How to Reduce SaaS Churn?

If you’ve just started to acquire your very first customers in your SaaS business, then churn may not be a big deal for you. But as you get over a thousand customers, churn becomes vital. And gradually it can be a big hurdle in the success of your business.

A high churn rate can put an impact on your company valuation, business growth, and the overall perception of customer satisfaction.

So where does the problem rely on?

High-growth expected SaaS startups think they have figured out every aspect. The path seems clear until churn begins to smack them in the face.

Suddenly, customers begin canceling and leaving at a faster rate than expected. Who is responsible for such flaws? No one will take the blame and that is obvious.

Sales team starts blaming the product team for not delivering whereas product teams blame customer success for not onboarding. Gradually marketing starts to worry about company reputation and growth. This is a common scenario.   

I’ve gone through some survey and what I found is extremely shocking. Here’s the list;

• Bessemer Venture Partners says an acceptable churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue.
• Roughly 70% of SaaS companies in their survey had annual churn in the < 10% range, with 75% of those at 5% or under.
• 30% of SaaS providers surveyed have an unacceptable level of churn.
  
  

Why do customers leave?

There could be either number of reasons whereas the customer decides to hit that “CANCEL” button, and here are a few of the most common:

They’ve faced a poor customer service experience. That means they might have tried to find help for something and couldn’t get what they wanted.

• They might have had a poor onboarding experience and couldn’t achieve what they were expecting.
• They tried your software and it wasn’t meant for them.
• Your software might cost them a lot
  
  

Sometimes there’s no indication that churn is coming as customer cancels without raising any issues. However, there are some signs even before that customer cancels.

Common signs of churn-

• Payment issues: These include late or missing payments; credit card hasn’t been updated, and so on.
• Disengagement with your product: it means the customer doesn’t seem to be engaged with your product. it might include signs like fewer logins, increased bounce rates, etc.
• More complaints: When customers face numerous difficulties or bugs to use your product, they start raising issues and complain against it. This is the biggest sign that your customer is unhappy with your product or services.

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