If you run a SaaS company, you know that customer churn is pretty much inevitable, similar to abandoned carts being inevitable in the world of ecommerce. However, just like you can work to reduce abandoned carts, you can also work to reduce customer churn.
Your first question is probably: What is an acceptable churn rate? We knew you’d ask. It’s a logical question to ask, but not always an easy one to answer. There are plenty of variables at play that impact churn- including your company size and specific industry. Numerous studies have been conducted, and for SaaS companies targeting small businesses, an average acceptable monthly churn rate is between 3 and 5%.
If you calculate your monthly churn rate and your percentage is significantly higher than that, that is alright. There are plenty of things you can do to start bringing that percentage down. Even if you are falling in the 3-5% range, there’s always room for improvement! No matter what your current churn rate is, you can set a goal to reduce it. Today we’ll be discussing how to do just that.
Check out these 5 ways SaaS businesses can reduce churn. Make sure you record what your current churn rate is before giving these tips a try. Check in periodically and see what happens once you get started. You should slowly but surely see your churn rate start to fall.
1. Offer a free trial
One of the best areas to focus on when reducing customer churn is the beginning before you’ve secured someone as a customer. While they are just a lead, a great way to both qualify the lead and get them invested in your service is by offering a free trial.
The truth is, not everyone is a good fit for your service. That’s okay. A free trial can help weed out leads that ultimately aren’t the right fit. For those who are the right fit, a free trial is a great low risk way for them to try out your service.
Once someone has used your service, it’ll be a lot harder for them to walk away from it. While convincing sales copy and an optimized landing page can do a lot, nothing will work better than the service itself. Don’t have your leads take your word for it that you have a great service- let them see for themselves.
As for the length of time that your free trial should be, consider doing what Salesforce did and segment your free trials based on the service level. This is great if you offer different services- more basic services require less time, while more advanced tools likely need more. If you have a very complex service, 7 days is likely not enough time to convince someone that they need your tool. Instead, offer something longer so that they really have the time to see the value.
In addition to the free trial, make sure that you are engaging with the lead at this point to ask them how they are liking the product. You may offer them some tips at this point, or even a small discount to encourage them to stick with you after the trial.
2. Collect feedback (and listen to it!)
If a lead decides to not stick with you after their free trial, or if a customer stops their subscription with you, what you need to do immediately is ask for feedback. You may not be able to get this particular lead or customer back, but you can learn from them. More importantly, you can use that valuable information to help secure current and future customers.
Be sure to personalize your request for feedback in order to increase your chances that someone will actually respond. Act like you care- because you do (or you should!) Notice the copy that Groove used in their feedback request email. Not only do they use the person’s first name, they make the customer feel better by saying that there are no hard feelings. This tactic certainly worked for Groove- they were able to reduce their churn rate by over 70%!
As you collect feedback from customers, make sure you watch out for patterns and see where you need to improve. This is especially important if you are a new SaaS company. Perhaps you are targeting the completely wrong audience, or maybe you have a few glitches that really need to be worked out. Maybe you don’t offer quick enough support. You won’t know unless you ask.
3. Engage via education
In addition to offering a free trial, engage your leads by offering additional pieces of information! Educating your audience on how great your service is is one of the best ways to ultimately reduce churn.
Think of it this way. If you sign up and use a service for a while and don’t notice any better results- would you keep it? Probably not. Now, if the service is simply bad, that’s one thing. But what if the problem is that you just didn’t know how to use the service or how to get the most out of it? That’s a problem that can be solved! The same goes for your audience and your SaaS tool.
Educate your audience in various ways if possible. Everyone has a different learning style and preference on how to take in new information. Some people prefer video walkthroughs, while some prefer to participate in webinars, while still others prefer written documentation.
The information that you provide your audience should be a good mix of service specific and industry specific info. For example, if you have your own social media marketing SaaS tool, create some educational content that is all about how to use your tool and some different content that is all about social media marketing in general and how to leverage social for achieving business goals.
With the right combination of info, your audience will have a great understanding of your service and will be excited to use it. On the other hand, this info may help them understand that your tool is not right for them. Like we said earlier- that is okay! No one has a service that is meant for everyone. Adjust your targeting if needed to ensure you are reaching the right audience.
4. Provide incentives and milestones
This one shouldn’t come as a surprise. Incentives are always an excellent idea to keep any audience happy. In addition to incentives, set up a variety of milestones that a user can hit, and be sure to alert and congratulate them when they do. For example, you might reach out when they have used your service for a certain period of time. Or, perhaps when they have sent out a certain number of messages (you’ve sent your first 10 web push campaigns- congrats!)
After using your product for a year, consider showing your appreciation by giving them a discount or perhaps a small upgrade to their service. Even if it is something small, it can go a long way towards keeping your customer happy and encouraging them to stick with you. Always remember that, more than likely, you have at least one competitor. Incentives and milestones can help set you apart from them.
Additionally, an incentive can also help bring someone back, as seen in the picture above. If someone has gone dormant and not used your service for a while, consider reaching out to them and encouraging them to come back to check out your new features. Add in a discount or some type of special offer to provide more motivation for them to do so. If your product is the same, why would they come back? However, if you are willing to provide a discount or have cool new features for them to try out, they are far more likely to do so.
5. Retarget Customers via Web Push Notification
Speaking of reaching out to customers who haven’t used your service in a while, a great way to do that is via web push notification! While email marketing may be the traditional way to engage your customers, it is losing a lot of its initial effectiveness. Inboxes are overflowing with messages, and it is easy for yours to get lost in the mix.
Instead, web push is a great way to directly engage directly your audience both on desktop and mobile devices. This is something you can do from the very beginning as well. Reach out to users who are on their free trial, users who have used your service for years, and everyone in between.
We recommend segmenting your audience no matter the campaign, but especially when dealing with users who either have just churned or who may churn. Users who don’t sign up with you after their free trial expires should be treated differently than users who used your service for years before quitting. Additionally, someone who hasn’t used your service for a week should be treated differently than someone who hasn’t used your service for 6 months.
Craft unique campaigns for users at various stages for the best results. Web push is a great way to boost engagement for SaaS companies, and this includes users who are at risk of churning. Combine this with our other tips to create really powerful campaigns. Reach out offering an incentive, providing some great tips, or encouraging activity to reach a new milestone. And of course don’t forget to include these 5 things that all the best web push notifications have.
Customer churn is not something to be afraid of. In fact, it is something you will absolutely have to deal with if you are a SaaS company. However, that doesn’t mean you don’t have any control.
These 5 ways SaaS businesses can reduce churn will help you get back (and stay) on track with your business and help you start to decrease your churn rate and increase your amount of recurring, happy customers. From collecting feedback, to offering a free trial, retargeting your customers via web push, and educating and engaging them with incentives and via milestones, you are sure to see a decrease in your churn rate.
What is your favorite method for reducing customer churn? Is it something we didn’t mention? Let us know by sending us a message!
If you are new to web push and want to start using it to engage with your customers, you can get started for free with Aimtell, or learn more about web push by reading our Beginner’s Guide.