Reducing churn is mission critical for all SaaS businesses. We write about it, read about it, discuss it, test for it, and even when we’ve reduced churn we look for ways to reduce it further. In a recent content marketing meeting we realized that while there are many blogs on how to reduce churn (ours included), it would be great to have a compilation of tips from the leaders in our industry.
So we asked SaaS experts and leaders, “What is that one tip for reducing SaaS churn that you wish someone had told you when you first started?”
By the way, huge thanks to everyone who took time out of their very busy schedules to share their knowledge with us (and you).
As the results came in, some common themes emerged:
Customer Success: Customer success is here to stay, and savvy SaaS leaders are implementing it from day one. For leading SaaS companies, customer success is one of the key ways to reduce SaaS churn.
Onboarding: It’s hard to find a blog where we don’t bring up onboarding. We see onboarding as critical to SaaS success, and we’re not alone. Industry leaders like David Skok and Christoph Janz specified the importance of onboarding for churn reduction.
Communicate with customers / Build relationships:This goes beyond
welcome emails and exit interviews (though those are both important). From the responses we received, it is clear that SaaS leaders have discovered incredible value in communicating directly with customers and building relationships with them. Not only does doing so help reduce churn, the insights help influence the company and product roadmap.
“Happy customers are your best way to not only increase TLV (by reducing churn) but also reducing CAC (by increasing word of mouth). Yes, I know this is ridiculously obvious, but I feel like sometimes the obvious gets lost in the maze of metrics.”
“Even though it is only one piece a customer’s lifetime, focus the majority of your time on the first 30 days and activation. Activation is not getting signed up and paying, but that the customer has taken an action or set of actions that indicate they understand the meaningful value that your product provides. Improvements on activation have the largest effect on overall churn for many reasons. The primary reason being that once a customer/user forms an opinion about a product/service it becomes much harder to change that opinion after the fact. So if they don’t have a good activation experience you will have to work multiple times harder to retain them over the long term compared to if they had a good activation experience.”
“The most powerful thing you can do to reduce churn is going to sound simple and obvious, but so few actually take the time to do it: build a real relationship with your customers. Find out who they are, what they want, what they don’t want, and how you can make them happier than they could ever be with your competitors. Every customer that signs up for Groove gets an email from me with a personal welcome and a simple question: why did you sign up for Groove? I read every response, and we get huge insights from this about each customer and what success actually means to them, which helps us create a better experience that’s tailored to their needs.This is email is just one of the things we do to accomplish this, but if there’s one thing I wish I had done more of when we were just starting out, it’s getting to know our customers and building deep relationships.”
“My one tip is: Remove self-serve account cancellation.Yes, we did it. Instead, when someone wanted to cancel, we just made it really easy to contact us. You could live chat with us on the spot or send a message to us directly from in the app.The result? We were able to save about 15% of cancellations from actually canceling at all!”
“I wish someone had told me how important it is to view churn as a learning opportunity. We now try to do exit interviews with every customer who churns and the feedback is authentic and timely.In these conversations, we’ve discovered major opportunities for improvement in our product. We’ve learned more about their desired outcomes, and what we’d need to change to help them reach it.The insight we get informs our strategy and how we prioritize our product roadmap. It allows us to solve for the root cause of churn and hopefully prevent it before it happens for future customers.We also don’t stop at exit interviews. Just because someone stops paying you doesn’t mean they stop rooting for you. We like to think of churned customers more like alumni than strangers. If they’re still willing to talk to you and provide feedback, they can be hugely valuable. And who knows, maybe you could win them back one day.”
“Great on-boarding is the best place to ensure that you don’t have customer churn. The insight here is obvious: right after purchase the customer is most excited about the product. They will give you time to get things working. If you don’t meet their expectations at that time it is much harder to fix things later, as they have moved on emotionally. So building a great on-boarding program is step one, and then step two is to ensure that your on-boarding was successful using a survey at the end. Ideally this should provide you with a measurement that you can use to identify problems and resolve them early.”
