7 Smart Ways To Reduce Churn In SaaS

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Senior Writer:

green tickDate: June 28, 2022

Is your organization losing tons of customers every month? No matter the industrial domain or size of a business firm, no one wants to lose valued clients.

Customer churn is an important performance metric for all business organizations, but it’s even more critical for the SaaS industry. Support team executives and sales managers are always on the lookout for innovative ways to reduce customer churn in SaaS.

Let’s delve deeper and understand more about this important metric and why it matters the most in the current business scenario.

What is Customer Churn Rate?

While we have constantly been hearing the term ‘customer churn rate’, everyone is not aware about what it exactly means. The customer churn rate measures the percentage of customers that stop using your product or service over a period of time. It’s an important performance parameter and is indicative of business success in the long run.

Why Is Customer Churn A Huge Problem?

A high customer churn translates into bad news for your organization. This is even truer for SaaS businesses, as if the churn rate is high, it will hinder growth and clients will lose interest in your product offerings.

There is a direct correlation between the lifetime value of a customer and the growth prospects of a business. The cost of acquiring new customers is 5-25% higher than the cost of retaining old ones.

It’s not easy to work on marketing campaigns, conduct cold calling, and pitch your products or services to probable leads – the simpler option would be to work out a roadmap to retain your older customer base by taking proactive steps.

7 Innovative Ways To Reduce Customer Churn in SaaS:

A majority of SaaS companies lose 1-3% of customers every month. The faster you understand the reasons that are prompting your customers to leave, the more effectively you can plan your tactical strategy to reduce churn.

Customers may not be satisfied with your SaaS offering due to a variety of reasons such as price, customer experience, technical glitches or an imperfect product-market match. While each customer may have their unique reason for not sticking around, your organization needs to make a concerted effort to tackle them individually so that customer churn does not result in a negative domino effect.

The first step to actually making a difference is to acknowledge that a problem exists. It is important for leaders to keep a track of your churn rate by measuring vital metrics such as percentage of customers lost, and the value of monthly recurring revenue lost. Put up customer churn rate on your vital metrics dashboard and make sure that it’s a strategic objective for your organization to get it down to the bare minimum.

SaaS savvy leaders need to build a support strategy that provides a mechanism to cope with heavy churn rates. Make it a corporate objective, and buy-in employee support by communicating to the entire team that churns rate needs to be reduced.

Make sure that the call agents or support representatives in direct contact with clients take extraordinary measures to avoid pain points. They need to facilitate smooth service and implement innovative techniques that will keep your churn rate at an all-time low.


While you may be convinced that churn is bad for your organization, the burning question here remains, ‘How to reduce churn rate?’ Here are seven techniques that SaaS business operation executives can utilize to keep their churn rate low in the current competitive corporate space:

Improve The Onboarding Process: Here’s an astonishing fact – 40-60% of users that sign up for a free trial of a SaaS application will use it just once, and not come back for final adoption. While clients on a free trial do not actually contribute to your churn rate, it is essential to strike the right chord so that they are converted to lifelong users.

Industry leaders view the onboarding process as critical to the churn rate, so it’s important to get the onboarding process done right. Your onboarding process needs to be novel, creative, and yet personal enough to keep customers hooked on in the long run. It needs to promote a demonstrable ‘win-win situation’ so that customers realize the immense potential of your product or service.

Your onboarding should not be complicated. Customers do not want to go through complex tutorials or impersonal welcome emails. Onboarding should include a simple email that helps them get started by implementing the product.

Make sure that customers know where to reach out for support if required. Create a positive onboarding experience to win half the battle –your customers will definitely not switch if they have a pleasant experience!

Watch Out For Danger Signals: It is vital for SaaS companies to monitor the behavioral differences of customers that leave and users that continue to use their products. This will help support team members identify red flags and look out for clients that may have tendencies to increase the churn rate.

Research has revealed that the length of the user’s first session and frequency of sessions are the most important indicators. If you find users are disengaged, try to help them engage proactively, rather than waiting for them to just drop off and switch to rivals.

Enhance Customer Engagement: Perhaps the most important performance indicator for SaaS organizations, customer engagement is unfortunately often overlooked. The more a customer engages with your product, the less likely they are to contribute to your churn rate.

Have a simple product that speaks volume, and don’t have complicated rules that kill all the fun for clients. Encourage your users to log in daily and incorporate your product in their routine workflow.

Better two-way engagement will help customers to get familiar with SaaS product features, and depend on your service for reliable information or data. An engaged user will surely renew the subscription, and even promote your product to interested parties, leading to a reduction in the churn rate.

Educate New Users: Do not end customer contact after a successful onboarding process- keep on a seamless flow of two-way communication to encourage retention. SaaS companies could send emails about additional features or publish blogs on how their product is influencing the environment.

Implementing a new SaaS product can be overwhelming. If new clients can’t figure out how to use the features right or navigate through the interface, they will tend to cancel a subscription. Provide a knowledge database and adequate support to new users after the initial formal onboarding. Value your loyal adopters so that they stick on and do not increase your churn rate.

Continuously Add Value To Your Product: No product or service in the market is perfect. It is imperative to keep making improvements in your product or service so that customers have an excellent experience.

Add new functionality after taking into account the latest market trends and technological advancements. Create some product differentiation that will serve as a unique selling proposition for your SaaS company. You need to work on enhancing customer delight so that there is a minimum chance of customer churn.

Ask For User Feedback: There are times that companies cannot prevent high churn rates. In such a situation, it’s always useful to ask for feedback and find out from dissatisfied customers why they left.

If a customer has had a negative experience, take all measures to ensure that the same is not repeated with other clients. Take user feedback to identify recurring patterns, and seal the gaps that cause a high churn rate.

Offer exclusive deals: Offers are hard to reject, especially when they are customized for a particular person. SaaS companies need to make it difficult for customers to walk away by providing them attractive and value-based offers – something that will directly benefit the customer. This strategy will definitely go a long way in reducing the churn.

When customers try to cancel their subscription, SaaS providers can offer them a free upgrade or a hefty discount on their renewal. This will provide thrust in the right direction, motivate customers to stick on, and increase the retention rate.

Do not stop communicating with your customers otherwise, your company is bound to wind up with a high churn rate. Conduct exit surveys to understand the reasons why your churn rate is high, so that common mistakes can be rectified and further churn can be prevented.

Having a robust action plan will help your SaaS company reduce churn and keep it at the bare minimum, along with gaining a super credible market reputation!

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