How to reduce customer churn in SaaS business

How to Reduce Customer Churn in SaaS Business?

Learn how to retain loyal customers and gradually reduce churn. How to use online surveys to do this? Read on.

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  • management and owners
  • sales and marketing specialists
  • entrepreneurs and the self-employed

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Customer satisfaction and loyalty in SaaS business have become essential factors having a direct impact on retention and churn. Let’s take a closer look at how surveys help systematically deliver customer lifetime value and keep existing customers around by identifying their needs and predicting signs of potential dissatisfaction. Prevention is always better than cure.

Collecting customer feedback through surveys will

A reference from a sales specialist

Unlike e-commerce, the principle of which is based on immediate sales, in the ever-changing SaaS landscape it is the entire customer lifecycle that businesses focus on.

Getting customer’s attention is just a beginning of the journey.

To generate recurring revenue and ensure continuous growth, you need to prove quality of your product or service over time, establish your market position as a trustworthy brand and build a long-term customer relationship.

Surveying your customers will bring you valuable data that will indicate any changes in their shopping behavior . Regular analyses of customers’ answers will enable you to take prompt action when any signs of negative progress are observed. Keep reading to find out how to benefit from such feedback.

You won't fix a leaky bucket by pouring faster

Churn is an inevitable phenomenon in any business, which in a general sense stands for loss of a customer. Marketers usually work with a term customer churn rate. This metric expresses the amount of customers who stopped using a product, canceled renewal or unsubscribed from a service for various reasons.

Poor customer/product/market fit

Before you introduce a product/service to the market, it is important to prepare a fertile ground by proper targeting. Set up a tactics based on answering these questions for yourself:

A failure to meet customer expectations

Customers expect to accomplish a specific task using your product/service. Although it might possess all required features but the intended goal cannot be achieved, they start looking for another solution, most likely among your competition. To avoid such an outcome, make sure your customers are satisfied. Invite them to fill out a customer satisfaction survey survey for you. Let them know that their insight will serve the purpose of further improvements.

Insufficient customer support

No matter how good your product or service is, customers might come across pain points that will need your assistance. Your ability to respond to submitted requests in an accurate, consistent and timely way owing to a knowledgeable employee team, multi-platform support or scalable support structure adds to user comfort, increases trust in your brand and reduces likelihood of customer churn. Assisted onboarding in place saves an abundance of time and hassle by creating a tighter relationship between a customer and the product itself.

A more tempting competition offer

The marketplace is flooded with miscellaneous products and services that attack on customer attention from every corner. Thus, there are tons of options to choose from. To motivate customers to pick you over your competition and stay loyal, it is essential that they always see the value your solution delivers. Do your best to fully understand their needs as much as where your potential is to take a bigger bite of the market. If necessary, use your competition as a source of inspiration and try to perform better by a notch.

Inadequate price

The issue of pricing plays a significant role in customer retention. Setting the price too low devalues your product/service, leaving an impression that it is not capable of solving a customer’s problem. On the contrary, if customers find your price disproportionately high, they will look elsewhere for more affordable options. Optimize prices and allow value discovery to make the customers feel that the purchase is worth the cost.

User experience

Function of your product or availability of your service affects your customers’ business. When it doesn’t work properly due to technical glitches, bugs, confusing layout or complex navigation, customers face the risk of losing productivity and revenue. Although the purpose is to supply impeccable products/services, we don’t live in a perfect world and slight imperfections do happen. They shouldn’t be frequent, neither repeated and most importantly, no reported flaw should remain without your response to prove that you take customers’ insights seriously.

A sales specialist introducing product to a new customer

All of the above described instances can result in loss of value, ie. the customer ceasing to use your product or unsubscribing from your service. Keep in touch with your client base, carry out a variety of surveys to ask for preferences and feedback, build engaging messaging campaigns to communicate the benefits your solution offers, provide first-rate support and let your customers know they are your priority to stay on top of their mind.

A high churn rate negatively impacts revenue and can also be a sign of discontent with your product/service.

To succeed in the fast-paced SaaS environment, it is therefore crucial to develop a systematic strategy to increase customer satisfaction and prevent churn.

Churn can’t be avoided, it can be worked with

Regardless of business, industry or professional background, acquisition of a new customer is much more costly compared to expenditure on retention of an existing client. Address new prospects but remember to look after the current customer base of yours. Evaluate their needs and expectations to apply upselling, ie. offering more expensive products, upgrades, or other add-ons. Besides churn numbers going down, you will witness your MRR (monthly recurring revenue) grow faster.

From this perspective, it is essential to conduct regular surveys to collect and analyze customer feedback. Useful how-tos and giveaways will be dealt with in the following chapter. For now, let’s take a brief look into general ways of fighting customer churn.