“I’d say the best way to reduce churn is always to improve the product. That’s #1. Second to that, many companies — especially those with sales teams — can make a lot of progress by better aligning their pricing, packaging and sales rep compensation to match their customer retention goals. Examples include things like moving from monthly to annual contracts; providing or requiring services to help companies get setup properly; and holding the sales team accountable for retention of the deals they bring in. All stuff that can have a big impact in the short term while the company grinds away at creating a remarkable product.”
“My best tip on reducing churn is to not do the traditional quick customer support, solving for tickets processed per hour or ticket resolution time. Instead, treat each customer complaint and phone call as an opportunity to delight them, teach them more about your product, over-service them. It really works well long-term.”
“In my experience, the most effective thing you can do to reduce churn is to on-board your customers properly in the first place. It’s maybe obvious, but you can only be successful if your customers are successfully using your product.”
“To effectively reduce your Churn, you need to understand it and make sure you’ve all the information at hand to help your users.Gathering insights should be the first step to reduce Churn. Insights are everywhere: Analytics, Help-Desk software, Sales calls, Surveys, Interviews… Literally everywhere.Make sure you gather that data and make sense of it in order to understand what’s causing your users to Churn. Once you understand, reducing Churn then becomes easy as pie. It’s just a process of iteration and experimentation.”
“SaaS subscriptions are not like gym memberships!Early in the year, I see lots of people commit to a gym membership with all the best intentions. But after 3 or 4 months, many of them are concocting all kinds of clever excuses for not actually going. But here’s the thing… they keep paying the monthly fee. Maybe it’s guilt or they’re expecting a sudden jolt of motivation.Subscriptions for SaaS solutions don’t usually work that way. Unlike the gym membership, if a few months go by without the customer using the SaaS solution, they will stop paying for it. Companies need to get their customers on board, keep them engaged, and show them value week in, week out. It’s a lot of work, and customers won’t do it all on their own. Companies need to keep marketing, even to their existing customers.”
“Don’t build an onboarding tour until you’ve proven out your UI with real users.We read in a number of places that “poor onboarding can cause your customers to churn”. So very early on we built a fancy onboarding tour for our (extremely immature) app that kept breaking and causing problems for users. A few months later we ended up rebuilding the UI and had to throw away all the code. Building expensive automated onboarding before you’venailed your UI or reached product market fit can be risky. I’d recommend using concierge onboarding or triggered in-app messages using something like Intercom. They are really fast to set up, test and track. This will help you get your customers successful without spending big bucks on custom automated onboarding in the early days.”
“The SaaS world is all about creating value for your customer and helping him/her achieve what they set out to. As a CEO, I believe that customer interaction is the lynchpin to achieving customer success and reducing churn. Be available for your customer, make it easy for them to reach out to you and respond in real-time. Doing this consistently is the key to maximizing CLT value and ensuring you are a step ahead in identifying potential churn scenarios.”
“Design all of your metrics and incentives to promote customer retention — including sales and marketing. It’s easy to game your metrics, and people are driven by incentives. If you want to reduce churn, start by making sure every team and department is customer-driven and aligned around customer success. As Charlie Munger said, the most important rule in management is to get the incentives right.”
“I recommend building a robust Client Success function into the business on day one. Many SaaS founders view this as a 3rd or 4th step – after they have nailed product, marketing and sales, but the reality is that building a dedicated client success function from the start can have a huge impact on retention. I feel so strongly about this that, in our most recent company (which is still in stealth mode), our very first hire was a Customer Success Manager.”
“Never stop talking to customers. As your company grows, it’s alway tempting to spend less time on things that feel like low-leverage uses of your time. Don’t get caught in the trap of thinking this applies to customer interactions — it doesn’t! Customer conversations are implicitly strategic.They can provide you a deep, intrinsic knowledge of what the market wants, where you are strong, and where you need to focus. The best periods of growth at my company have coincided with me spending time with our customers, especially face-to-face, whenever possible.”
Remember the original question? “What is that one tip for reducing SaaS churn that you wish someone had told you when you first started?”
Do you have an answer you would like to share? We would love to hear it in the comments below.