How to Reduce SaaS Churn


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All too often, companies put too much focus on acquiring new customers and not enough focus on retaining current customers. This causes current customers to leave, resulting in a high churn rate to match the high acquisition rate. Learn how to reduce churn and increase retention.

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How to Reduce SaaS Churn

  1. 1. Software-as-a-Service (SaaS) is one of the most popular and quickly growing business models in the tech field today due to recurring revenue and the overall growth in the space. But alongside rapid growth rate, SaaS companies need to pay close attention to the other end of the spectrum - churn rate. Churn rate, simply speaking, is measured by the number of contractual customers lost/(number of new customers + number of existing customers) over a given time period. How to Reduce SaaS Churn Rates Twitter AccountPublishTwitter AccountSocial Media SaaS companies are prone to higher churn rates due to the competitive nature of the tech space (especially in younger companies), but on a larger scale churn can significantly affect a company’s revenue. As a result, reducing the churn rate is just as important as increasing the acquisition rate and maintaining customer retention rates. So how do SaaS companies reduce their churn rate? What practices can they implement to keep the number low? Though a high churn rate is common among young startups, Viralheat, a social media marketing suite founded in 2009, reduced its churn rate 50 percent since implementing a customer success program in January 2012. The plan has reduced its churn rate by 10 percent month over month. What’s making Viralheat’s customer success plan so successful? Let’s take a closer look at the components and how each has contributed to reducing churn. 1) Contact new customers: Go beyond the traditional welcome email and support ticket route if you realize that the type of support customers need is more hands-on. New services can be intimidating to new users, some of which are using a product like this for the first time. Customers who feel inundated or overwhelmed by a product or service are more likely to leave than customers who feel comfortable and educated. By personally calling new customers, Viralheat’s customer success team was able to learn each client’s specific needs and sufficiently guide them through usage of the product. Customers were more knowledgeable with the tool and able to use it to its full capabilities, resulting in less customers leaving. 2) Create a help center: SaaS companies have a lot of information for their customers. Many questions can be answered simply, but FAQs don’t resonate well with most customers. Visual resources serve a better purpose in this situation so Viralheat created a customer Help Center where how-to and informational resource pages and videos are housed. Customers can come to the Help Center and find the resources they need to assist them with Viralheat’s core functionalities. Note: Churn rate is the number of customers lost/(number of new customers + number of existing customers) over a period of time. Tip: Implement a customer success program to help reduce the churn rate and increase revenue.
  2. 2. How to reach us Email: Web: 3) Offer real-time online chat services: In today’s fast-paced world, and especially in the technology field, potential customers want answers and they want them now. The difference between choosing services could be the response time to a question about a product, especially in the early stages of shopping around. Viralheat implemented an online chat on their homepage, allowing current or potential customers to immediately reach a member of the customer success team. 4) Conduct new user demos: Using SaaS products often require training or visual demonstration of the product’s capabilities. Product demonstrations are especially helpful for prospective and new users as they can directly see how to use a product. Some companies offer a prerecorded demo to highlight features, but often these demos are hard to follow along without rewinding and pausing along the way and any questions attendees have at the end are left unanswered. Viralheat offers live demos twice a week where attendees join a web demo and are able to see the customer success representative demonstrate the product in real- time. Moreover, customers are able to ask questions during and after the demo for an immediate response. 5) Interact on social networks: Customer support solely through email correspondence or phone support is quickly becoming a part of the past. Social media networks like Facebook and Twitter serve as a ripe stomping ground for customers and consumers to pose their questions or voice their dissatisfaction. Ignoring those reaching out through social networks is a mistake as we’ve all seen the damage that can be done by doing so. Often times customers only reach out via social networks so Viralheat ensures that they are quick to reply to all inquiries or feedback received on these platforms. In fact, many users have lauded Viralheat for their quick responses on Facebook and Twitter. Note: Technology allows companies and customers a variety of ways to connect with each other - knowing and using them make a big difference in churn rates.. Tip: Don’t just focus on a customer in the beginning. Staying connected reduces the possibility of churn. Tip: Your audience is telling you exactly what they want, how they feel, etc. Engage with them and let them know you’re listening! The implementation of a customer success program should be geared toward satisfying all customers – potential, new, or existing. A happy customer is less likely to leave a product or service than an unhappy customer – ensuring that customers feel satisfied at all stages of their relationship with a product also ensures higher acquisition and retention rates. And although SaaS companies enjoy rapid growth and increased popularity, they must also keep churn rates low for continued success. About Viralheat: is the social media management and intelligence company that makes it easy for you to manage social and put it to work for your business. Trusted by more than 10,000 brands, Viralheat combines social media management and intelligence in a single platform encompassing account management, monitoring, engage- ment, and analytics. With its comprehensive platform and flexible pricing, Viralheat easily scales as your social programs and business needs evolve.