marketing officer of Mention, helped reduce churn by 22 percent in one month by continuing the conversation with users after the free trial period ended.
Additionally, although Mention’s staff had a marketing process that converted free trial users, communication stopped with them after users upgraded and became paying subscribers. Mention decided to create additional emails and in-app messages to keep users engaged and to encourage their use of additional features.
Sometimes a little communication goes a long way; keep that in mind as you work to reduce churn for your SaaS business.
5. Target the Right Audience
Are you targeting the right customers in your growth efforts? Maybe your target audience isn’t refined enough. Signing up lots of new customers doesn’t mean anything if they are just going to turn around and leave after the free trial period ends or soon after signing up.
Attracting customers who don’t need what you’re selling is a surefire way to have a high churn rate. Look at your data and see what it tells you, or simply ask recently departed customers why they left. If the bulk of the answers you receive indicate your product doesn’t address their needs, you know you need to refine your marketing efforts for a client base better suited for your product.