Tackling Churn in the SaaS world

Dropping the ball when no one calls for it.
Image Credits: Pakman

Types of Churn Metrics

At a high level, we have two churn metrics that businesses typically keep care about.

Churn Evaluation Process

Step 1 — Track Churn Metrics

You can’t have a debate on numbers that you aren’t tracking, can you?

2. Understand the driving forces behind churn

The second part is which needs a bit more detective work and diligence: unpacking driving forces.

  • Poor Onboarding: the customer was never properly trained, oriented & welcomed to the platform which left them to figure out the solution.
  • Switched hands: the initial set of users were all set on the solution but then there were a few replacements who were used to other tools and never made the transition gracefully.
  • Knowledge Gap: the client simply wasn’t aware of all the problems you can solve for them and graduates to a solution that is perceived to be superior. I remember once we were about to lose an enterprise-grade client with an annual contract value of $30,000. When the CEO interviewed the decision maker in their final days, we discovered they were cancelling because they “thought” we didn’t have a couple of search features (which we did but weren’t really advertised well on the solution). An intense yet candid training later, we saved the account.
  • Poor Practice Usage: the customer uses the account but not in the way it’s meant to be used and thus, ends up frustrated. For example, instead of saving a job description template, a customer continues to copy paste JDs from a Word file requiring a lot of re-formatting & clean up.
  • Undergo bankruptcy
  • Get acquired where the parent company mandated another product
  • Witness a change of leadership that decided to go another way
  • continue to understand the needs of your high-value customers and how they evolve. If you plan to expand your offering, you’ll need those insights to build the right solution. At the time of conceiving AfterHire, we had the benefit of a rich Google Drive folder brim with past RFPs that we had received from customers that fueled most of our product decisions.
  • explore partnerships and see if you can build native integrations with such specialized platforms where your customer simply has to plug n play another service rather than abandon yours.

3. Discuss next action steps

Now, that you have created structures to track metrics and identify driving forces behind churned accounts, it’s important to democratize that information with the right people.

  • Compare the churn metrics against last month and the prior year.
  • Share the breakup of driving forces and why accounts were churning the most.
  • Enrich the context of churned accounts with additional information shared by various teams (they may know a bit more than what’s tagged)
  • Decide on action points (related to product, process & people) on how to best address these challenges in the future.

Planning Churn Blockers

Different constituents of the product team have their own theories of how to reduce churn:

  • Product Managers will suggest more features that need to built to amplify the value of the product.
  • Engineers will talk about focusing on improving existing feature sets & tackling tech debt for faster delivery.
  • Marketing will propose to run ambitious and creative customer marketing campaigns to keep re-instilling belief in the product.
  • Design will think about UX areas we need to improve and why simplicity is key.
  • Force-feeding features rather than taking a consultative approach. It’s critical to keep understanding what the core problem the customer is trying to solve and then meaningfully mapping that to a product feature that you serve. Get out of always selling. Start solving.
  • Not understand the customer’s situational context. It’s critical to build deeper relationships with multiple people in the organization (especially your point of contact’s direct supervisor), learn about the user’s life at the office, who they are trying to impress and the social interactions within it. Become their extended team member, not an emotionally-aloof provider.
  • Not exploring cross-selling or up-selling opportunities. This stems from the second point. Your customers are trying to solve multiple problems at a time. If you can take care of the primary one pretty well and then raise your hand for a few others that your product can potentially solve, they will love you for that. Most reps don’t even ask or have the curiosity (or audacity) to learn more. It’s only a matter of time when someone else might choose to take on that mantle.

Net Negative Churn

Consistent net negative churn is a candy land for SaaS ventures (with one caveat which I’ll explain in the end).

Conclusion

Listen, acquisition is a tough game. Getting a new customer to sign up requires a lot of effort from a number of parties. However, while retention of an existing customer base isn’t trivial either, it’s something that’s far more in your control.

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Aatir Abdul Rauf

Aatir Abdul Rauf

Director of Marketing, vFairs. Product Management enthusiast, lover of marketing, LinkedIn writer & dad of 2 boys that keep me humble.