8 Ways to Reduce Churn in Your SaaS Product

Danni FriedlandCustomer Success, Onboarding0 Comments

8 Ways to Reduce Churn in Your SaaS Product

To run a profitable, successful company, you need to keep customer retention high and your churn rate low.

While it sounds simple, this is the result of:
1. Tracking the right metrics
2. Optimizing the user experience
3. Analyzing the customer lifecycle
4. Informing users about new features
5. Sending timely reminders to reassure they are using your product to its full potential
6. And so much more

To reduce churn, you have to know your product, the user’s behavior, and the users’ needs.

Maintaining their loyalty is an ongoing effort.

However, if you are providing a top performance service by understanding what they need – not only will they stick around for a long time but you will also get referrals.

Here are  8 tactics that leading companies use to remind their users that their product/service is the best.

Feel free to copy all 8.

Understand Product Usage Patterns

If you want to understand the customers that churned, you need to check your analytics and find common usage patterns.

You want to learn how they interacted with your product and what drove them to churn.

Whenever you find recurring patterns – like friction points, them being unaware of a specific feature – it’s your chance to intervene and fix whatever is causing the lack of engagement.

Churn statistics usually measure account cancellations, but it’s understanding the actions the lead to churn you want to prevent.

Intercom re-engaged users who stopped using the product by focusing on activity churn.

activity-churn

Activity Churn – From https://blog.intercom.com/churn-retention-and-reengaging-customers/

They were able to reduce churn through email automation, only after they observed the usage patterns and spotted a drop of engagement across an entire team. They decided to take action by sending re-engagement personalized emails at the right time.

They decided to take action by sending re-engagement personalized emails at the right time.

Why is this important?

If they would have measured churn based merely on account cancellations, they would have missed the opportunity to re-engage customers.

They identified at-risk customers that went from using the service daily, to weekly and then monthly.

They reached out to those users before they canceled

Intercom reached out to those users before they canceled their subscription and were able to retain a large percentage of previously active customers.

“The best case is that you recover a customer; the worst case is often that you learn why your users leave.” says Des Traynor, Co-Founder and Chief Strategy Officer at Intercom.

8 Ways to Reduce Churn in Your SaaS Product Click To Tweet

A Good Onboarding Process

First impressions matter if you want to engage and retain your users.

40-60% of the users that sign up for a free SaaS product are unable to see the benefits of the product and therefore use it once and never again.

When it comes to reducing churn, the onboarding process is a key factor to quickly communicate the value of your product.

Patrick McKenzie founder of Bingo Cart Creator, claims that this percentage of churn can be reduced by either making the software better or by improving communication with users with the right onboarding process.

After optimizing the onboarding process of the Bingo Card Creator he increased by 10% the number of users who actually succeeded with the application on their first use of the software.

Why is this important?

When users first use your product, they have no idea what to expect and if the onboarding process is not smooth, they might think it is too complicated. Even though the process actually takes only a few seconds, users might think otherwise and quit.

You won’t get a second chance to give a good first impression and this is why you should constantly test and optimize the onboarding process.

Educate Your Users

You gotta remind users of the value in your product by providing resources above and beyond so they can get the best out of it. Training, blogs, meetups, webinars, online demonstrations via screen sharing, in-depth workbooks and so on.

It’s a great way to guide your users through the entire experience your product is able to give them.

You gotta remind users of the value in your product by providing resources above and beyond so they can… Click To Tweet

Mention reduced churn by 22% through increased communication with their customers and through a “use-case Master Class”—a webinar that explained their potential and guided new customers in the use of the service’s features with accurate examples.

Why is this important?

You gotta reassure your active users and those who are slipping away that your product is the best.

If you are optimizing features, let your customers know how it will benefit them.

This will remind them why they signed up in the first place and make them stick around, ultimately reducing churn rate.

Measure & Increase CHI

The Customer Happiness Index involves several factors including customer’s frequency, engagement and the degree to which the customer is practicing inbound marketing.

Hubspot uses CHI to measure daily if customers are doing better or worse than the baseline.

It helps them control whether new projects within the business are having a positive effect or not.

Hubspot was able to retain 33% of the customers that were not on the right track by using their own CHI.

