Churn | 6 MIN READ

5 Ways to Benchmark and Control Your SaaS Churn Rate Effectively!

SaaS Churn Rate is the percentage at which your clients end their subscriptions from you in a certain time frame. Here are 5 ways to control it effectively.

Simran Mohanty
May 20, 2020


SaaS churn rate

Churn is supposedly the new buzz in the market, and why wouldn’t it be? While reducing the SaaS churn rate might seem like a big undertaking, it is also the one that is worth giving a prioritization.  

As per a report published by HubSpot’s 2018 state of inbound claims that about 60% of respondents note ‘traffic generation’ as their biggest challenge in marketing and that too it has stayed consistent for the past three years.  

For those of you who are wondering what is meant by Customer Churn, it is nothing but the percentage of the customers that severed the usage of your company’s service or product during a specific period of time.  

It is formulated by; 

Number of customers lost in a quarter / Number of customers you started the quarter with.  

But no worries, we are here to guide you with the best tips that are going to help you control your SaaS churn rate effectively, as much as possible. Let us begin with the top 5.  

Mapping your New Customers  

Kindly note that getting used to a new product or a service can sometimes be overwhelming for the customer. Unfortunately, if the customer cannot figure out ways to navigate through your service, they are most likely to lose interest instantly.  

For this, enable mapping, so that the newbies can access a roadmap to your product’s functionality, process and features seamlessly. This approach makes it easier to manage customer expectations while giving you complete freedom to surface more information to them.  

The whole point simmers down to the fact that customers tend to feel more empowered to achieve success and are thus less likely to leave, so it is of high pertinence that you constantly monitor on the roadmap for the customers.  

As Sunil GuptaProfessorHarvard Business School aptly puts it

“If I offer an incentive to customers most likely to churn, they may not leave the company, but will it be profitable for me? The traditional method is focused on reducing churn, but we contend the goal should be maximizing profits, rather than only reducing churn,”  

Kudos to the Right Content Strategy 

It might be possible that you could have the most dynamic product with tons of features, applicable to many user groups. But all of that would go into vain if you lose more customers than you gain them.  

That is when you need to be backed by a strong content strategy. It has a huge potential to create a steady flow of predictable revenue if it is done in the right manner.  

content strategy

You may begin with documenting guides for your customers. Identify keywords that your niche caters to, at most. Remember, it is keywords that drive your clients to your page, almost like a moth drawn towards a flame.  

Having content available for your customers is vital for successful onboarding and to bind them to your SaaS solution on a long term basis. Utilize these tactics judiciously and then bid farewell to all that unnecessary churning!  

Say Yes to a Friendly Communication 

Goes without saying, communication always gives you a higher edge, in whichever niche you may be. Demonstrate your friendly gesture by reaching out to your customers before they need you. This shows them that you are investing in themselves to get the most out of your product or service.  

Pay extra heed to the type of message you send out, note that the text should be directly tied to your product or service usage only.  

Let’s say, for instance, if someone signs up for your service and then you see that they aren’t using all of what is actually available to them, you might want to send them a gentle reminder and illustrate how those features would be highly beneficial to them. You can rather encourage them to check out a whole buffet of facets that they haven’t yet explored.  

Discounts on the Go 

Why would your customers want to stick around with you? What are the features that you provide that sets you apart from the rest?  

The answer is special discounts, incentives in any form, loyalty programs, etc can come to rescue. Though a small effort but this step will take you a long way as they will see the value you render to your business.  

Having said that, there are certain other points that you need to consider as well. Delve into the time frame. As in, if you see that your client is approaching the end of the contract and you get a vibe that they might not renew, that is exactly when you need to strike a discount. This offer will most likely leer them back into affirming a business deal with you and in turn, will significantly cut down the SaaS churn rate

The Tale of Psychology and Human Behavior  

Human behavior speaks more about a person than his demographics do. And that is why you as a SaaS company must see beyond segmentation based on just demographics to counter higher SaaS churn rate.  

This analysis will help identify what proportion of users ended their usage after witnessing an error message or what percentage of them spent an exceeding amount of time on the onboarding level? Answering the aforementioned questions paves the way to rather informed decisions too.  

With the completed analysis, you will be in a position to easily identify the behaviors that respond directly to the actions that the users perform when they are on the verge of canceling or unsubscribing the contract.  

Do not limit your solutions to the customers who are at the peak of churning. Think of the many other ways in which you can reward your loyal customers who have stuck around with you too.  

Final Take  

In any given business, churn rate is extremely critical, and reducing it will begin a never-ending battle. The aforementioned hacks will work best for you and you shall be good to go. To have a clearer picture of churn and ways to minimize it, click here.  

You might also like:

  • The SaaS Churn Handbook – Everything you need to know for understanding and preventing customer churn.
  • To understand how SmartKarrot helps top SaaS companies predict and prevent churn, Request a Demo.

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Originally Published May 20th, 2020, Updated December 30th, 2020

Simran Mohanty

Simran hails from the content marketing backdrop with extensive knowledge in blogs, articles, and technical whitepapers in the non-fictional domain. She uses her 'gift of the gab' to explore new possibilities on her way and to make an exquisite impact on her readers. In her spare time, she likes to read journals on artificial intelligence or play with her cute kittens.

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