Does your SaaS have a “leakage” problem?
Retention and churn figures go hand in hand and are key metrics for SaaS, yet knowing what they are and doing something about them are quite different things. Many SaaS are failing miserably when it comes to retention and find themselves in a routine pattern of trying to plug up a leaky boat.
If your SaaS is one of those, you may be making one of these critical mistakes which impact your retention:
#1. Your Key Focus Is Acquisition
When you think of the analogy of a sales funnel, where your new acquisitions come in at the top and the width narrows on the way through as fewer people move all the way through with you, retention problems can be akin to having a hole at the bottom of your funnel.
It doesn’t matter how many new acquisitions you keep pulling in at the top if you have that leakage problem at the bottom.
One of the important things to remember is that churn isn’t the problem, it’s the symptom of something else going on in your business. For example, if your focus is largely acquisition, but you’re then leaving customers to fend for themselves once you’ve got them onboard, there’s a good chance you’ll see this result in churn issues.
Of course you need to give focus to acquisition, but that’s not where your plan should end. Customer success journey mapping is a great strategy for laying out a plan which will give you that holistic view of how the customer moves through your organization, not just a view which says “get them onboard at all costs.”
Client Success looked at journey mapping recently and defined some best practices for preparing maps:
- Always look at the journey from the customer perspective.
- Identify any handoffs between departments in your customer journey.
- Define your customer success milestones.
- Share your map with trusted clients and have them validate it.
- Measure and optimize regularly.
Journey mapping helps to reinforce that you can’t just put all your efforts into acquisition, then sit back, hoping the customer wants to stick around. As you can see from the Client Success example below, there are touch points that go with each stage so you’ve got to put that work in.
#2. You’re Not Asking for Engagement
No matter how you look at it, a customer who is not using your product is probably not going to keep paying for it. You might think “oh well, it mustn’t have been the right app for them”, but how would they even know that if they haven’t had the opportunity to try?
Look, we’re bombarded with new information, emails, content and the latest, most exciting new technology constantly. There’s a good chance that someone not in the habit of using your app simply forgets to put it to work, especially when it’s not yet part of their daily ritual. Next thing, they see you billing their credit card, think “oh, that’s right, well I’m not even using that” and they cancel.
You may have been able to prevent this simply by asking for engagement from their very first interaction with you. When Totango did some research on SaaS use, they found around 50% of customers weren’t using the service they were paying for. This immediately puts those people at high risk of cancelling.
You’re not going to win them all, you just can’t. However, you can do your best to engage them while you have them and hopefully ensure that more people become active users.
Some ways of asking for engagement include:
- Push notifications for apps.
- Emails encouraging customers to try different features.
- Phone calls from your customer success team.
- Incentivizing product tours (for example, Dropbox offers free space for taking their product tour).
You need to give yourself the best chance of getting in front of the customer and demonstrating the value of your app.
#3. You’re Not Delivering Value
It could be that your app simply doesn’t deliver what users want. It happens, though hopefully you did enough research before producing it that this simply isn’t the case. The other possibility is that the customer simply doesn’t see the value of your app, a possibility which can certainly happen if you haven’t asked for engagement.
How will the customer realize value if they don’t try it and see it?
It comes back to understanding what your customer success milestones are (those key steps which a customer has to take to see value from your app) and driving engagement so that they reach them.
#4. You’re Inaccessible
How easy is it for your customers to get help or to submit a support ticket? Some SaaS are notoriously difficult, with queries not being followed up unless the customer goes back and asks, or with deciphering how to get help being difficult in the first place.
Most people can’t be bothered spending money on something which they’re going to need help with, but even more so if that help is hard to find.
The solution is to make getting help easy and obvious. The customer shouldn’t have to click around looking or wait for lengthy periods of time for a response.
Part of this is accountability too. From time to time there are always bugs or upgrades happening within an app and being upfront and accessible shows that you’re transparent and probably a trustworthy bet for the customer.
#5. You’re Not Personalizing
Tobin Lehman described failing to personalize the experience as “the biggest” SaaS retention mistake. Why? As he points out, this can be explained using Maslow’s Hierarchy of Needs. We’re not buying the software because we want software, we’re buying it to solve a need that we have and for each customer, that need may be different.
“The truth is that your SaaS not only fulfills some tactical or basic needs, it also fills some emotional needs higher up the hierarchy. And in the customer experience many marketers neglect this hidden contract with the consumer that your product is doing more than providing a service. It’s providing an avenue to the experience of this person’s daily life.”
The suggestion is that your retention process should heavily focus on developing relationships with your customers and being able to offer a personal touch.
Depending on your business model, you may not be able to offer large-scale personal service, but you can make your interactions more personalized by segmenting customers appropriately and keeping your messages to them relevant.
Instead of blanket email blasts, try sending out emails based on behaviors and activities. This helps to convey a message that you “know” your customer better.
#6. You’re Not Proactive
Ideally, you don’t want to be waiting until there is some kind of issue to take action. You need to be monitoring constantly and noticing potential churn issues before they have turned into a full-blown churn event.
For example, are you monitoring for expired or cancelled credit cards? This is a common reason for churn, but by using the right software (such as Retained for any SaaS using Stripe), you can send out early alerts to your customers to remind them to update their credit card details before their next billing cycle.
You should also be monitoring sentiment about your app and general chatter about it (on social media, for example, or through surveying your customers). If there are complaints, comments or requests which come up regularly, you may have an issue that should be addressed early before it turns into a cause for churn.
Another big one is any changes in the pattern of use of the customer. If they were usually a twice weekly user, but have only logged in once over the last month, this reduction in use may indicate they’re not happy anymore and looking to move on. This is where you need to be reaching out and just asking the customer how things are going.
#7. You’re Not Focusing on Features that Matter
It’s almost always the case with SaaS that, over time, you’ll find certain features are much more important to your customers than others. These are your “moneymakers” and are a large part of why the customer decided to sign up with you.
If you’re devoting a whole lot of time to new, extra features, but neglecting any essential fixes or updates to those core features, you’re setting yourself up to annoy customers and trigger churn. Want retention? Devote your main focus to those features which really matter to customers.
We all want better customer retention, but remember if you’re experiencing more churn than you’d like, that is not the real problem you have. Churn is a symptom of something else — somewhere that you’re not meeting the needs of the customer or not even getting out of the gate there because you haven’t engaged the customer in the first place.
Map out a plan which includes the entire customer journey (not just for acquisition!), and look for ways to better engage or meet their needs. The hope is that your funnel turns into more of a flask, with no significant numbers cancelling.
Kill your churn. Keep more of your customers. Get an invite to Retained.