5 Churn Reduction Tips

Churn reduction – it’s about time we had a talk about this, because it seems to be one of the bigger problems in SaaS at the moment, and churn rates have become a bit of a buzzword in the field as a result. Professionals scramble to work out pseudo-scientific solutions for this problem, and who knows, some of them may work. But honestly, it’s probably not such a complex problem, though definitely a severe one.

Churn reduction honestly may be easier to solve than people are making it out to be. Today we’re going to look at five ways this may be possible without resorting to Euclidian mathematics or something equally brain-breaking to accomplish it.

The goal of this is not to discredit the advanced theories of marketing and business that churn rates are inspiring, but rather to point out some simpler solutions for those of us who have barely enough time as it is just to run our businesses. These are practical solutions that on their own have been tested in the past, and while some of the higher theories may provide more coverage and ultimate resolution one day, these work well enough to contain the chaos.

Without further ado, let’s get started …

#1 – Update Frequency

This can go either direction, first off. Update frequency is a bit of a two-headed best, because being too frequent or too infrequent with feature refinement or addition of new features can put customers off, resulting in loss of subscriptions. How can it go both ways?

Well, infrequent updates to an extreme can make customers begin to suspect obsolescence in something even if it is not there. They may feel that a competing service stays on the cutting edge more efficiently than your service, or they may feel that it is stagnating. This will cause them to write the service off even if the conclusions are utterly unfounded.

On the other end of the spectrum, updating too frequently, like with any marketing platform, can just exhaust customers. They may quickly feel that the product isn’t what it once was, and abandon it for something a bit more evenly paced.

In either case, finding a balance here will reduce your churn rate significantly, if you suspect this may be an issue. This balance will be unique to your demographic and service, bear in mind.

#2 – Tech Support

Bad tech support is a box of nails in a company’s coffin, and this applies to SaaS just as it does with any other service. If customer support uses old, inconvenient methodologies, or just isn’t handled right, then customers who inevitably encounter an issue will cancel their subscriptions when they see how poorly their issues are dealt with.

Solving this is often in adopting better policies and strategies, such as making hold times and phone trees less horrible, and hiring staff who natively speak a given language, or at least incredibly fluently. This may sound a mite insensitive, but it is … as they say … what it is.

#3 – Overhead

Overhead is a major issue in SaaS, more so than many other business models. With SaaS, there are often trial or basic free accounts for a given service, alongside paid versions which offer higher features. The problem here is that if there are huge amounts of free customers and few paid customers, the overhead is passed along to these paid customers whether you want it to be or not.

Add to this the fact that the software itself has overhead, and you have a rather vicious cycle. Alas, the only solution to this isn’t pretty. You may limit free accounts to a timed basis, and put anti-fraud precautions into place to prevent free trials from being exploited. This will deter potentiality of customer base somewhat though.

Your better choice is to gimp the free platform a bit more, and at a bit of temporary expense, reduce the cost of the paid platform. This will incentivize customers. The reduction in price this ultimately feasibly establishes is the goal for churn reduction – customers get tired of price gouging.

#4 – Incentives

Incentives to keep customers coming back are important in all businesses, including SaaS. These incentives may be as simple as reduced rates for long time customers, or occasional free upgrades or rewards. Credit card companies and airlines have done this for almost 100 years, and with great success.

The rewards seldom have to be grandiose, but incentivizing customers is something that can’t be overlooked in importance, if you want to reduce your churn rates. People just like to be appreciated. This will aid in churn reduction almost immediately.

#5 – Identity

You have competitors, unless you’re a pioneer 9which brings its own bucket of troubles). How are you identifying your company and service so that it stands out among competitors?

This is important in SaaS just as much as it is with, say, soft drink companies or clothing lines. SaaS may often be more practical and business-oriented, but that means nothing. Make sure you stand out, in a positive way, otherwise people may wander off to something that looks shinier. Remember, all that glitters is in fact gold, in the eyes of the consumer.

These are just five things that may aid in churn reduction, and there may be many other things to consider, so take a long look at how things are in your situation.

Kevin Goldberg