Whether churn is already an issue impacting your bottom line, or you’re just trying to get ahead of the curve, you need to pick through a huge amount of information and opinions to build your own unique SaaS churn strategy. This week we’re simplifying and streamlining the process of building that foundation.
Let’s step back from the hundreds of strategies out there and focus in on the ways that a product manager crafts a killer customer retention strategy.
6 STEPS TO A KILLER SAAS CHURN STRATEGY:
Step 1: Get to know your churn
You wouldn’t develop a strategy for any segment of your business without first understanding what you’re dealing with, so you must approach your SaaS churn strategy the same way. Where are the strengths of your business, and where are the weak points? Start by looking at a few key metrics:
- How high is your churn rate?
- What kinds of churn are you experiencing?
- At what point in the user experience are you seeing the most churn?
Most importantly, you need to figure out why people are churning, and how the process happens. Is most of your churn coming from customers relatively new to the product, or longer-term users? Do you experience a lot of churn after large releases?
Alternately: are you seeing a lot of passive churn? Are customers not taking the time to resubscribe or update their payment information? Getting a handle on your existing churn will not only allow you to fix leaks- it’s also a great way to invest new users more deeply in the product.
Step 2: Get to know your users
It’s easy to get started here. Develop customer profiles and buyer personas, gather customer feedback, and pay particular attention to the use-patterns of your most successful customers. There’s a good chance you’ve done this before. Do it again.
Your user base will change with time, and regularly checking in to get a sense of how they are relating to your product is key to building a long-term SaaS churn strategy.
At this point, you’ll likely start to see where you are falling short for customers, but don’t rush into a churn prevention strategy too early. You’ll need to get input from every department in your business and do some centralizing work before you can properly respond to your customer churn.
Step 3: Align your entire team around retention
This is the point where you bring everybody on board. Starting with a strong sense of your customer base and existing churn, now you can open up lines of communication and build dialogue within the company.
Your different teams will have radically different perspectives on retention (which makes sense, given the different ways they relate to your customer base), and it’s worth getting everyone’s two cents as you start planning.
Sales, for example, will have a sense of the kinds of leads that most consistently convert, while CS will likely know which kinds of new users struggle the most with the product and require the most support. Development will need to respond to the needs of both of these groups in their feature releases and bug patches.
Drawing a connecting line between initial leads and long-term customers is a great way for every part of your team to start to align around customer retention.
It’s about focusing on the lifetime value of the customer. It’s also about building a customer-first company culture. The most important takeaway: retention is everyone’s job.
From these initial conversations, you can start aligning each team around fighting customer churn.
We’ve covered this topic in pretty serious depth before- check out our article on How To Build A Retention Department Without Hiring Any New Employees, or these four basic principles for systematizing your customer success.
Step 4: Map out the typical user journey and highlight at-risk moments
You’ll get a general sense of the user journey by mapping the path of leads to paying customers, now it’s time to build on that information and develop workable action points.
By mapping out the decision points in a customer’s journey from initial connection to the sale and beyond, you can see where they are most in danger of churning and proactively take steps to head them off at that point.
Go through the entire process as a customer, or have someone outside your company test and report to you. See what you’re doing now to help your customer become successful through their eyes. Think in terms of engagement, frustrations, and cross-road moments in their experience.
You need to see where customers are most at risk of churning. These are moments where you’ll need to be proactive in your SaaS churn strategy; focusing time, energy, and resources to ensure that your hard-won users stay with you long-term.
Early at-risk moments include your onboarding. In this stage, it’s vital that customers reach an “aha moment” of using your products and getting real value. Soon after, they need to reach a second activation point, where the product becomes a part of their workflow.
At the end of the first month (or the first billable period), users will likely take a moment to evaluate their decision to use, and pay for, your product. In this period, it’s all about the relationship developing between the user and the product. The risk is a lack of investment early on leading to an early churn.
You’ll want to lean in on your retention strategy any time you receive a complaint or a feature request from a user. Likewise, any time you release a new feature or make major updates.
Finally, keep an eye on customers that upgrade or downgrade, or make a referral. These are major points in their journey, and it’s key to be there for them at each junction.
For more on user roadmaps, check out our exhaustive article here.
Step 5: Set your strategies
Here’s the fun part- turning all of the information you’ve taken in into an exciting new action plan.
Focus first on the areas where you have the most concerns.
To help you get started, here are some of our top strategies:
- Dial in your marketing
- Improve your onboarding
- Proactively engage with your customers, throughout the lifecycle
- Ask for feedback while they are customers
- Stop passive churn
- Leverage successful customers
- Create retention-focused pricing
Step 6: Analyze your work
Make sure you have clear insights into your customer retention and how it’s improving with the new strategies you’re using.
With a new dunning system in place, have you reduced involuntary churn? If so, by how much?
Since updating your onboarding, has your churn rate within the first 30 days improved? It’s vital to be scientific here, with a well-developed evaluation process and clear metrics for success.
Good analytics will need to be the backbone of your process over time.
Rinse and repeat
Churn never stops and neither should you. Your customer base evolves, employees come and go, and strategies need tweaking all the time. Once your SaaS churn strategy starts to feel easy and flow naturally, go back in and find other points of interaction to develop.
Remember: there’s no limit to how much you can help customers. Keep working. Keep evolving. Flexibility and a willingness to grow are signs of a good strategy that can accommodate a huge range of customers.
Most importantly- make sure your approach is focused and targeted. Throwing strategies against the wall will exhaust your team. Instead, take the time to understand your ecosystem and your role within it. You’ll be glad you did.