  1. Go the extra mile with your most valuable customers to keep them happy. As sneaky as it sounds, all customers in your catalog can’t get the same amount of attention. This is not to say that you should favor some and neglect the rest. Always strive for excellent customer service but decide who will get a dedicated customer success manager and who can do equally well with helpdesk support.
  2. Analyze why churn occurs and who’s at risk. Be proactive in terms of churn prevention. Communicate regularly with your customers. Make sure they can leverage maximum of your product features’ availability or service range (eg. send newsletters with handy tips and hints, distribute invitations for webinars and live demos, use surveys to ask about their experience, etc.). Once you notice a silent intermezzo after the purchase or subscription, reach out to the customer to see where the catch is. Is this the only case or do other companies within this segment encounter similar issues? Getting such insight will enable you to forecast and take action in time.
  3. Educate customers to increase their loyalty and establish a long-lasting relationship. Create a solid portfolio of tutorials and e-learning materials that invite customers to master your product’s features or navigate towards smooth service utilization. Fine-tune onboarding processes that guide users to solve specific challenges by means of your product/service. The more empowered they feel to achieve success, the less likely they are to lose interest and drift away.
  4. Ask for customer feedback to keep improving your products or services. Opinions and suggestions from customers will indicate which aspects of your product or service are assessed affirmatively and shall be considered to evolve further potential or where you will need to take focus to eliminate weaknesses. Surveys represent a cost-effective way of collecting feedback often, regularly and in a long-term run.
  5. Offer incentives to show appreciation of your customer’s loyalty. Let your customers know that you value them and their business. Reward them with a loyalty program, propose a discount, offer a free trial for new products - simply, give them a reason to stay with you. It is also advisable to track the customer timeline. When the customer’s subscription is approaching its expiration and there is uncertainty about its renewal, be prepared to give them a motive and a good impulse to stick around.
  6. Stay competitive. As much as your customers are driven to pursue trends, improve their products, or implement new technologies to reflect constantly changing market conditions, you need to follow the same flexibility to keep your business going, make it better serve the customers and remain in their spotlight. Knowing your competition helps you stay in the loop.

Even though there are a number of variables that affect churn, its prevention is in principle about maximizing value for the customer and minimizing potential issues. The journey from a prospect towards a paying customer, who’s loyal and can evangelize your product/service, isn’t easy but it’s certainly worth the effort, which results in revenue growth, pool of satisfied customers and thriving business.

Negative feedback isn’t harmful, quite the contrary

There is a difference between those who fall in depression when facing criticism and those who view it as a challenge to do better. Negative customer assessment can serve as a great eye-opener. The point is to read data from the feedback properly, get rational and constructive and find determination to take measures that will eliminate reported weak spots.

The best way to get quick and relevant input from customers are online surveys. Survio is a professional survey SaaS platform that allows you to cover the entire process from creating a questionnaire, through response collection to feedback analysis and yet contains dozens of powerful features.

In order to gather meaningful data, each survey should have a clear structure filled with unambiguous questions. Also remember to select from a variety of question types that facilitate evaluation and lead you to an accurate outcome. To get a smooth start with surveys, choose from over a hundred of ready-made and fully editable survey templates, organized in categories.

Measure loyalty of your customers by means of Net Promoter Score® (NPS®) - a simple standardized question dividing your respondents into supporters and critics based on a score you receive on a scale from 0 to 10. The NPS® combined with an open-ended question gives you a unique opportunity to receive valuable tips and original ideas from the customers regarding particular aspects of your business to pay attention to. Feel free to read more details on utilization of the NPS® in a use case that we’ve prepared for you.

The NPS® and customer satisfaction survey both serve as tools of churn prevention. As soon as the score begins to drop or negative feedback starts to increase, it is a sign for you to take action and search for a cause which can potentially end up in a customer loss. Customer exit survey, as the title suggests, is applied after the customer is gone. The biggest gain in this otherwise not really cheerful situation is

Tip: Make surveys as clear-cut as possible for respondents. It is proof of your respect and gratitude for their time and willingness to share thoughts with you.

It is also important to consider when, where and how you will display the survey to respondents in order to maximize response rate. Survio allows multiple options of sharing a survey:

Do you ask how you can analyze and evaluate responses in Survio? Except for printed surveys, received data are automatically analyzed in real time and processed into charts and tables. Export of results in professional reports using the most common formats (PDF, DOCX, PPTX, XLSX, CSV or Google Sheets) and online dashboards is an imaginary cherry on the presentation cake top.

A reference on customer retention and customer churn from a sales specialist

Summary - when the customer comes first, the customer will last

Where there is supply and demand, there are customers and providers. Customer loyalty is not for granted and has to be fought for. One day the customer sings praises to you, another to your competitor if you fail to meet their requirements or expectations. Remember though that churn doesn’t have to be fatal as long as you respond to it in time and take it as an opportunity to learn and grow.

Each customer is individual and has to be treated accordingly. There are a number of churn indicators and means to prevent it. Knowledge, communication and ability to set yourself apart from your competition are the key. Unsatisfied customers don’t complain, they usually leave in silence. If they have to leave, find out why and scan your customer base to make sure that other clients don’t have similar motives. Use surveys regularly and repeatedly. Collect and analyze data. Keep an eye on churn rates and survey outcomes. Customer satisfaction is a prerequisite for business health and its growth potential.

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