How To Lower Your SaaS Customer Churn

Learn relevant strategies to help you lower your SaaS customer churn.

Customer churn can significantly impact SaaS businesses and cause inflation in their recurring revenue. A recent study by Accenture Strategy stated that "Enterprise SaaS companies lose $1.6 trillion per year due to customer churn!"

Customer churn happens when a customer stops using your products or services. However, customer churn does not occur randomly or out of the blue. Before a customer opts out, there are clear signals that a customer is unhappy and might churn. No company in this world has ever not lost a customer. However, you can still learn from each churned customer and prevent similar occurrences in the future.

If enterprise SaaS companies had access to a crystal ball that allowed them to forecast churn, they would be unstoppable. Unfortunately, no crystal ball would help you predict the future.

Enterprise SaaS companies rely on data-driven actionable insights to identify the indicators that lead to customer churn. There are multiple reasons for customers churn, but the most common pointers that a customer is going to churn are:

Product Usage Pattern

A customer's usage rate declining is typically a sign that churn is about to occur. However, there are different usage metrics, such as total users, user log-ins, time spent using the product, etc. Churn is typically the next step if you see that a customer's usage pattern has significantly changed. You should always know if your customers change how they interact with your product if they switch from one feature to another.

Customer Interaction Level

The level of customer interaction generally declines due to a decrease in product usage or perceived value. Customers no longer see the benefit of calling you to solve their problems. If you notice a drop from an average of eight support calls per month to just one or previously reliable customers who missed two or three consecutive payments, it should cause concern.

Product Downgrade

When customers downgrade to a lower-tier plan, it may signify a downgrade in the product, which lowers MRR and raises the possibility of customer churn. Customer churn can happen due to a customer's price sensitivity or misalignment of the value proposition.

These indicators help you anticipate churn triggers and reduce their onset by conducting a proactive churn analysis that considers the above indicators.

Understanding Customer Churn!

Since acquiring a new customer can be more expensive than retaining an existing one, enterprise SaaS companies focus on providing a quicker time to value and a better customer experience to their customers to retain them over the long term. However, some things are beyond one's control.

Churn is unavoidable when customers stop doing business with you because of situations beyond their control. For example, what if your existing customer's business is about to close or they don’t have the necessary equipment or a third-party service to run it? There can be many instances where it's beyond our control to stop the customers from churning.

Do not lose hope.

There are some circumstances in which you are powerless to stop your customers from leaving, but there are also situations in which  a churn is preventable.

Avoidable customer churn occurs when your loyal customer becomes frustrated with the product or service and quits the subscription. These are the instances of bad customer onboarding, unsatisfactory customer experience, poor value delivery , low security & privacy, and sub-par  product quality.

Let's discover the most effective strategies for lowering these SaaS churns.

Seven Strategies To Lower Your SaaS Customer Churn.

Enterprise SaaS companies must ensure that their relationships with current customers improve over time. It will help reduce customer churn and re-engage customers who have left or are about to leave.

Let's dive right into the strategies!

Offer Effortless Customer Onboarding

It is crucial to offer customers an effortless customer onboarding. Customers are more likely to use your product or service more frequently if you make an excellent first impression. Considering that a customer will remember the impression you left after paying you with their hard-earned money. Also, every subsequent interaction with them will be influenced by how you treated them when they made that commitment.

Define Roadmap For Customers

Having personalized customer onboarding specific to your business is a blessing in disguise. This strategy gives you total control over the rate at which you're surfacing more information while making it simpler to manage customer expectations. Defining a roadmap to walk the potential customer through the features, functionality, and operation of your product or service can help make the transition easier. Customers are less likely to leave your company if they feel empowered to succeed through your guidance. So you must constantly review and improve your onboarding process and continue to help your customers overcome hurdles.

Increase Customer Engagement

Increased customer engagement will help SaaS enterprises lower their customer churn by putting the right strategy in place and focusing on customer satisfaction. Having an engagement strategy that is simple to implement and regularly informing customers about the benefits of your product or service will help to increase customer engagement and foster long-lasting relationships. You can accomplish this with blogs, newsletters, videos, and other platforms using personalized, product-focused content.

Segment Customer feedback

Every customer is unique and has specific challenges to overcome. So their preferred approaches to overcoming them have to be unique too. Segmenting your customers based on the challenges they tell you about, how they use your services, and what content they read the most helps to show them you're paying attention. This strategy will encourage customers to refrain from churning and be with you for a long time.

Prioritize Proactive Customer Service

Prioritizing proactive customer service may help you identify issues you were unaware of while onboarding your customers and help you provide the necessary solutions. A bad customer experience can be a significant factor in why customers stop doing business with you, so having an effective customer success strategy is essential for SaaS enterprises. Your customer needs to have an exceptional and memorable experience to recognize the value of your product and remain loyal.

Create A Community Around Your Product

In our very nature, we have a solid desire to fit in. People enjoy having a sense of belonging or being part of a community. You can lower customer churn rate by educating and involving users in online communities. A community provides a platform for customers to actively and frequently engage with each other and share knowledge while allowing you to make your customers feel like they are a part of your brand.

Offer Dedicated Account Managers.

SaaS enterprises can enhance customer retention efforts, boost customer retention rate (CRR), and raise customer lifetime value (CLV) by offering a dedicated account manager for prominent customers. Customers are more likely to stick around when they feel like they know someone at the business personally. Assigning someone sole responsibility for a particular client can be an effective retention strategy.

Hold Regular 1:1 Success Calls And Send NPS Surveys

Retaining customers can be a hectic process. However, you must make an effort to schedule regular 1-on-1 success calls with your clients and monitor their Net Promoter Score (NPS) to learn what aspects of your products are liked and disliked by your customers. These will allow you to find out how and why they use your services and what difficulties they encounter. These will help you strategize your next move and create an effective customer success strategy.

Conclusion

You will lose a significant chunk of your annual recurring revenue if a customer decides they no longer want to use your products and services. It will cost you money and time, and finding a new client may take months.

Everything comes down to delivering a remarkable customer experience because that is the most successful strategy for reducing customer churn. Motivating your current customers to stay with you requires less time and money.

Customers who have a good experience are much more likely to return. They could even be your biggest supporters, bringing in more clients and promoting your company. So make sure you consistently show customers how much you appreciate their loyalty.

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