Don’t Run Your Business Into the Ground: 5 Ways to Reduce your SaaS Churn Rate

The word Churn has a lot of range. On one hand you churn butter. That is delicious. On the other hand SaaS churn is one of the most common reasons that SaaS companies fail. So what can we do to reduce your SaaS churn rate and make it smooth as butter?

I get asked from time-to-time what an acceptable SaaS rate is. The answer is much more complex because it relates directly to your specific business. The simple answer of course is 0% but seeing as to how that is about as likely as seeing Leonardo DaVinci riding a winged Pegasus through your backyard I will simply say. “As low as possible.”

The truth is that somewhere in the 5-7% per year would be terrific.

Here are some ways you can reduce your SaaS churn rate, and you can always check out this additional way. 

 

 

“It’s time we try and communicate”

This quote from an awesome song by the late, great Michael Hedges nails it. Think about this for a second. How often and under what circumstances do you speak to your customers? In most cases companies and customers communicate when the company wants to upsell them, or the customer needs assistance. Other than that it is out of sight and out of mind. There is another way. By implementing customer satisfaction surveys, a simple feedback bar, or new product announcements your customers will feel invested in your success and you will gain valuable insights into ways you can improve your service.

 

“Wherever you go I will follow you ‘Cause I was wrong”

Oh yes, an Everything But the Girl Reference. The trick here is to understand what you do wrong. Look at your competitors and as we mentioned above listen to your customers. They will tell you under no uncertain terms exactly what your company is getting wrong. Once you have identified that address it. You might need to reach out to some industry experts for their opinion. The good news is that once the issue is known you can tackle it.

 

We’re all Americans trying to compete.”

Aptly said by NBA Hall of Fame guard Oscar Robertson, if you have any kind of competitive advantage the way to use that to lower your SaaS churn rate is to find your advantage in the market and deliver it consistently. Zappos has its incredible customer service, Apple has intuitive design. Whatever you have and I am sure that you do. Deliver. Sometimes it helps to develop a core values statement that can help you communicate that advantage not only to your employees but your customers as well.

 

“I’m so hung up on these stupid little things”

Yeah I had to dig pretty deep to find this song quote but it is in a song by Anastacia and it is right on. If you can eliminate bad decisions and PR you will be well on your way to reducing your SaaS churn rate. Remember the “United Breaks Guitars” song? All united had to do was buy the guy a new guitar. Their reluctance to help a frustrated customer ended up with a viral hit against them and an eventual 150 million dollar market share loss. Ouch.

 

“You’re the best around nothing is gonna ever keep your down”

Quick who can name the artist and/or movie that song is from? I’ll put the answer below. This potential tip requires a bit of nuance. What I mean by that is while it is important to remind your customer of how great you are, you cannot beat them over the head with it. Be sure to remind users about the power of your product and your great features. You can do this subtly during interactions with customers or even in the occasional version update emails you send out.

 

Ok so who guessed correctly? Yes the song is performed by Joe Esposito and is from the soundtrack for “The Karate Kid”. Nice work.

What will also work is a combination of the tips I mentioned above in creating a company culture that your customers will not want to leave. Reduce your SaaS churn rate? Try eliminating it all together. Good luck.

Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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