18 Simple Ways to Reduce Customer Churn in SaaS Immediately

Do you know if you are losing customers each month? And if so, how many? And how does it affect your firm’s overall growth? 

You must be able to answer all of the above questions to make sure your business is one the right track. In short, you must know your customer churn rate! 

This is important as losing customers each month can have a vital outcome for your firm. Whether you have a big or a small company, even a 4% customer churn rate can indicate a high ratio of customer turn, and thereby revenue churn. This is something that no business can afford.

What is customer churn rate?

Your customer churn rate is the percentage of consumers that do not renew or cancel their subscription plans. This can be measured through any given month, quarter, or year.

The big problem is that if customer churn in your SaaS company keeps getting higher and higher it can ultimately prevent the overall growth of your firm. Therefore, you want to be focusing on what you can do to reduce the overall customer churn in your business. 

Below you will find our list of 18 ways to reduce churn in SaaS companies. This should not only help you to reduce your churn rate, but also retain your user in the future. 

 

18 ways to reduce customer churn in SaaS companies

1) Get your onboarding right

It is of high importance that you get your users interested and engage with your software solution right from the initial stage. Because if you don’t, it will most likely have a negative effect on your customer churn rate.

Right from the onboarding process, you need to get your users to experience the real benefits of your service. If you manage that, it will make them more likely to return to your service next time. 

Be sure, that when a customer purchases one of your solutions it is easy to get started. Users do not want to read big manuals about how to get started or go through emails packed with tutorials. This can make people leave already before they actually began to use your product. Consequently, they won’t be making the next payment. 

Instead, you need to make it easy to start using your product. Create a simple introduction email that will get new users off on the right track, fast and easy.

2) Engage with your customers

Make sure you keep engaging with your consumers and maintain regular communication with them, throughout every stage of the consumer journey. 

For any SaaS product, the most important thing is to be able to solve your users’ problems and do it fast. Because if a customer does not feel welcomed and appreciated they are much more likely to cancel their subscription with you. 

One way to approach this could be by segmenting your customers and send out communications that are relevant to the various groups. This should help increase engagement and reduced churn. 

 

3) Use pre-dunning software

Dunning is the situation where a customer payment has been declined and your team is trying to get the customer to update his or her credit card details. However, instead of ending in this situation you can apply pre-dunning software. This kind of software will automatically send out an email to customers and reminding them that their credit card is about to expire and so need to be updated. 

If you invest in pre-dunning software to help you deal with payment issues, it can have a significant impact on your overall revenue. Then you avoid the issue where missing payment becomes a common reason for customer churn in your company. 

4) Offer an incentive

More companies have experienced that it can have a huge impact to offer consumers an incentive to stay. An incentive that is hard for them to say no to.

If they try to cancel their plan, you could, for example, offer users a 20% discount on their current plan. This has shown to be a great strategy for many firms. 

 

5) Educate your users

You need to educate your consumers about your software on a continuous basis – also after the initial onboarding process. This will guarantee that your users have the right knowledge to get the most out of your software. This is important because, in order for your customers to receive the most benefit from your service, they have to be able to use it to its complete potential.

6) Ask For Feedback

Always ask your customers for feedback – both your current and your churning once. While it might seem extremely simple, you can gain great knowledge just by asking for feedback. This will give you the chance to improve and create the best possible product.

However, you need to make sure you ask the right consumers for their feedback. The feedback from a person who did not convert after a free trial is no way near as valuable as the feedback given by a long-term customer who suddenly canceled. Of course, you will not hear back from all churning consumers, but make sure to use the feedback from the once who do respond. 

Little by little, you will start to see a pattern of reasons for churn. Once you have enough data you can then identify which issues need to be addressed first. This will soon have a big influence on your churn rate. 

7) Know what your customers are doing

It is essential to know what your consumers are doing when using your services. Because if you don’t know how they are using it, you will not be able to take progressive action to retain them. 

You should be able to answer questions such as:

  • Is your purchase funnel working properly? 
  • Do your customers make important actions on your product/service?
  • How many users keep returning and using your product day after day?

Only when you have the answer to such questions you can start identifying potential issues and take action to prevent consumers from churning.

8) Offer yearly instead of monthly contracts

Billing your customers on a yearly base is a great tactic to reduce churn among your users. When you offer long-term commitment and contracts it most often reduces churn. This is due to the fact that customers become more dedicated to your product, get it fully implemented and enjoying the benefits.

Yet, on the negative side, it will slow down sales. Therefore, we recommend that you start to testing different billing strategies in order to find the optimal level.

9) Build stickiness into your product

Product stickiness can be increased in two ways; by becoming an essential part of your users’ workflow or by becoming the central container for your customers’ key data.

You need to understand how people are using your product. Then you need to figure out how your software can be well established in your consumers’ business so it won’t be worth it for them to switch to an offer from your competitors.  

