Types of SaaS Churn & How to Fight Back
We wrote an article this week about how the main reason for customer churn can almost always be tied back to customer success issues. While this is very true, it doesn’t mean we shouldn’t take specific reasons for churn seriously, and try to combat them the best way we can.
While many of these reasons will still ultimately relate back to customer success, some of them have different solutions so we wanted to dig deeper into this ever-evolving issue. Customer churn is a major growth hurdle for all SaaS companies, and it’s something you want to fight strategically. Otherwise, you’ll be losing people as quickly as they come in. And that just doesn’t work for the SaaS model.
The reality with churn is that some of it can’t ever be controlled. Some of these reasons will be outside your power, so we want to focus on what we can control.
Here are 4 reasons you’re losing people.
ONBOARDING: Your onboarding process encompasses two crucial elements: the customer signing-up for your service, and said customer achieving their desired outcome with your service.
There is a gap between these two elements, and if the gap is too big, or takes too long to close, there is a major risk of customer churn. For example, perhaps your app has been purchased to help a small business manage their accounting. In this moment, the desired outcome for this particular person is that they need to send out automated invoices, instead of doing them manually. How long will it take your new customer to get there? This leads us nicely into the next section, customer success.
CUSTOMER SUCCESS: Continuing from the example above, it’s safe to assume that for this client, their version of customer success was setting up a system to send out automatic invoices to all their clients, so they don’t have to continue to do it every month. That was the initial goal and desired outcome, which a great onboarding process easily facilitated. Checkmate.
But, the glory is short-lived. The client suddenly realizes they’d like to have all bank and credit accounts automatically synced, so they no longer have to manually enter business expenses. The desired outcome has changed, and if your service isn’t prepared to help achieve those ever-evolving goals, your customer will be looking for someone else who can.
Ensure that through both the onboarding process and customer success journey, your customers have easy access to tutorials, educational materials, and videos that will ensure they are able to continue to evolve with your service, and continue to be successful.
CUSTOMER SERVICE: What happens when something unexpected happens, and your customers need support immediately? If you’re not there to provide it, in the way they want to receive it, there is a major risk of churn.
Our small business owner from above needs to get paid. Suddenly, the invoices stop sending and it is unclear as to why. To this business owner, this is an urgent matter that needs to be dealt with immediately. Ensure you’ve got agents reachable via online chat, email, and telephone to ensure your customers get the support they need. Otherwise, someone else will snatch them up and give them the customer service they deserve.
YOU’VE GOT THE WRONG PEOPLE: This is a tough pill to swallow, but it happens all the time. If you’re attracting the wrong customers, they will never become successful with your product of service, and the churn is inevitable. Continuing with our friend above, let’s assume that this business owner absolutely hates doing anything on his MacBook. He works off his iPhone and iPad, as he is always on the road.
It turns out, the bulk of your app’s features won’t work on his phone. So after all this seemingly successful onboarding and adoption, it turns out, this product wasn’t the right fit after all. Although this customer seems like your ideal client, it turns out he isn’t and his preferences mean he will never become successful with your service. Understand who your ideal client is, but take it a step further to assess customer fit to ensure your targets are fully equipped with what they need to become successful with your product or service.
These 4 areas are some of the most common churn culprits, but with the right steps, you can point things in the other direction.
David is the Co-founder and CEO of Goji Labs. David loves working closely with passionate founders to understand their vision and help them build beautiful applications while focusing on risk-mitigation. As an author, he focuses on informative and educational blogs that enable our clients to make the most of their businesses.