As the owner of a SaaS business, you are aware that churn is more than a passing fad. High churn rates have a direct influence on a company’s revenue, growth, and long-term success.
You’re probably also aware that churn management necessitates a strategy that goes beyond customer acquisition.
Even though the significance of customer churn is obvious, it is possible that you are not accumulating the insights that could assist you in reducing churn.
Not to be concerned! This article investigates three essential insights about customer churn that can improve your revenue growth strategies. Grab a cup of coffee and settle into a comfortable position before we begin.
How should the optimal churn rate be determined?
For SaaS and subscription-based businesses, churn typically refers to lost customers or revenue and is conveyed as a percentage or dollar amount. There are two principal types of turnover:
Customer churn equals customers lost over time
Revenue churn equals the quantity of gross revenue lost over time.
Both types of churn provide value and insight into what is occurring, but if you offer multiple plans, you should prioritize revenue churn. It is always undesirable to lose consumers, but it is essential to monitor their value.
For instance, if your revenue churn suddenly decreased one month, it would be beneficial to determine whether this was due to the loss of several smaller customers or one large customer.
Loss of Clients by Segment
Understanding the churn rates of different consumer segments can cast light on who is leaving, when they are leaving, and why they are departing.
This can be achieved by segmenting your customer churn rate by consumer size (small, medium, enterprise), industry, audience, or geographic location.
Using this data, you could delve deeper into which customers were lost during this period and begin to identify patterns.
Causes and Trends of Customer Churn
Which missing features result in the greatest customer churn?
Who among your competitors offers the most expensive prices?
Do you attract the appropriate clients?
There are a variety of reasons a client may cancel their subscription.
The following are, according to our data, the most common causes of SaaS cancellations:
Too expensive
The product contains technical flaws
Customer is substituting an alternative item
Customer lacks knowledge of the product’s usage
Customer will discontinue operations
Among all available insights, cancellation insights are among the most actionable.
A customer who is canceling because they believe the price is too high in comparison to the value they are receiving may be persuaded to participate in a product demonstration call, whereas a customer who is closing their business is a lost cause.
Using a cancellation survey in which consumers can express their reasons for departing in a direct and explicit manner is one way to collect this data.
Gain actionable understanding of churn
Using these insights, you can develop targeted strategies to reduce customer churn, enhance customer retention, and ultimately boost your SaaS revenue.
Both the procurement and implementation of these insights are facilitated by analytics subscription software. Register for a free two-week trial to commence.
