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Here’s How SaaS Companies Can Avoid Customer Churn

SaaS Screen

Guest post by Hardik Oza

Customer churn is a cost of doing business, and in the world of software as a service (SaaS), this is often the norm rather than an exception. There is intense competition between companies in B2B (business-to-business) marketing.

As per the SaaS survey, 30% of SaaS providers state that churn rates have been higher during the past year. It is cause for worry even if you consider that the market size exceeds $100 billion. Still, there is no room for complacency since there are about 10,000 private SaaS companies and the number is increasing. Churn, sad to say, has a cascading effect. You can avoid these or reduce churn with these guidelines.

Improve Products

The software market is not like the car market where you have the Ferrari and Bugatti at one end and the Kia at the other. Differences are often marginal in SaaS but could be the decider for many customers.

The first thing to do is to carry out periodic surveys to understand pain points.  Listen to customers and implement improvements they recommend, not just features that you think will lock in customers or something as one-upmanship over competitors.

Understand Why Customers Opt For SaaS

According to the SaaS Industry Market Report, there are several core reasons why customers opt for SaaS solutions:

  • 75% do so because of the speed of delivery; 
  • 63% because it gives them flexibility; 
  • 58% because it allows business continuity 

The important thing is to avoid any chance of complaint about the software if you wish to retain loyalty.

One could cite numerous examples of software companies that grew through constant innovation and just as many that went off the radar because of complacency. Technologies change, customer expectations change, and the marketplace changes. It is a challenge to keep on top in all these areas, but it is a necessity if you do not want to be left behind.

Engage With Customers

Your clients are using the software, revenues are pouring in and you sit back and relax. It is better to get those feet down to the ground and engage with customers while your development team is working on improvements.

It helps to conduct periodic surveys. You could simply send out an email each week to all your subscribers. Invite them to point out bugs the way Google does and rewards those who do point out flaws. Perversely, some people do like to point out flaws but that is all to the good for you. Your users pinpoint trouble points and your team resolves them instead of wasting time discovering problems.

That is not the only way to engage with clients. You could invite them to an online conference to air their views. You could and should maintain a list of key personnel and send out greetings for birthdays and anniversaries, for example.

Give customers a sense of fulfillment by sending out congratulatory and thank you mails by effective email marketing campaigns when each one completes 100 days, one year, and so on. Offer a small reward to be adjusted in the next month’s subscription. Someone who has been with you for a year could get 15 days or a month’s additional free subscription.

Ask them for testimonials. Request that they say a good word on your behalf to their business associates.

Why keep at it? The simple reason is that the SaaS market will exceed $157 billion worldwide by 2020, according to Statista. You must keep growing; stagnation is decline.

Be Proactive

It pays to be a go-getter. The corporate mobile SaaS market will touch $7.4 billion by 2021 and smaller businesses too find it profitable to switch to SaaS. Go after new customers with a vengeance.

Tend your new acquisitions with care for the first three months. Virtually hand-hold them during this period because this is when churn is most likely to occur. An India- based service provider stood up to giants in the software sector simply by focusing on personalized services, an area that the giants were reluctant to touch or found it difficult to manage.

Push existing customers to opt for prepaid bargains. Prepare postpaid and prepaid rate cards and try to convince customers to pay upfront. You get assured revenues and customers are locked in for the duration.AZ Software went this way and slashed prices for a year’s upfront payment. Their customers responded and now AZ has a large pool of sticky customers. Once you get them into the advance payment yearly model, they are likely to continue that way. Businesses find that it is easy for accounting purposes. This done, you can focus on customer experience because you have a whole year of their time to play with.

Focus On Customer Experience

Are you doing enough is always a question that should be playing at the back of your mind. Well, go out and ask your customers. Sometimes you may not even have to ask. Simply keep track of customer complaints and the way you resolve their software related issues. Their feedback will tell you a lot.

Customer experience is not just about the software and its features though it is important. The way your team reacts, interacts, and responds to your customers influences the experience. You could analyze this area and introduce changes for the better.

Keeping customers happy is a priority, whether you like it or not. A PWC survey found that 32% of customers are likely to leave after just one bad experience. Conversely, happy customers are likely to gladly pay a premium. They will also upgrade packages or add additional services.

Are some customers still leaving? Try your best to stop them from leaving with a personal phone call. Even if they do leave, you to get to know why.

Develop A Loyalty Program

If you deal with customers then you must create a loyalty program. Engage loyalty experts to craft a strategy that molds itself around your business, customers, and goals. This will help immensely in reducing customer churn, and you will wonder why you did not think of it before. 

 

Hardik Oza is an SEO practitioner with more than 9 years of experience. He works at PeddleWeb, an internet advertising company in India. He shares his thoughts on additional publications like SEMrush, Search Engine People, and Social Media Today. Follow him on Twitter at @Ozaemotion.