Every SaaS company wants to reduce customer churn, that’s no secret. I’ll actually rephrase that, every SaaS company wants to eliminate customer churn. Unfortunately, customer churn is something you have to live with when you’re in the subscription software business. However, that doesn’t mean that you should accept your current churn rate.
Why customers churn in the first place?
This is the question we should be asking ourselves. Unless your customer (assuming it’s a business) is no longer in business or it’s 100% clear that they were not your target market in the first place, you need to find the answers to this question.
There are a number of common reasons why a customer churns. It can be that they have outgrown the usefulness of your product/service. Maybe they found it difficult to solve their problem with your product because of bad UI/UX. Or maybe your competitor released a shiny new feature that fits their needs better than what you’re currently providing.
The bottom line is there is an infinite number of reasons why any particular customer decides to churn, and it’s your job to find out why.
But how do you know why a customer churns before they churn?
Once you find out why a customer churns, haven’t you already lost them? Not necessarily! This all depends on when you talk to your customers. If you’re waiting until they click that “cancel” button to ask them why they are cancelling, then you don’t have much of a chance of keeping them as a customer.
Ideally, you want to routinely survey your customers throughout their subscription. Perhaps once a month or every two months is a good cadence, but make sure this happens before their subscription length reaches your average subscription lifetime. For example, if your average customer churns after 5 months, you’ll want to ensure that you survey them at least a few weeks before this point.
Surveying your customers before the time in which they churn helps you gather enough insight to determine if you are still providing the product or service they desire and gives you enough time to address it. Every business is different, so you will have to determine what level of service or product satisfaction makes a happy customer.
Send them a survey!
A simple single question survey, or an NPS survey, or even a customer satisfaction survey would work. Any of these surveys would give you enough customer insight to identify a customer who may be at risk of churning, and help you potentially understand exactly why they feel this way.
It may turn out that something such as simplifying confusing UI on a page or vague documentation that needed to be addressed was all that was necessary to prevent a customer for churning. The only way to know what action to take, is to actually know what your customers are feeling.
Once you have a good system in place where you’re surveying your customers before they churn, you will then be able to address their concerns and possibly prevent that next customer from hitting that cancel button.