Chapter 6

Reducing Customer Churn for SaaS

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Customer Churn: The Ultimate Guide

The digital transformation of business has empowered customers to expect responsive, personalized service from SaaS providers. You can only provide that experience if you understand who they are, how they work, and what they need.

The following SaaS strategies for customer success are all based on using data to create an intuitive customer experience:

  • Rapidly onboarding
  • Maintaining customer success efforts
  • Maximizing post-sale customer management
  • Servicing the customer
  • Personalizing the renewal process

Before we consider the solutions, let’s look at the reasons why customers churn in the first place. In most cases, data-driven customer management can rekindle interest and progress the relationship.

Fear of customer churn can make you feel you’re standing above a trap door, like the floor could fall away at any moment.

But you’re not a passive victim. We believe in data-driven, proactive customer success that lets you take control of your churn risk and strengthen your customer relationships. Reducing churn in this customer-centered subscription economy means placing the customer at the center of everything you do. It’s about proactive customer success, not reactive customer service.

ROI-focused SaaS strategies should be based on comprehensive data gathered from every customer engagement. That information is then turned into customer solutions that create an ongoing revenue source across the entire customer journey.

In short, customer knowledge conquers churn fear.

With that, here’s some of the most effective ways to reduce SaaS churn:

1. Communicate with Your Customers

If you want to achieve customer success by lowering your churn rates and increasing retention, you will need to learn what customers want from you, how you are failing to meet their expectations, and if you should give them even more product or service options. And this starts by talking.

It’s simple. 

If you want to know what’s disappointing your customers, ask them! 

But what method should you use? 

One easy tool is the satisfaction survey. Keep it short at 10 questions or less. If a survey is short, customers will spend more time considering and answering each question, which improves the quality of your data. 

Present a satisfaction survey to the customer at an unobtrusive moment, like when they have just closed or opened an app. If you work around their needs and schedules, customers will be more open to talking to you.

With the help of customer success platforms, your team can also use automated emails to ask customers how well they’re adopting your products and services. 

Don’t use this as an upsell opportunity, which customers can smell a mile away. Just ask them if they need any product support or have any feedback. Also, be available to customers on social media, reply promptly, and pay attention to their comments. 

This is also a great source of feedback. So keep an open ear, open channels, and communicate with your customers on their terms. You just might gain insights into why they are canceling subscriptions or spending less.

Empowering your team with an enterprise customer success solution that increases visibility around customer health metrics while empowering proactive conversations with customers at risk of churning is also essential in order for your subscription-based business to compete in a crowded market. 

Gathering intel straight from your customers about how they are using—or struggling with—your product can go a long way toward helping your enterprise beat the average churn rate for subscription services.

2. Ensure Customers Adopt All Your Product’s Features

If customers subscribe to your service or product but fail to use all the features, then they may not recognize the true value of your product. And when customers fail to see the value of a product, it can drive up churn rates. So, spend some time working on product adoption.

Start by ensuring that a customer understands why your product is useful right away. You can use welcome messages, tutorials, and tooltips to show how your product works in small, digestible bites. As your product evolves new features, introduce new capabilities as though they were mini product launches.

Get customers used to new features by sending them emails that give reminders and guidance on next steps. For example, if a customer downloads or installs a digital product, send them an email explaining how to use it. In fact, send an email any time a customer takes an action related to the new feature.

Customer relationship management platforms make it easier to nurture positive customer adoption by alerting you when certain events occur. As such, you can see if a customer is not taking advantage of a certain feature so you can then remind them of its value.

By understanding your company’s current churn rates, you’ll begin to pinpoint where your enterprise is losing revenue—and why customers are canceling subscriptions. Churn rates offer insights that can help you refine your product and become an all-around better company. That means your customer success team must know how to meet revenue growth goals, tighten profit margins, and expand your subscriber base.

But, keep in mind, these numbers are only one part of your enterprise’s success story. To position yourself as a leader in the market, you must empower your team with SaaS tools that paint a full picture of the health of your customers—and of your enterprise.

3. Rapid Onboarding

Onboarding is the first step in the customer journey, and you want to reduce the amount of time it takes to move from post-sale to the earliest experience of value. There are several practical ways you can speed up the process, including:

  • Establish KPIs
  • Coordinate customer training with management
  • Constantly monitor customer adoption
  • Celebrate key milestones
  • Identify and analyze bottlenecks
  • Measure and understand onboarding progress

The onboarding process doesn’t end until the customer can use your product independently. Even then, you should constantly monitor adoption rates to identify potential risk and upsell opportunities.

4. Maintaining Customer Success Effort

You build a customer-centered SaaS business by gathering data during every interaction and making it accessible to every member of your team. To achieve this goal, you need a goals-centered customer success platform that places data into a visual, hierarchical system and lets you quickly identify where each account lies on the customer journey. Any team member should be able to easily identify if a customer is at risk or has entered a new phase.

The right customer-data platform will help you maintain a consistent and evolving customer success effort.

5. Maximizing Post-Sale Customer Management

In an opt-in SaaS subscription economy, value comes from customer retention and continuous upselling and adoption. Rather than focusing on short-term revenue, your goal should be to foster value across the customer lifecycle. This cycle includes several clear milestones:

  • Onboarding
  • Nurture
  • Renewal
  • Expansion

Each phase requires dedicated attention from your customer success team if your revenue base is to expand beyond a single transaction into an ongoing, long-term relationship.

The terms nurturing and expansion are key. By leveraging customer data insights, you can proactively encourage greater product adoption and feature use over time. Staying relevant to your customer means demonstrating you can both drive and accommodate their growth.

6. Servicing the Customer

You want to keep your customers happy so they will renew, and in order to do this, you need a comprehensive understanding of your customer. Maintaining a customer success platform is integral to knowing where a customer is on their journey and what form of engagement will suit their needs.

The most efficient way to accomplish this goal is by using customer data to create a customer health score. A customer health score is a simple color-coded score that can be read at a glance but is composed of complex algorithms and business rules that predict how likely a customer is to renew their subscription.

It’s about using actionable, results-driven data to be proactive. Offer solutions to problems your customers have yet to encounter, demonstrate that you understand their business, and most of all, give them answers whenever they ask questions.

7. Real-time, ROI-focused Customer Success

The best way to beat your fear of customer churn is to gather knowledge and use it correctly. The customer-centered economy demands that we give customers an experience that is intuitive, responsive, and personal. You can’t achieve that goal without intimately knowing your customer, their needs, and their operations.

By gathering customer data at every engagement and creating a real-time understanding of where they sit in their journey, you can make customers feel as if your company is built around them as individuals. You reduce churn by remaining relevant to your customer as they grow.