How to reduce churn rates for your SaaS / PaaS products?

Every start-up or a growing company focuses on customer acquisition. That's natural - you want more customers. However, ignoring churn can make it hard for your business to survive or be profitable.

For large companies, high churn rate could even mean losing market share.

Ok, let’s start by first understanding what exactly is does Churn rate mean in a SaaS / PaaS business?

SaaS / PaaS churn is the percentage rate at which SaaS / PaaS customers cancel their recurring revenue subscriptions. SaaS churn can be interpreted as the probability rate at which customers will cancel their subscriptions with your product.
– Joel York

Here’s a small visual that makes the point further clearer.

But why does customer churn occurs?

Every business is aware that Customer Churn is inevitable. It’s impossible to guarantee that all your customers will stick with you forever, and this happens for a variety of reasons. Few reasons why your customers may discontinue their subscription of your service.

  • Value proposition is not clear
  • Wrong target group
  • Poor User Experience & Design
  • On-boarding experience is half baked
  • Your product has bugs and is difficult to use
  • Your pricing doesn’t fit the customers’ expectations

So how you can reduce churn rates in your SaaS / PaaS products?

1. Value

Know that every customer who chooses your product is there to benefit themselves. If they don't receive value in the very early stages of their engagement with you, there are higher chances of them leaving the product. Make sure every feature set that is selected for your product plays an important role in helping customers accomplishing their desired goals.

For starters: Comprehensive research is important to zero-in on your customers’ needs, pain-points and expectations from the product. Thus you can shortlist the most essential set of features to develop which will keep the customers engaged for long.

2. Right Target Group

Understanding your target audience is of utmost importance before you even plan your product. Not doing this right might result in targeting customers who are a misfit for your product. We have witnessed this scenario which is quite common in startups. Since you are just starting, it’s important to take time to find the right set of customers.

3. User Experience & Design

The most essential ingredient in your product design is to get the overall user experience right. You can get the customers on your platform by pumping money in marketing or sales. However, post that if their experience on the platform is not right, frustrating or confusing, they are bound to go away.

Making sure the User Flow Architecture of the entire platform is structured based on feature priority and usability touch points. This makes the Navigation of the platform more accessible.

Making sure a UX strategy is in place to craft an experience that guides users to accomplish their tasks in a user-friendly manner and provides delight in overall journey. This increases customer engagement with the product and loyalty too.

Making sure you have a strong Visual Personality Design of your brand. As design and superior usability impacts customer engagement & long term retention. Good design helps in building trust on the product and an edge over the competition.

4. On-Boarding Experience

This is one of the key stages where your product gets a chance to make its first impression on your customers. This is the first time when your customer is going to use the product after signing up or for a trial. Improve onboarding experience with the help of following tools:

  • Guided tours
  • List of hero features
  • Walk-through of the product
  • Guidance to move forward to the next steps
  • Assistance in setting up the account

The right onboarding experience impacts customer engagement and long-term retention positively - which in turn decreases churn. Capture their attention by showing your value proposition early in this stage.

5. Usability, Design & Quality

The design personality, quality and overall usability enhances the way customers feel about your product. For example, it could be as small as ‘customer support’. The feature has to be accessible within the product, at each step of the user's journey with least amount of clicks to accomplish goals.

Your customer should feel in control of the product in terms of usability and not the other way round.

6. Value Over Pricing

Make sure the value offered through your product exceeds the price a customer pays. Always follow the path of offering more value than receiving from the customers. If the price exceeds value, your customers will not think twice before finding other cost-friendly solutions that serve their purpose.

The above-mentioned tips would extensively help in reducing churn rates and will directly shoot your business profitability high. As we all know that pumping money in marketing or sales would get us more customers but those efforts are short-lived. To the contrary, selling to existing customers is much easier than to new ones. Focusing on high customer engagement, support, value and delightful experience can help pull down the churn rate in your SaaS / PaaS business.

If you are running a SaaS / PaaS business and facing high churn rates, we should definitely talk. We have done it before and we’ll do it for you too.

Reach out
to us and let's talk about how can we reduce your churn.

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