The Metric that Controls the Fate of Your SaaS Business - Churn
 

The Metric that Controls the Fate of Your SaaS Business - Churn

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• 3. We’ll cover... 1 The Basics of Churn 2 Your Only Strategy to Truly Fix Churn 3 Tactics and Hacks to Reduce Churn ...

• 3. We’ll cover... 1 The Basics of Churn 2 Your Only Strategy to Truly Fix Churn 3 Tactics and Hacks to Reduce Churn
• 4. The Basics of Churn
• 5. What is churn? The number of customers who cancel within a given time period.
• 6. The Churn Formula % customer churn = # of customers who churned total # of customers forentrepreneurs.com/saas-metrics-2-definitions
• 7. You’re in for the long haul.
• 8. If you don’t keep customers around... You’ll never survive because customers will never become profitable.
• 9. Standard time to recover acquisition cost? 12 Months
• 10. Standard time to reach profitability? Up to 24 Months
• 11. So what’s our churn goal?
• 12. 10% monthly churn and above... You haven’t found product/market fit yet. Your customers do not like your product.
• 13. Results of the Pacific Crest Survey Median Annual Churn = 9% Median Monthly Churn = 0.72% forentrepreneurs.com/2013-saas-survey
• 14. Who responded to the survey? Larger SaaS companies with a median contract value of $20,000. forentrepreneurs.com/2013-saas-survey
• 15. If you’re targeting SMBs: Annual Churn = 15% Monthly Churn = 1.17%
• 16. The Bottom Line on Monthly Churn 1 Over 10% = New Product or Market 2 2-10% = Major Problem 3 1-2% = Doable 4 Under 1% = On Track
• 17. Your Only Strategy to Truly Fix Churn
• 18. Here’s the bad news... The only way to fix churn entirely is to improve your product.
• 19. You need to talk to your customers.
• 20. Talk to two types of customers: 1 Customers that have never churned. 2 Customers that churned in the last month.
• 21. Look for key differences between the two groups
• 22. Specific items to look for: 1 Are they different customer types? 2 How do they use the product? 3 How do they describe the product? 4 Do they get continuous value?
• 23. Start nudging people in the right direction.
• 24. You’ll need to find your own path.
• 25. Other items to look for: 1 Is your app stable? 2 Does it provide value quickly enough? 3 Slow support? 4 Better alternatives?
• 26. Tactics and Hacks to Reduce Churn
• 27. The Hacks 1 Ask People Why They Cancel 2 Push Annual Billing 3 Expired Credit Cards 4 Call At-Risk Customers 5 Go for the Upsell for Negative Churn
• 28. 1. Ask People Why They Cancel
• 29. 2. Push Annual Billing
• 30. Send emails for your annual dicscounts.
• 31. 3. Expired Credit Cards Inform customers their credit card is going to expire two weeks before it does.
• 32. 4. Call At-Risk Customers Alert your support team when customers become inactive, then reach out.
• 33. 5. Go for the Upsell When a current customer upgrades their plan.
• 34. Common upsells: 1 Exclusive features 2 Expanding seats 3 Increased usage 4 Better support
• 35. What’s negative churn? Increase in revenue from upsells exceeds revenue lost from churned customers.
• 36. Low churn + great upsells = negative churn

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The Metric that Controls the Fate of Your SaaS Business - Churn The Metric that Controls the Fate of Your SaaS Business - Churn Presentation Transcript

  • The Metric that Controls the Fate of Your SaaS Business - Churn Lars Lofgren Growth Manager - October 2013 Zach Bulygo Content Marketer
  • @larslofgren
  • We’ll cover... 1 The Basics of Churn 2 Your Only Strategy to Truly Fix Churn 3 Tactics and Hacks to Reduce Churn
  • The Basics of Churn
  • What is churn? The number of customers who cancel within a given time period.
  • The Churn Formula % customer churn = # of customers who churned total # of customers forentrepreneurs.com/saas-metrics-2-definitions
  • You’re in for the long haul.
  • If you don’t keep customers around... You’ll never survive because customers will never become profitable.
  • Standard time to recover acquisition cost? 12 Months
  • Standard time to reach profitability? Up to 24 Months
  • So what’s our churn goal?
  • 10% monthly churn and above... You haven’t found product/market fit yet. Your customers do not like your product.
  • Results of the Pacific Crest Survey Median Annual Churn = 9% Median Monthly Churn = 0.72% forentrepreneurs.com/2013-saas-survey
  • Who responded to the survey? Larger SaaS companies with a median contract value of $20,000. forentrepreneurs.com/2013-saas-survey
  • If you’re targeting SMBs: Annual Churn = 15% Monthly Churn = 1.17%
  • The Bottom Line on Monthly Churn 1 Over 10% = New Product or Market 2 2-10% = Major Problem 3 1-2% = Doable 4 Under 1% = On Track
  • Your Only Strategy to Truly Fix Churn
  • Here’s the bad news... The only way to fix churn entirely is to improve your product.
  • You need to talk to your customers.
  • Talk to two types of customers: 1 Customers that have never churned. 2 Customers that churned in the last month.
  • Look for key differences between the two groups
  • Specific items to look for: 1 Are they different customer types? 2 How do they use the product? 3 How do they describe the product? 4 Do they get continuous value?
  • Start nudging people in the right direction.
  • You’ll need to find your own path.
  • Other items to look for: 1 Is your app stable? 2 Does it provide value quickly enough? 3 Slow support? 4 Better alternatives?
  • Tactics and Hacks to Reduce Churn
  • The Hacks 1 Ask People Why They Cancel 2 Push Annual Billing 3 Expired Credit Cards 4 Call At-Risk Customers 5 Go for the Upsell for Negative Churn
  • 1. Ask People Why They Cancel
  • 2. Push Annual Billing
  • Send emails for your annual dicscounts. 1 month after a monthly user subscribes, send an email with a link to get your annual discount. *Patrick McKenzie gets credit for this one
  • 3. Expired Credit Cards Inform customers their credit card is going to expire two weeks before it does. *Another tip from Patrick McKenzie
  • 4. Call At-Risk Customers Alert your support team when customers become inactive, then reach out.
  • 5. Go for the Upsell When a current customer upgrades their plan.
  • Common upsells: 1 Exclusive features 2 Expanding seats 3 Increased usage 4 Better support
  • What’s negative churn? Increase in revenue from upsells exceeds revenue lost from churned customers.
  • Low churn + great upsells = negative churn
  • Q&A Time! Lars Lofgren llofgren@kissmetrics.com @larslofgren