Churn Out or Dig In: Turning Customer Churn into Positive Growth
While reducing customer churn is key to keeping your SAAS business afloat, it’s more than just a method for damage control. Preventing customers from churning out is an active process by which you can promote customer investment in your product and deepen your connection to your user base. In other words, you have a choice in how to relate to your customers- will they churn out or dig in?
This week we’re exploring common ways that customers churn and how to turn them into opportunities for your business.
1. Build customer engagement
For the entire lifecycle of a customer subscription, you should constantly be educating, engaging, and furthering the learning of each customer. A customer with only a cursory understanding of your product is unlikely to work efficiently with it, will not use advanced features, and will only integrate it into their workflow on a shallow level.
On the other hand, when done well, consistent customer success training can make your product invaluable. Photoshop, for example, has a steep learning curve and overwhelmed customers often churn out before even finishing a free trial. Once a user understands the more advanced features, however, returning to a simpler online editor like Canva feels almost crippling.
Think of it this way: have you ever used a software to the point where regardless of cheaper options or attractive bargains, you know that you’ve invested enough time that it wouldn’t be worth switching? Well-crafted customer learning experiences create a form of loyalty that is difficult to replicate via any other method.
2. Avoid bad-fit leads
Not every customer will be best served by your product, but the resources involved in servicing these bad-fit leads can quickly become a huge drain on your company. From the consistent need for customer service to bad publicity when they churn out, these users are rarely worth taking on, even for the short-term profit.
So what do you do to avoid these kinds of leads? First, develop detailed buyer personas both for customers that will integrate smoothly into your service and for users that won’t. Make sure your sales and marketing teams understand that not every sale is necessarily a good sale and are willing to suggest bad-fit leads look elsewhere. The top of the funnel is the easiest place to make changes for these customers since little to no resources have been invested in them at this point.
How does this help to invest customers more deeply in your service? For one thing, your customer success team will have more space to work with customers that are suited to your product and likely to stay long-term, rather than pouring time and energy into finding workarounds for users that shouldn’t be using your service in the first place.
Better leads also mean more useful customer feedback. These users will have needs that your service doesn’t necessarily offer right now but may want to develop in the future. By communicating consistently and acting on user requests, you can develop longer-term relationships and create a sense of community within your user base.
Bad fit leads, on the other hand, can muddy the waters with feature-requests that don’t fit into the mission or focus of your company. Get to know the needs and pain points of your customers, then fine-tune your user experience to their needs.
3. Develop customer relationships
Getting to know your customers is a key step to reducing customer churn. Particularly in the age of the internet, users love to feel like they have a personal connection or contact at a company. Don’t wait until there’s an issue or the danger that customers will churn out to take this step. Proactively make contact. Offer support, advice, expert sessions, and webinars. If you don’t already have an account management program in place, consider creating one to service the needs of (at least) your highest-value customers.
If you offer multiple subscription tiers, remember that more features aren’t necessarily better for all customers. While upselling can be a great technique for increasing revenue, finding a best-fit plan is generally more valuable in the long-run, as it gives users the optimum product experience for their specific needs.
At the same time, once a user has been with you for a while and is comfortable using the product, addressing specific pain points via upselling will give them even more reason to love your service. Discuss advanced features with them specifically relating to their needs as a user and you’ll set them up for success and a longer tenure with your product.
4. Focus your company culture around a customer-first mindset
We’ve said it before and we’ll say it again: every department should be aligned around customer success. Their success is your success. If you’re making decisions in any department that aren’t in the best interest of your customers, they will churn out. From sales reps to developers, every member of your team should be trained on buyer personas and should have daily reminders of the faces behind the usernames.
This is an overarching process that will affect every aspect of your business. So how do you get started?
Communicate consistently with customers. Exit surveys can be a great way to get a sense of why your users churn and build strategies in response. A consistent connection between customer service and development is key to responding to bugs when they appear. It’s also a great way to pass on feature requests, workarounds, and generally shape the product to the needs of the user.
5. Fight passive churn
This is the easy part. Also known as involuntary churn, passive churn stems from failed credit card payments that ultimately result in canceled subscriptions. Failed payments can become a silent plague on SaaS businesses because these customers churn out without making any noise. And you may be thinking this simple issue can’t attribute to large amounts of churn, but Churn Buster has seen companies with up to half of their overall churn attributed to failed payments.
That being said, a solid dunning system can recover over 70% of those failed payments and prevent customers from churning out passively.
From customizable recovery campaigns to optimized card update pages, there are some very simple steps to creating a solid dunning process. And with a tool like Churn Buster, it’s easy to plug this leak with little to no effort from your team.
Churn Out or Dig In
These steps might seem intimidating at first, but in the long run, they’re key to a more stable revenue base, and ultimately a healthier company. Remember- the process isn’t just catching users before they churn. It’s creating the kind of product and culture that promote stable growth. By taking proactive steps, you can decide how your users invest in your product, and gradually develop the kind of long-term connections that will make your business successful. Ready to take the first step?