10 Ways To Reduce SaaS Churn Rate In 2023

Jan 2, 2023 · by Alisher Akbarov
10 Ways To Reduce SaaS Churn Rate In 2023

A certain amount of churn in each period is unavoidable — customers’ opinions change, and competitors constantly find new ways to lure them away.

But a high churn rate means a loss in potential revenue. The fewer users leave, the more your customer base grows — and the more revenue your product generates.

Here are 10 strategies to lower the churn rate that you can implement into your SaaS business today.

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5-Step Guide on Revenue Growth for Bootstrapped & Seed Stage Startups in 2023

1. Improve and Simplify the User Onboarding Process ▶️

Starting to use a new product or service can be overwhelming. And if a customer can’t figure out how to navigate your software right from the start, they will probably lose interest, and fast. Therefore, it’s important to set up a new customer onboarding process or roadmap to guide new users through your product’s features, functionality, and process.

2. Engage with Your Customers 👩‍❤️‍👨

Reach out to your users before they need you. Like that, you are showing that you’re dedicated to helping them get the most out of your product or service. Track customer behavior, and if someone signs up for your product or service and you notice that they aren’t using all of what’s available to them, you might send them a friendly email as a nudge.

To show users the day-to-day value of your product, provide abundant and useful information about the main functional benefits of your product and offer regular news updates, such as announcements of deals, special offers or upcoming upgrades.

3. Offer Rewards 🎁

Incentives like discounts or free upgrades can make users feel appreciated and stimulate them to extend their contracts. 

Rewards can also encourage them to refer others to you. Give customers a reason to stay by providing them with something special, such as a promo, discount, loyalty program, and so on. These rewards will work as a good incentive to show your current users how much you value them, especially in highly competitive markets with a lot of alternatives.

Offering incentives, take into consideration the customers’ timeline. For example, it is wise to provide a discounted renewal rate to a user when they are approaching the end of their subscription. It will incentivize them to stay on board longer.

4. Ask for Customer Feedback Often 🗣️

Communicating with your customers helps you know where users are having problems and provides them with the solution, therefore helping you improve your relationship with them, and gain their loyalty.

By adding a way to provide feedback on your website, you are getting a great tool for gathering input from current customers, and the ones who have ended their contracts. Replying to those reviews through a personalized email will encourage users to share more suggestions with you.

Integrate a live chat feature on your website and monitor those conversations to highlight trends, frequently asked questions, and difficulties that could be stopping your customers from seeing the full value of your product or service.

Also, you can use customer exit surveys. Don’t go overboard with the number of questions, three to five questions will do the job and will not tire users. Start the survey by asking for the user’s name to establish a personal connection, and continue with questions like ‘What you liked/disliked about our product?’, ‘What is the reason you stopped using our product?’, ‘What would prevent you from leaving?’. The answers to the survey will provide you with actionable data, which you can use to improve your product or service and reduce your churn rate.

5. Determine and Analyze Why Churn Occurs 🧐

The easiest way to do this is to literally talk to the customer — get them on the phone and ask questions. This simple way will let you demonstrate that you sincerely care, and you can learn what went wrong straight away.

After that, go with analysis. Study how and when churn occurs for your average customer. Maybe the churn starts after a particular number of days after they first start using your product, or users have some other specific reason. Then, analyze these trends, so you can find patterns and forecast churn before it happens, and contact those at-risk customers with personalized incentives and offers to re-engage them.

6. Make Yourself Indispensable 🥇

Think of a way of making yourself indispensable by integrating your product into users’ lives. Then it’s extremely hard for them to switch to your competitors or terminate their subscriptions.

Prioritize customer satisfaction and always strive for more. You want to be sure that your products or services are as valuable to your customer as possible.

For instance, provide a 14-day free trial plan to allow users to test your SaaS service before buying a pro plan. Let the free trial include all the features from the paid plan. At the end of the 14 days trial, users are already so used to the paid plan features that it’s difficult to downgrade.

7. Enhance Your Customer Service 🧑‍💻

A great way to reduce churn is to provide outstanding customer service. Your service representatives should be authorized not only to answer a question but to solve issues for the customer. Improve the operations of your customer service team to reduce churn rate. It’s important to be responsive. We recommend responding to your customers’ queries within 5 minutes.

Having a customer service department is perfect, but expensive. Many companies nowadays are using automated chatbots to help their customers and sell products or services. Chatbots are great because they can complete repetitive tasks, and they are available 24/7. They are also a good tool for analyzing customer behaviors and monitoring user data.

8. Offer Dedicated Account Managers 💁‍♂️

Depending on the type of business you are in, having someone dedicated to dealing with a particular customer can be a great way to retain them. Customer success managers can provide customers with information on how to get the most out of your product or service. When users feel they have a personal relationship with someone in the company, they will more likely stay on board.

Of course, having account managers isn’t always possible. To make up for this, you can use an omnichannel approach that provides your reps with information about customers. That way, customers can feel like they have built a relationship with your company as a whole instead.

9. Overcome Feature Blindness 🦮

As users become more familiar with your product, they build habits around certain features. They also have a tendency to ignore other parts or try each feature a few times before neglecting them altogether. When a user is too focused on their most used features, ignoring other features, it is called feature blindness.

To overcome feature blindness, use tooltips or hotspots to point out features in context. Address the need when a user is most involved, and not focused on more familiar activities. This makes it much more probable that they will pay attention to what you’re trying to show them.

10. Offer Long Term Subscription ♾️

Instead of the month-to-month plans, offer your customers longer subscription options. Make annual plans pre-selected by default on your website’s pricing page if you are PLG. Signing up your customers for annuals would mean increasing their LTV and decreasing churn in most cases, as you would have more time to win their hearts and close them for another term.

Here at Comfi, we provide a B2B Buy Now Pay Later tool that allows your users to split the annual subscription plan cost into 12 interest-free tranches over 12 months. Your customers will start to use your product or service instantly, and see firsthand the benefits it brings them and their business while saving money with yearly plan discounts. Whereas, Comfi pays you the whole sum upfront within 7 business days.

Contact customers who have terminated their accounts and let them know about the lucrative opportunity of getting your annual plans through Comfi and benefiting from discounts. For best results, personalize your email as much as possible. Leverage this strategy to improve customer retention, and up customer lifetime value and turn your MRR into ARR.

Be Proactive

Customer churn can be damaging to your business’s finances, but being proactive and taking some measures before it’s too late will help your SaaS business keep customers and even attract more users. Implement Comfi as a payment method, and offer your customers long-term contracts at a discounted price, so your users undoubtedly stick around for the long haul.

Let’s talk your revenue together
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Amal Abdullaev

Co-founder at Comfi

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Alisher Akbarov

Alisher Akbarov

Co-founder, COO

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