Hubspot’s former VP of Customer Success, Jonah Lopin, gives us a step-by-step guide to measure CHI and reduce churn:

  1. Measure as many dimensions of customer usage and engagement as you can, and relate those data points back to your customer record in your CRM system or your reporting engine.
  1. Use the data to identify segments of customers who exhibit important behaviors (outsize success, high NPS, retention characteristics, etc.)
  1. Run regressions to determine the most significant dimensions of usage and adoption and combine those factors to create a single score that is highly predictive of the behaviors from step 2. Consider calling your score CHI :).
  1. Now that you’ve got a good leading indicator of customer success, make changes in the business to try to drive CHI scores up. When you try something that works, keep doing it. When something doesn’t work, just try something else.

Why is this important?

Measuring CHI scores allowed Hubspot to take actions before the users faced a problem and decided to leave.

This is something you can measure every day that will give you clear feedback on the customer’s experience that will identify the customers that need your help.

Trigger-Based Emails

Right after a user signs up, you need to know what they are doing and reassure they are using your product to its full potential.

You can evaluate analytics that showcases customer insights and watch video session recordings to learn from the customer lifecycle after subscription.

Whenever the results portray inactive users, you can use different tools like Customer.io, Vero, Hubspot Enterprise and Boomtrain in order to set triggered-based email campaigns and encourage them to take action.

Buffer sends trigger-based emails to users with their streams empty in order to remind them to activate their social channels and ultimately reduce churn.

buffer-lifecycle-email

Why is this important?

Once a user signs up, there is a lot that goes on and you need to find ways to increase retention and continue to provide value.

Sending trigger-based emails – based on analytics to identify less active users – will encourage them to take action.

Building Relationships With Customers

It is one thing to interact with your customers and it is another thing to build a relationship with them.

CSM’s need to ensure their company is providing exceptional customer service that will make the customers feel valued.

Zack Urlocker, helped Zendesk reduce churn by creating a team for Customer Account Management that implemented a 12-month program with regular check-ins, emails and phone calls rather than just calling their customers for renewal purposes.

Why is this important?

Nowadays, technology developments have automated interactions between customers and services resulting in non-personalized relationships.

By building closer relationships with their customers, Zendesk was able to identify potential issues and anticipate solutions.

They earned referrals by making their customers happy and regaining their trust.

By building closer relationships with their customers, @Zendesk was able to identify potential issues… Click To Tweet

Define WHY Customers Quit

There is a big difference in the behavior of churned users and the behavior of those that stick around and are loyal customers.

Segmenting your users will allow you to accurately target the ones who convert and identify the ones who are slipping away, followed by a study in their behavior.

Alex Turnbull tells us how Groove reduced churn by 71% by understanding why their customers quit.

They segmented their customers in a group of those who spent less than two minutes in their first session and another group of those who already setup a mailbox but had quit using it.

They sent an email with a slight difference to each group, targeting the problem.

First group: Email got a 26% response rate; and over 40% of those users were still Groove customers after 30 days.

Second group: Email got over 15% response rate; and 50% of those users remained after 30 days.

Why is this important?

Your customers will not tell you whenever they are having trouble. Most of them will probably just leave.

If you don’t want them to churn, you should look at your “Red Flag” metrics, as Groove calls them, to find the differences between the most engaged users and the ones who left.

Then, use what you learn to identify what factors are disturbing at-risk users and help them right away.

Provide Transparency

We’ve reviewed various ways that are great for reducing churn – measuring CHI, optimizing onboarding process, observing analytics to understand product usage, etc… These are all factual approaches that will make your users stick with your product for a longer period of time.

Transparency is also a key factor and yet, it is barely mentioned in articles with in-depth analysis on reducing customer churn.

BrightInfo reduced Churn from 4.4% to .5%  by injecting “radical transparency” into their SaaS product. It automatically runs A/B tests, comparing KPIs for site visitors who don’t see BrightInfo’s content recommendations with those that do. The product dashboard demonstrates the clear evidence that it is driving ROI.

Why is this important?

Being transparent builds trust amongst your customers and redirects the organization’s focus towards the right, loyal customers.

Being transparent builds trust amongst your customers and redirects the organization’s focus towards… Click To Tweet

In conclusion

We’ve learned from different successful case studies that companies reduce churn through various approaches.

Every one of these hacks can help you reduce churn for your product and you can even combine a few to have higher results of success.

Nevertheless, there are three underlying elements that you should always keep in mind for customer loyalty: on-going communication, optimal customer experience and high-quality service.

Which ways do you suggest are the best for reducing churn? Do you know about additional case studies with exceptional results? Let us know in the comments!

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