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Churn be Gone! 5 Ways to Kill Off High Churn Rates

They say every rose has its thorn and SaaS is no different. From constantly changing technological standards to increasingly frequent product upgrades to fluctuating fads, SaaS adoption presents a host of challenges. The most challenging of them all is churn -- existing customers who cancel their subscriptions. According to a survey by Pacific Crest, some 70% of SaaS companies have a churn rate of 10% or less. If your churn rate is above that, you have a problem.

5 Ways to Reduce Churn

Here are 5 proven tactics you can easily apply today and begin to reduce churn:

1.    Reward Loyalty

Customers love the feeling that they’re loved. A customer that feels that they're respected by a business will want to continue working with that business, even if they could save money with a competitor. Begin building lasting relationships immediately after sealing a new deal -- 48% of customers say that the critical time to gain their loyalty is upon their first purchase or when they first begin a service. Keep in mind that Millennials are more loyal than they get credit for -- 55% of Millennials claim to be brand loyal, as opposed to only 39% of customers 35 and older. Building this loyalty is an investment in your future.

2.    Cancel Renewal Charges

Don’t make customers pay to cancel their subscription and don’t charge renewal charges. When you look at the nature of SaaS, these charges are not necessary, and they needlessly alienate customers. Without these charges, a loyal customer will feel less skeptical about coming back to you. They’ll appreciate that you’re an honest business.

3.    Show Confidence in Your Product

Showing how confident you are in your product will say a great deal to the customers. Show them that you don't fear competitors, and that you are proud of your product for the service it can bring the customers, not for the money it reaps for the owners. Provide a 100% money back guarantee if your customers aren't satisfied. This conveys that you have no reservations about your product.

4.    Show Your Marketing Flair

Combating churn rates is very heavily influenced by having a flair for marketing and understanding your customers. Most companies allocate less than 20% of their budget to marketing, but report more than 20% of their total revenue to their marketing program. With a good marketing plan and happy customers, the sales will come to you, whether through word of mouth or viral marketing. From a stealth viral video to a twitter account that apes the lingo of the youth, viral marketing is a great way to reach a wide audience. “SaaS and chill?” Yes!

5.    Stay Cognizant of Market Competition

When your service adoption picks up, so will the media attention that it attracts. Interested developers will get on the bandwagon. When competition does come, it generally takes the form of less expensive and usually inferior knockoffs of your products/services. Unfortunately, you can’t halt spinoff companies from promoting cheap, inferior SAAS solutions. However, you can try to convince users who moved to cheaper services that they’ve made a mistake. Keep an eye out for competitors who want to profit off the popularity of your service. Figure them out. Find their weak points. Tell their users how the service they provide doesn’t match up.

While churn is a fact of the SaaS industry, and will never entirely go away, it’s far from insurmountable. John F. Kennedy said that “In the Chinese language, the word "crisis" is composed of two characters, one representing danger and the other, opportunity.” Which one is it going to be for you?


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