You need to know what key characteristics of your product that make it sticky. Then data about customer engagement should tell you who is not using those specific features. Those are the users most likely to churn.

You can also strive to become the central container for your consumers’ key data. If your software holds critical data that are not easily transferred to other solutions, then it will become a big hassle for them to move over to a competitor. 

10) Identify at-risk users

Instead of just waiting for customers to cancel their subscriptions until you start your attempts to retain them, you can take a much more proactive approach. 

You should be collecting data about product usage, so you can identify the most critical factors of a healthy customer. This data will then show you patterns of customers at risk of churning. By getting those warning signals your success team can actively reach out to assure that customers are receiving the most benefits from your product.

It is not necessarily easy to recognize at-risk customers, however, there are some churn indicators that your team can be looking out for. The churn indicators for every firm will be different, but the two main signals most companies should look at are NPS and software engagement.

11) Deliver offers to at-risk customers

If you have identified some at-risk consumers, it is highly recommended that you offer them some kind of extra value to try to keep them.

For example, it is a good idea to remind consumers about their next billing day and then include some information about new key features or a case study about your product. 

As mentioned earlier, one of the main reasons why consumers churn is due to a failed payment. Therefore, you need to send out emails to consumers, informing them about when their credit card is about to expire or their payment failed.

A dunning period is the time between a user’s payment failed and canceling their subscription. By adjusting your consumer’s dunning period, you can increase the number of successful payments among other companies. 

The great thing is that this can easily be done by any SaaS company and help prevent churn drastically. 

12) Design all of your metrics and incentives to promote customer retention

You should create all your metrics and incentives in a way that increases customer retention. This should also include your sales and marketing department. 

You can simply adjust your metrics to fit into your business needs. Furthermore, human beings are basically driven by incentives, so make sure you have those designed in the right way. 

For you to reduce churn, you should begin by making sure all of your teams are customer-driven and centered around customer success.

13) Listen to your ex-customers 

We touched upon this subject a bit earlier in this article. The importance to listen to your consumers in order to improve your services and products is essential. 

You will get the best insight from your churning consumers as they can provide you with specific information about why they canceled. You can also get specific information about what particularly triggered them to leave. 

Gather this information by sending out automatically triggered exit surveys once a consumer leaves. 

The learnings you will get are invaluable to you in the long term, as you can start to align your service with users’ expectations and help improve your overall products. 

14) Explore your top customers’ minds through surveys and research

You need to get inside your consumers’ minds and understand their true preferences and dislikes. Only then can you start to fulfill your users’ demands. 

This can be done through different methods such as comprehensive market research, social media surveys, short interviews through emails or create interactive communications on your website. 

Once you know what your most valuable customers like and dislike about your offerings and your competitors’, you will have an idea of your next move. Maybe you need to create new features or improve/remove existing ones that don’t work anymore. 

15) Upselling Existing Clients

There are many good reasons for trying to upselling existing consumers. The upselling can consist of everything from providing add-on features to additional package options.  Upselling not only allows you to increase overall revenue, but it can also help reducing churn. 

The explanation lies in the fact, that the more engaged your consumers are with your products and services, the more value they will recognize, and the harder it will be for them to cancel their subscription.

16) Amazing Customer Support

Quick response times from your customer support team are critical when maintain a good customer relationship.

Most SaaS companies find themselves in a highly competitive market, and therefore it is vital that you provide excellent customer support. It is very easy for users to swift around and try different solutions. However, if a user experiences great client experience and support that will most often make them stick around.

Therefore, you need to make sure it is easy for your clients to reach your team through multiple channels. These should include channels such as social media, your website, in-app support, and live chat.

In today’s digital world and with all the tools available, it shouldn’t be a problem to maintain a first response time of 45 minutes or less. You can come a long way with fast and efficient support when building trust among your consumers and keeping them from switching providers.

17) Training

It has been proven that providing product training and courses that are relevant within your industry significantly can help to reduce churn among clients. 

By offering different kinds of online training, you will be able to increase customer engagement and ultimately retention.

18) Membership and community growth

By offering online courses, you will also be able to create and own an online community based on the education you provides. You can design communities where it is possible for your users to share best practices and ideas. This should be an online space where they can interact and also receive support from your teams.

An online community will both provide you with further customer insights and increase engagement, as well as decrease churn.

Conclusion 

Churn customers can be a complete killer for any SaaS business, so you need to be taken this matter seriously.

If you already offer a great software solution, make sure to create some strategies that can reduce the churn rate for your company. Even the smallest and simplest act like using dunning software can have a notable impact on your bottom line.

You can start by baselining your own churn rate. Then actively start to work towards preventing churn, and see what happens. Analyze the results, optimize your tactics and then you will hopefully see your churn rate decreasing.

Subscribe To Our Newsletter

Get updates and learn from the best