How to Reduce Churn Among SaaS Customers

Posted by Ryan Howard on Jan 22, 2021 9:37:16 AM

How to Reduce Churn Among SaaS Customers

If you're in sales, and we all are, you've heard the expression that it's cheaper to retain a customer than to get a new one. Sales and marketing is expensive and retention is easier because the relationship has already been established. Instead of losing customers, especially SaaS customers that have been working with you for months or years, let's try to understand why they're leaving. 

Is there a way to reduce churn among SaaS customers?


Measure Churn

You can't know what you're up against unless you have details. In order to measure customer churn, you'll need to calculate the churn rate within a period of time. Quite simply, if your churn rate (or number of lost customers) is higher than the rate of (or number of) new customers gained, your business could be in trouble.

Churn rate = # Lost Customers/# Total Customers

Understand Why Churn Happens

There could be a number of reasons why your customers are leaving, just like there are a number of reasons customers don't pay on time.  The only way to find out why is to actually engage with those who are choosing to go. You can do this with follow-up phone calls, exit surveys or live chats on your unsubscribe page. If you've never engaged with your customer prior to this point, that may be why they're leaving. Which brings us to our next point, how to reduce SaaS customer churn.

See also: How to Collect From Nonpaying SaaS Customers

Reduce Churn Among SaaS Customers

Perhaps your customer signed up when your company was small and now that you've grown, your customer service team just can't keep up.  Maybe they found a better, or less expensive, competitor to provide the same product or service.  It could be that they're going out of business or merged with another company and simply don't require use of your product or service anymore. The point is... it could be any of these things. With that in mind, consider these tips to reduce SaaS customer churn: 

Onboard First and Friendliest: From the initial correspondence, show your customers that you want to hear from them. Include your social media and website information so it's easier to follow and contact you.

Provide Reasons to Use Your Product or Service: Whether through daily social media posts or monthly emails, offer updates, success stories or other ways for your customers to regularly interact with your business.

Stay Engaged, Especially Near Subscription End Dates: If you know that your customers only sign up for a free trial, definitely keep in touch during that trial so that you stay front of mind. 

Connect with Customer Service: If your customers aren't happy with your product or if they have regular complaints about your service, you won't know unless you pay attention. Bonus if you make it easier for customers to offer feedback during their subscription period. 

Improve and Offer More: When you receive feedback, integrate these new features and changes to your product. Then send out engaging messages providing more reasons to use your product or service.

Charge up front: If your SaaS customers are incentivized to pay a year or two in advance at a reduced rate, you can get paid up front. But again, stay engaged during the subscription period so they don't churn at the end.

In any SaaS or subscription-based sales model, there will be a loss of customers but loyal customers will stick around with these steps. Also, if your client has simply stopped paying, you do have options for collecting what's owed to your business.  Connect with Enterprise Recovery to learn how our accounts receivable, bad debt recovery and legal review can help recover your delinquent SaaS customer accounts.


Topics: Best Practices, Business relationships