💡 Overview

Today, we’re diving into a topic that keeps many SaaS founders up at night—Churn.

Many SaaS businesses focus heavily on acquisition, putting tons of effort into PPC, SEO, and other growth hacks. But what’s the point of filling up your bucket if you can’t keep the water in? Research shows that a 5% increase in customer retention can lead to more than a 25% increase in profits.

So, why are we so fixated on adding more water when we should be plugging the holes?

Today, we'll dissect why churn happens, how to calculate your churn rate, and share non-obvious strategies to minimize it.

⭐️ Ways to Cut Churn

Identify At-Risk Customers

Use predictive analytics to flag customers who show signs of churning, like reduced activity or engagement. Identifying who is likely to churn allows you to take preventative action.

Targeted outreach to at-risk customers can re-engage them and reduce the likelihood of churn.

Example: If a SaaS customer hasn't logged in for 30 days, send an automated "We Miss You" email with a feature update or special offer.

Personalized Onboarding

Tailor the onboarding process to meet the specific needs of different customer segments. A one-size-fits-all approach doesn't address unique customer needs.

Personalized experiences increase satisfaction and stickiness, making it less likely that users will look for alternative solutions.

Example: For a project management tool, onboard marketing teams with templates for campaign planning rather than generic project templates.

You can read more about optimising the onboarding process in a previous edition here.

Customer Education

Provide easily accessible resources, like how-to guides, webinars, or FAQs. Users who don't understand your product won't stick around.

Educated customers are more likely to fully utilize your product, increasing their overall value and reducing churn.

Example: For a photo-editing app, release a series of tutorial videos on advanced editing techniques.

Automate Retention Marketing

Use automated email sequences for milestones or triggered by specific behaviours to enhance user engagement. Automated retention efforts can target customers at crucial moments without manual intervention.

Timely engagement increases product use and reminds customers of your product’s value.

Example: Send an automated email with usage stats and tips after a customer's first month.

Enhanced Customer Support

Offer 24/7 support, introduce chatbots for instant queries, or use AI to preemptively address issues. I’ve linked some tools you can use for this in the resources section.

Poor customer service is a leading reason for churn. Instant and helpful customer service can turn potentially negative experiences into positive ones, thereby retaining customers.

Example: A VPN service using a chatbot to instantly solve common connectivity issues.

Regular Check-ins

Proactively reach out to customers at regular intervals to collect feedback and offer help. Customer needs change and may not always be met by your current offerings.

By proactively checking in, you can adapt to these needs and prevent customers from seeking alternatives.

Example: Quarterly business reviews for B2B clients to discuss their ROI and future plans.

Implement a Loyalty Program

Offer rewards for long-term subscriptions or frequent usage. Price alone is rarely enough to retain customers long-term.

A loyalty program rewards customer engagement and investment in your product, which in turn reduces the temptation for them to look elsewhere. They're more likely to stick around if they’re getting more than just a service but also added value through rewards or exclusive content.

Example: A language learning app that gives you bonus content after you complete X number of levels.

Graceful Offboarding

For customers who do churn, offer an offboarding process that gathers insights into why they're leaving.

You can learn even from the customers you lose. They can provide insights into why people are leaving, offering a roadmap for future improvements to reduce churn.

Example: A cancellation survey that asks departing users why they're leaving, then uses this data to identify churn factors.

You can read more about how to do this from a previous edition here.

Utilize Net Promoter Score (NPS)

Regularly survey your customers to gauge their satisfaction and likelihood of recommending your product. Customer sentiment can be a strong indicator of future behaviour.

It helps pinpoint areas of dissatisfaction before they lead to churn and identifies potential advocates.

Example: After a customer has used your product for six months, automatically send an NPS survey.

Dynamic Pricing Strategies

Adjust pricing for at-risk segments or offer temporary discounts. Economic factors are often a reason for churn.

This offers pricing flexibility, which can retain price-sensitive customers without devaluing the product.

Example: Seasonal pricing for a fitness app, with lower rates in winter when users are less active.

👇 Examples

Groove

Groove reduced churn by 71% by defining "why" customers quit. They researched user behaviour to determine what correlated with churn and found that customers who didn't use the product regularly were more likely to churn.

They then implemented a series of changes to encourage regular usage, such as sending personalized onboarding emails and offering a free concierge service to help customers get started.

HubSpot

Hubspot reduced churn by focusing on customer education. They created a library of educational content, including blog posts, webinars, and ebooks, to help customers get the most out of their product.

They also implemented a series of changes to their onboarding process, such as offering personalized training sessions and assigning a dedicated customer success manager to each customer.

BigCommerce

BigCommerce reduced churn by improving their product. They identified the key features that customers were requesting and then implemented those features as quickly as possible.

They also implemented a series of changes to their customer support process, such as offering 24/7 support and assigning a dedicated support team to each customer

📚 Resources

• Botpress - Build ChatGPT bots quickly and easily.

• 10 Effective Strategies to Reduce Churn Rate in SaaS

• How to Reduce Customer Churn: SaaS Crisis Survival Guide

• SaaS Churn: 9 Case Studies That Will Help You Make More Money

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