Customer churn refers to the measurement of how many customers leave a business or service within a given period of time. For SaaS distributors and other companies that work with subscribers, the change-over rate is critical as it indicates the percentage of your customers (subscribers) that you lose. Many SAAS companies choose to overlook this metric in favor of more detailed and derived metrics, but this is a huge mistake.
SaaS companies must measure their growth against rampant, growth-hungry competitors and a market with saturation potential. By relying on future revenues, SaaS companies are struggling to generate predictable revenue growth. The fastest-growing SaaS companies tend to lose sight of their safe monthly revenue flow and focus instead on bookings and new sales.
SaaS startups face particular difficulties in terms of marketing, sales and customer success. In most cases, a start-up is not profitable until it expands its customer base. SaaS start-ups are limited in the amount they can spend on customer acquisition because they need to segment and attract a large number of quality leads in order to grow.
To make an early stage SaaS company successful, you can't just build a great product and change your subscription software model and expect hundreds of customers to come. You need a sophisticated marketing strategy that executes all kinds of marketing and sales campaigns to convince people to be aware of your SAAS product and to attract your target market. The registration and activation of self-service users is the best way to reduce customer acquisition costs and increase lead acquisition rates for SaaS startups.
Here are the 10 steps to turn your churn rate to success!
- Analyze why customers churn
- Engage with your customers
- Educate the customer
- Know which customer is at risk to churn
- Define your most valuable customers
- Offer incentives to the customer that likely to churn
- Target the right audience
- Improve your service
- Pay attention to complaints
- Offer long term contracts
If you are proactive, you can prevent customer loss by creating conditions in which customers can see and benefit from your products. To stay motivated, remember that 82% of companies claim retention is cheaper than acquisition, while the minimal 2% increase in retention can reduce costs by up to 10%. This means that your customers will see that it is better to keep you and stay then leave. It is important to remember that the main reason for churn is not the product, it is poor customer service. Communicate with customers, integrate them into your product, improve your customer service and make sure they see what they can gain by staying with you rather than turning away from you. Remember, Keeping your customers is not magic, it's a lot of work and attention!