By understanding the reasons why customers churn, SaaS companies can work to improve their products and address these issues to retain customers and prevent churn. While most of the reasons I outlined are common sense, it’s easy to ignore them.
The product is difficult to use or has a poor user experience.
Customers buy (or rent) a product to solve a specific problem or do a particular job and make their or their company’s lives easy. Instead of helping make their lives easy, if the customer spends their time and energy figuring out how to use the product, they will be frustrated and eventually look to fire the product and explore alternatives.
The product is too expensive or not a good value for the customer.
Given the ease of building saas products, customers are constantly getting pitched by new and innovative products trying to unseat existing saas offerings. If the customers feel your product is expensive and they aren’t getting enough value, they will look for alternatives. While most companies might think that having a moat and high switching costs might make it difficult for these customers to go to your competitors, more and more technologies are making it easy to switch.
The customer experiences technical issues or poor customer support.
Every time a customer uses your product, you can delight them with a fantastic product experience or annoy them with bugs and bad UI/UX. While customers might have some patience with these product experience issues, if you provide poor customer support, it’s a lethal combo for churn.
The customer finds a more suitable alternative product.
Given the plethora of saas products being built daily, customers will always have a choice to explore a more suitable product that might have a better user experience and promise better customer support.
Customers no longer need the product, or their business priorities have changed.
This can be because of weak product market fit or other reasons outside your control e.g.
- The company doesn’t have the problem your product solves
- Budget cuts
- Better in-house solution
- The product is not critical enough to justify the cost.
To reduce churn, companies can take several steps to improve their products, customer service, and overall customer experience. Some effective strategies for reducing churn include:
- Conducting regular customer feedback and satisfaction surveys to identify areas for improvement and address customer concerns. This can include NPS surveys or Product-market fit surveys.
- Offering a free trial or demonstration period to allow customers to try the product and make sure it meets their needs. While the sales team always wants to sell, churning a customer is a lot more expensive for a company as it reduces the chances to work with their customer again, and it also ruins their market reputation.
- Providing comprehensive customer support, including online tutorials, FAQs, and live support, to help customers with any technical issues or questions.
- Regularly updating and improving the product based on customer feedback and market trends to ensure that it remains relevant and valuable to customers.
- Offering flexible pricing and payment options, such as discounts or promotions, to make the product more affordable and attractive to customers.
- Developing a customer loyalty program, with rewards and incentives, to encourage customers to continue using the product and refer it to others.
By implementing these strategies, companies can reduce churn and improve customer retention.
This article was written by GPT3 and heavily edited by me!