The Leading Reasons for Customer Churn in SaaS
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Transcript of The Leading Reasons for Customer Churn in SaaS
PROMOTERS PASSIVES DETRACTORS
The Leading Reasons for Customer Churn in SaaSWhy customers pull the trigger and what you can do to stop them
02The Leading Reasons for Customer Churn in SaaS
Churn can be defined
simply as the rate at which
you are losing customers.
churn
If you imagine your business as a bucket
with holes, the water flowing from the top is your
growth rate, while the holes at the bottom is churn.
03The Leading Reasons for Customer Churn in SaaS
According to Pacific
Crest’s survey, 30% of
Saas companies have
unacceptable levels of
churn
Source: Pacific Crest
30% of Saas
companies
Statistics
04The Leading Reasons for Customer Churn in SaaS
While a certain level of churn is
unavoidable, it’s important to keep it
under control, as a high churn rate
can potentially kill your business.
05The Leading Reasons for Customer Churn in SaaS
If your business has 100 customers and the
churn rate is 5% per month, you will be left
with only 48 customers in one year.
06The Leading Reasons for Customer Churn in SaaS
80% of your company’s
future revenue comes just
from 20% of your
existing customers
Top-Line Growth
Existing
customers
07The Leading Reasons for Customer Churn in SaaS
Source: Bain and Co.
Reducing churn by merely
5% can increase profits by
as much as 25-125%
Increase Revenue
25
50
75
100
125
08The Leading Reasons for Customer Churn in SaaS
61% of customer take
their business to a
competitor when they
end a business
relationship
Source: Get Satisfaction Blog
09The Leading Reasons for Customer Churn in SaaS
61% ofcustomers
Brand Loyalty
10The Leading Reasons for Customer Churn in SaaS
The first step in fighting churn isto understand what causes it.
Why do Customers Churn?
12The Leading Reasons for Customer Churn in SaaS
Reasons for Customer Churn
Ignoring data
Pooronboardingexperience
Weakrelationships
Ineffectivecustomerservice
Reason #1: Poor Onboarding Experience
14The Leading Reasons for Customer Churn in SaaS
What if majority of your customers are leaving not because they don’t use your product, but because they don't know how to use your product?
Reason #1: Poor Onboarding Experience
In a highly competitive world, a poor onboarding experience can be costly, as it increases customer acquisition cost and reduces activation conversion.
15The Leading Reasons for Customer Churn in SaaS
Reason #1: Poor Onboarding Experience
16The Leading Reasons for Customer Churn in SaaS
That’s why brands focus on delivering "Aha!" moments to direct users towards the lower end of the conversion funnel.
Reason #1: Poor Onboarding Experience
The "Aha!" moment is the first user interaction that delivers clarity
on your product’s unique value proposition, and gets them hooked.
17The Leading Reasons for Customer Churn in SaaS
Oh, I got it!
Reason #1: Poor Onboarding Experience
For instance, the “Aha!” moment for Instagram is getting users to upload one picture, for Twitter it’s posting the first tweet, for WhatsApp it’s sending that first message.
18The Leading Reasons for Customer Churn in SaaS
Reason #1: Poor Onboarding Experience
19The Leading Reasons for Customer Churn in SaaS
As per behavioral psychology, people need "activation energy" to complete a task that they would rather not do.
Reason #1: Poor Onboarding Experience
There’s a reason why people find it so difficult to hit the gym in
the morning, but don't mind partying for hours.
The difference lies in the activation energy gap, which is huge in
the morning, since you have to push yourself to wake up early
and hit the gym. However, dancing at a party is tempting,
convenient, and delivers instant gratification - thereby making it
an activity with “low activation energy”.
20The Leading Reasons for Customer Churn in SaaS
Reason #1: Poor Onboarding Experience
21The Leading Reasons for Customer Churn in SaaS
When you want a customer to complete a task they’re least likely to do (filling forms, sharing personal information, etc.), you need to reduce the activation gap.
Reason #1: Poor Onboarding Experience
Lay the basic groundwork (minimise initial inputs)
Design walkthrough tutorials (step-by-step product guides, visual tours, etc.)
Deploy. Test. Repeat (run A/B tests)
22The Leading Reasons for Customer Churn in SaaS
1.
2.
3.
Reason #1: Poor Onboarding Experience
How to reduce the Activation Gap?
Reason #2: Ineffective customer service
24The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
Poor customer service is the one of the topmost reason for customer churn as it takes a single bad experience to make users choose a competitor.
Source: American Express
25The Leading Reasons for Customer Churn in SaaS
78% of customers bail out
on a product because of a
poor customer service
experience
78% ofcustomers
Reason #2: Ineffective customer service
70% of buying experiences are based solely on how the customers feel being treated.
