It is easy to start a SaaS product and see growth. But it is hard work to keep that growth going and prevent churn. This can be a stressful period for many entrepreneurs. But, the good news is there are things you can do to reduce churn and prevent customer churn.
Reducing SaaS customer churn isn’t as difficult as it seems. You simply need to know what to do to get it done. The SaaS business model is divided into 3 main components:
- Customer acquisition.
- Customer retention.
- Upselling and reselling.
Customer retention is the most crucial one.
Continuous customer care is a critical success factor for subscription-based companies. But just as there are numerous ways to grow your customer base, there are several different approaches when it comes to reducing churn. Here are 15 actions that will help you reduce churn rates, and keep your customers happy.
Why You Need to Reduce Churn
No business likes to lose customers. It is, however, significantly more important for SaaS businesses. To make a profit, they rely on recurring revenue from clients. Whereas retail businesses receive the majority of their revenue at the moment of sale, SaaS companies are paid over a longer period.
The longer a customer stays with a company, the more valuable that company considers them to be. As a result, controlling churn is critical for every successful Business. It is also an essential metric for any company to monitor. Keeping customers on board is what keeps your monthly revenue going. It’s also less expensive to keep a single customer than to acquire a new one.
15 Ways to Reduce Churn
If you can reduce churn, your bottom line will look a lot better. Keeping customers happy and paying their subscriptions is the key to achieving long-term growth that can be sustained.
The following are 15 various ways to reduce churn. Mix and combine the ideas and tips that are most appropriate for your company. If you do it right, you can both minimize churn and increase your MRR.
1) Communicate Proactively
Many SaaS companies spend months optimizing their sign-up and onboarding experience only to realize that once users are in, they are easy to lose.
This is a shame, as it usually happens because companies focus on getting people to sign up/onboard and they forget about the customers after that.
I believe there is a simple pattern you can apply to your SaaS company that will significantly increase retention and reduce churn. It is simply reaching out proactively to your users with different touchpoints.
Such proactive outreach shows to customers that you care about them. It tells them that you care about them getting the most out of your service. The most effective type of outreach should also be closely related to the customer’s use of that service. You might, for example, contact users who aren’t making use of a given service feature. A simple reminder of that feature and its benefits can help customers get more out of your product.
2) Identifies The Weaknesses Of Your Service
You’re right to be proud of your company and its products. That doesn’t mean that everything about your business is flawless. No company has a perfect record of doing things right the first time. Your products or services will always have flaws. These problems might be increasing your churn rate.
Some of the issues could be:
- Poor Onboarding
- Bad Customer Service
- Weak Relationship Building
- Pricing
The first step in resolving those issues is identifying them. You have to recognize your flaws. Your current customers are your best source for the answers you need. Try to get as much response from them as possible. Ask Them directly about what they believe you can do to improve your service.
3) Use Automated Emails to Reduce Churn
The cost of acquiring a customer is growing substantially. The channels available to customers are multiplying and changing at a faster pace. In such a situation, it becomes very important for a business to try out new techniques to handle their relationship with their customers in the best way possible. Using Automated Emails offers so many benefits that most of the businesses are not taking its use seriously.
Most excellent automated email clients allow you to set up Trigger Emails. These are messages that are automatically sent to customers under specific circumstances. They could, for example, be sent to someone who hasn’t logged in in a few days. Such emails are fantastic for bringing clients back to your service or showing them how to get the most out of it.
4) Provide Added-Value Elements
A tried and tested way of boosting customer satisfaction is by giving them more for their money. Consider how you may add value to the services you offer them.
What you can do:
- Free Tutorials on how to use your producs
- Discounts
- Promotions
5) Effective Customer Segmentation
Customer segmentation is a process used to divide your current customers into groups with similar needs. Knowing who your customers are helps you understand the motivations behind the decisions they are making and why they are using your product (or not).
Someone who has been with your company for years is not the same as someone who just signed up a week ago. If you want to keep them pleased and onboard, you have to treat them differently. You can communicate with different groups of customers more effectively if you segment them.
6) Identify Customers at Risk of Churning
Customers that are about to churn are an important segment of your customer base on which to focus. You might be able to retain them on board if you can solve their problems with your service ahead of time. That is a smart and effective strategy to reduce churn.
7) Priority Should Be Given To Your Most Valuable Customers
The vast majority of SaaS companies understand the importance of focusing on their highest-value customers. However, you might be surprised at just how few of them do it. I’ve seen some companies that just don’t extend a high level of service to more difficult and demanding users. The benefits are clear: non-high value users have less invested in your product and are more likely to churn.
8) Reward Loyal Customers to Reduce Churn
Loyalty programs are not a new concept by any means, but they are highly effective. According to the Harvard Business Review, increasing customer retention rates by 5% can increase profits by 75% to 95%. Loyalty programs work because they offer a reward to customers who engage with your brand and help keep them engaged.
9) Improve your Onboarding Process Will Help You Reduce Churn
The onboarding process with new customers is a critical moment, as it can determine whether users will stay active on your website or leave. For that reason, you want to get it right, and for most businesses, this includes a step by step process.
User onboarding is the process of delivering product value to your users during the vital period soon after they’ve signed up. There is not a one-size-fits-all onboarding process, but the goal of it is to make a user’s first experience with your product as intuitive and instructional as possible.
10) Upselling is your Best Friend
It is critical to promote your products and website to new customers. However, you should not dedicate all of your marketing efforts to generating new leads and prospects. It may surprise you how profitable it is to upsell new packages and add-ons to existing customers.
11) Continue Adding Value and Tell Users
You never want to get stuck in a loop in business. You should always strive to enhance your products and services. Keep an eye out for ways to add value to the services you provide to your customers. When you provide new services or features, make sure to tell your customers.
You may want to inform:
- New features
- Upgrades
- Resolved issues
- Success stories
12) Build a Customer Community
If you aren’t actively engaging your customers, Churn is an inevitable consequence. But to prevent churn, there’s one thing you need to do – create a customer community. What is a customer community? It is essentially a forum where customers feel safe in sharing ideas and opinions. Creating a customer community will reduce churn, increase sales and increase revenue. Social Media is a great place to do this.
13) Lengthen Subscription Time: Offer Longer Contracts
Longer contracts are a simple and effective strategy to reduce churn. By tying a customer to a longer agreement, you are virtually assuring that they will not churn for an extended length of time. However, you must use caution while prolonging contracts.
Extending your customers’ commitments works best when they are already happy with you. Customers that are pleased with your products are more likely to stay with you in the long run. If your customer satisfaction levels aren’t where you’d like them to be, other churn-reduction strategies may be more suitable.
14) Keep The Personal Touch
More than just making an existing customer feel valued, personalising your emails will help you keep them around for longer. Keeping customers engaged will help you increase your brand loyalty, and ultimately improve your churn rate.
15) Use A Data Science Platform To Reduce Churn: Radix Is Here To Help You!
With the right platform, data science can help you identify at-risk customers and reduce churn. Radix makes it easy to try out and adopt the latest data science techniques in a self-service way.
As a data science platform, Radix’s key differentiator is the ability to understand user behavior using machine learning and personalization to reduce churn rate.
Create your Free Account Here!
Read More:
Types of Churn: Delinquent vs Proactive
Revenue Churn: Definition, How to Calculate, Ways to Track & Improve
