Jan 3, 2020

The main goal of any business is to acquire and maintain customers to reach its revenue objectives. With software as a service  (SaaS) businesses, losing customers is a huge blow to sustaining growth and driving profits. SaaS businesses need to watch churn and take measures to minimize it. Churn rate is the percentage of customers that unsubscribe from a service for a variety of reasons.

Customer retention requires you to provide premium products and unmatched service. However, watching these two factors alone is not enough. With stiff competition in the SaaS industry, you need to implement advanced strategies that will keep you on top of your competition.

Here are four tips for reducing churn in your SaaS business:

1. Watch Customer Engagement

Engagement happens when clients frequently use and gain significant value from your SaaS. Customer engagement is defined as the relation between a client’s time, attention, and your SaaS.

Work on a client engagement system that will deliver a Customer Happiness Index score, which will help you to understand churn.

An excellent example of this is HubSpot: the SaaS company implemented this strategy to identify clients who were on the verge of churning.

Their support staff would then contact these customers to improve their engagement rate. By employing this strategy, HubSpot was able to identify sticky product parts, the features that lower churn if used by customers. A low churn rate leads to monumental gains.

If a client barely uses your product, there is no reason why they should continue paying for it. The most reasonable course of action is to cancel the subscription. This is why you should ensure that your product adds value to customers.

JR Farr from has this to say regarding reducing churn rate: “Understanding why your customers are canceling their subscription earlier helps you to act accordingly.”

He argues that there is no use in trying to fix a sink whose well is completely broken.

2. Sell Continuously

As a SaaS company, you should never stop selling. This is the only way you will prevent users from unsubscribing from your service. Here are some ways of achieving this:

a). Provide unmatched customer service.

Offer users a solution to their problems, and be accessible when they need you. Issues raised by customers should be addressed expediently.

b). Be scalable.

Keep up the growth rate of your clients’ businesses. Consider what they need in additional product functionality or service. Offer customers an experience that naturally complements their needs.

c). Offer fast deployments and instant configuration.

Many SaaS companies’ sales cycles tend to be short, which is a good thing for both them and the customers. Customers subscribe to SaaS services as they save time and can be deployed quickly.

3. Focus on Successful Onboarding

Successful onboarding entails showcasing your value to prospects in advance. SaaS startups can use an in-app messaging tool to inform their prospects and new clients about the value they offer. You can do this by focusing on the most pressing problems that your service solves. Use the in-app messaging tool to send messages such as “are you familiar with this feature?”

Your first interaction with customers should be geared towards solving their problems. Doing this has been found to curb churn by 70%.

You can also use the onboarding process to get customer feedback, especially from those who unsubscribe after a short period of time. This feedback can help you uncover your SaaS limitations.

4. Target the Right Users During Sign Up

If you attract the wrong prospects during sign up, then you can be sure that they will cancel their subscription along the way, despite what you might do to keep them around. This is because the users have no interest in your product.

To land the right prospects, increase the commitment level during sign up. You can also require new users to provide an email address and password when signing up. An uninterested party won’t waste their time with a sign-up process.

Apart from providing a great product or service, successful SaaS businesses focus on building a brand that their customers love and trust. This helps a customer to stay with your business long term.

You may also like to read:

Top SaaS Market Trends & Statistics for 2020

10 Best Email Marketing Tips for 2020

SaaS vs PaaS vs IaaS: Definitions, Comparison, & Examples


David Gasparyan

David Gasparyan is the founder and president of Phonexa, a SaaS company that gives businesses all the tools they need to run and optimize their marketing campaigns. David has a formal education in marketing and first started working in the digital marketing space over fifteen years ago, at a time when Google was only a search engine, Facebook didn’t exist, and the internet’s full potential had yet to be realized.

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