Source: HelpScout
26The Leading Reasons for Customer Churn in SaaS
70% ofexperiences
Reason #2: Ineffective customer service
While delivering a great customer service is a
clockwork mechanism with lots of components playing
a vital role, there are two key strategies at the core:
Improve Accessibility
Ask for Feedback
27The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
Pick the right channels for your customer service delivery.
Emails, chats, and other passive communication channels are low-cost, low-energy ways for connecting with customers who have minor issues, while calls and personal interactions are expensive yet effective ways to address high-priority issues.
28The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
Solution #1: Improve Accessibility
29The Leading Reasons for Customer Churn in SaaS
Emails Calls
MeetingsWebsites
Live chat
Communityforums
FAQ
Social media
Communication channels with
customers
Reason #2: Ineffective customer service
Source: Genesys Global Survey
30The Leading Reasons for Customer Churn in SaaS
Over 75% of customers are more satisfied with assistance by phone. The second channel of choice is email communication.
22
59
78
0
10
20
30
40
50
60
70
80
90
Web-selfservice Email Phone
Reason #2: Ineffective customer service
Pick the right channels by following three factors:
31The Leading Reasons for Customer Churn in SaaS
Employee convenience(How easy it is to solve the query through that medium for your customer reps)
Overall turnaround time(How fast can you resolve the query through the channel)
Relative customer satisfaction(Using A/B testing to find the channel that maximises customer satisfaction)
1.
2.
3.
Reason #2: Ineffective customer service
According to Lee Resources report, 80% of
companies believe they deliver superior customer
service, while only 8% of customers believe that
businesses actually do that.
32The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
Solution #2: Customer Feedback
Ask your customers how they feel about your
product or service (survey forms, NPS, CSAT)
33The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
34The Leading Reasons for Customer Churn in SaaS
Reason #2: Ineffective customer service
Close the feedback loop
Reason #3: Weak relationships
As per White House Office of Consumer Affairs,
it’s 6-7x times more expensive to acquire a new
customer than to retain an existing one.
36The Leading Reasons for Customer Churn in SaaS
Reason #3: Weak relationships
81% of customers are
more likely to stay
provided that they feel
connected with the brand.
Source: SalesForce
37The Leading Reasons for Customer Churn in SaaS
81% ofcustomers
Reason #3: Weak relationships
38The Leading Reasons for Customer Churn in SaaS
Reason #3: Weak relationships
Be available and connected to your customers through relevant communication channels
39The Leading Reasons for Customer Churn in SaaS
Tips to help you build strong relationships:
Know your customers’ preferences
Conduct customer exit surveys
Re-engage inactive customers
1.
2.
3.
Reason #3: Weak relationships
Reason #4: Ignoring data
“ The goal is to turn data into information, and
information into insight.”- Carly Florina
41The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
42The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
That’s why you need to pay attention to what
the data is telling you.
43The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
Analyzing behavioral traits and personalizing
experiences is the key to customer retention
44The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
If the renewal rate is decreasing, dig up the data to answer:
Why the renewals rate is low?
Which segment stopped renewing?
Where did they stop?
How can they be re-engaged?
45The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
Use data to improve customer retention:
46The Leading Reasons for Customer Churn in SaaS
1.
2.
3.
Reason #4: Ignoring data
Track and prioritize feature requests
Personalize experiences
Analyze customer behavior
Track how clients use your product
Personalize customer experience
Analyze customerbehavior
47The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
48The Leading Reasons for Customer Churn in SaaS
Step 1: Pay close attention to what your customers are asking, monitor
how they use your product and what obstacles they are facing.
Step 2: Put all improvement ideas on a priority list (easy-to-fix and highly
demanded features go to the top) and pass that list to your product team.
Step 3: Track the interaction of customers with newly developed features
and use early feedback from users to refine product experiences.
Reason #4: Ignoring data
Track and prioritize feature requests
Personalization not only increases conversion, but
also improves user engagement as users spend less
time finding features and more time interacting with
those features.
49The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
Personalize experience
50The Leading Reasons for Customer Churn in SaaS
Reason #4: Ignoring data
Analyze customer behavior
The best way to reduce customer churn is to
analyze how your customers interact with your
product and optimize your service for desirable
customer experience.
• Improve your onboarding experience, always be
available to assist your customers and build strong
relationships with them.
• Pay attention to all the data generated
by how your customers interact with your product.
51The Leading Reasons for Customer Churn in SaaS
Conclusion
Net Promoter Score® makes it easy to identify
your brand detractors by asking one simple
question:
On a scale of 1-10, how likely are you to recommend
the product experience to your friends or colleagues?
Know What Your Customers Think About You
52The Leading Reasons for Customer Churn in SaaS
Retently Sentiment lets you track customer
satisfaction, improve retention and decrease churn.
53The Leading Reasons for Customer Churn in SaaS
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