Maintaining your SaaS Customers & Reducing Subscription Churn
Churn rate: “The percentage of subscribers to a service that discontinue their subscription to that service in a given time period.” . Not a fun term at all. However, to lose customers is to lose money! The measurement of the churn rate is crucial information for your subscriber based SaaS. A high churn rate could have a detrimental effect on profits and hinder growth, and with this in mind, it would be ridiculous not to take charge of your SaaS customer base whilst the industry is experiencing a boom at the moment!
Markets are predicting the industry to grow more than $220 billion through to 2022, along with an outstanding compound annual growth rate (CAGR) of 13.1%. if this brilliant news for the industry excites you, here are the top 5 tips to maintaining your SaaS customer base in the current climate:
Best experience of all time
It sounds grand in scale, yet that’s what you should always be striving for within your SaaS. When you provide a smooth user experience, it almost guarantees your product will be sought after. A good example of this would be the U.S giant Netflix. Films can be acquired in many ways, some methods are more frowned upon more than others, yet Netflix boasts a 152 million subscriber base for a reason! They have impeccable service and their ease of use is superior. Your end goal should be to provide the best user experience of all time to stay competitive – you’re only as strong as the foundation of what you’re selling! Hone in on your product’s greatest feature; by keeping it sharp, it’ll prevent customers from ever wanting to cancel. That key feature has been referred to as “Sticky” by Forentrepreneurs, a feature which embeds itself in the user. They become dependent on it, ultimately serving for a greater user experience.
The best things happen unexpectedly
There are multiple ways you can surprise your customers. If you have something relevant to your product, offer it out sparingly and make it meaningful. Some examples could be:
- Extra storage
- A free month trial
- Additional features
- A suitable voucher
As reported by Peter Economy, “the secret to delivering great customer service is to give your customers a surprise – something they didn’t expect. It’s those unexpected experiences that leave customers with a story they are eager to tell. By keeping customers’ expectations vague in terms of what could be offered to them next, you’ve hooked them into thriving off the unexpected. A reliable business procedure entices the people with something they can’t refuse!
Keep the customer on top of their payment method.
In the scenario that your SaaS relies on scheduled payments from credit cards, this is noteworthy to your revenue. It’s very easy to lose customers by their card simply expiring, which is the worst-case scenario as the customer probably wasn’t aware their subscription was cancelled. Seth Eisen, a spokesman for Visa USA, said that most credit cards expire every three years.
With this in mind, that means that 3% of your subscriptions will expire in a given month, or 36% will expire in a year. This will be a regular occurrence for your SaaS. Inform the customers that their card is due to expire before it happens, be it by email, phone call, or text; it’ll keep the customer considering their relations to your service.
Richard Felix of Stripe says “You should be sending a series of emails over time. The goal is to find a balance between giving the customer enough time to update their billing information, but not enough time that they forget to do so.” Keeping the customer informed on their payment method isn’t the most thrilling part of a retention strategy, but it’s important to stay on top of it.
By providing effective customer support, it will fundamentally keep customer churn down. Slide share reported that 67% of customers list bad customer experience and the main reason for cancelling their subscription. Don’t only assess the customer’s problems, but be transparent with forthcoming issues too. Transparency helps the customer overcome their skepticism and builds a level of valued trust.
These are just some of the ways you can create a culture of transparency:
- Keep customers informed on any upcoming contract or pricing adjustments
- Make sure users are notified of potential downtime
- Ensure that your help & support section is easy to find
- Let a real-time live chat system provide quick answers
It’s these measures that you can take to retain users whilst achieving full transparency. These actions go a long way in installing trust within the user and preserve loyalty to your SaaS.
Always request feedback and be ready to adapt
By looking for feedback in the right places, the user is awarded a sense of power as they reach to shape your SaaS. With competition always looming, it’s important to stay on top of what users feel could be improved. It can create a communal feel with your product, and in turn score loyalty amongst users. Attach a link on your subscription model page or within a monthly newsletter; invite the user in every way possible to assist in making your SaaS the best it can be… if you don’t ask, you don’t know!
Churn is inevitable, however, you can make it manageable. By following these tips, you will not only build a successful SaaS company but a strong and confident brand along with it. Confidence in a brand inspires faithfulness with its customers.