An endless chase for new customers has an appeal that sometimes causes businesses to overlook the value of the companies they already have in their customer base. However, customer churn can be a hidden killer of your revenue, and perhaps more importantly, your brand image. When it comes to Software-as-a-Service (SaaS) company success, retaining loyal customers is particularly crucial.
SaaS Capital reports that the median gross retention for B2B SaaS companies was 91%, and the median net retention was 102%. What about the customers? The numbers aren’t as straightforward as the market is actively changing, but data does show that customers who continued doing business with them have either preserved or increased the amount of money spent on a product.
That’s why tracking churn analytics can be a good contribution to SaaS retention strategies. This article will explore the opportunities of using such data to shift your approach from reactive to proactive.
Churn Analytics 101: What It Is and Why It Matters
Simply put, churn analytics is the data that explains why customers cancelled the service or downgraded their subscription. It dives into why and when, allowing businesses to draw their own insights and find practical solutions to minimize it.
Leveraging churn analytics is beneficial because it:
- Helps you understand the key at-risk customer groups
- Identifies SaaS gaps or pricing issues
- Predicts future churn rates
- Aligns your product roadmap with the actual customer journey.
Generally, using churn is like using a compass and a map where you were just guessing before. You can build more effective retention strategies and improve what you’re offering.
Metrics to Track Your Churn More Effectively
Every company usually tracks its churn numbers as part of strategic analysis, so you probably know your churn rate already. However, it’s only the start if you want to have a more thorough overview of how well your business fares. Here are the key metrics every SaaS team should keep an eye on:
- Revenue churn. This is an additional metric for customer churn — it shows how much money was lost due to cancellations, downgrades, and other reasons. But sometimes, you can lose money even without your customers leaving, and so tracking this can help you keep tabs on revenue shrinkage. Consider the numbers across the industry: for SaaS, a median gross dollar churn was about 14%, which can serve as a good reference point for your business.
- Net Promoter Score (NPS). This is a survey-based metric that asks customers how likely they are to recommend your product. It’s beneficial because it identifies dissatisfaction even before churn occurs.
- Customer Satisfaction Score (CSAT). Your CSAT provides information about how satisfied your customers are with their interactions with your software or SaaS support. It’s a great way to measure changes of your customer’s mood, identifying frustration before it leads to churn.
- Exit surveys. No one can offer you a better explanation of what went sideways than the customers who decide they no longer want your services. Ensure that your exit surveys demonstrate a genuine willingness to listen and include at least one open-ended question.
Keep in mind, however, that your search for answers can annoy those customers who are loyal or aren’t leaving you yet. Shep Hyken from Forbes reports that 20% of customers can stop doing business with a brand if it’s got overly long surveys.
Tracking these metrics consistently allows you to move from reporting churn to understanding and reducing it. Add your options if you need to measure something in particular, too.
Customer Retention Strategies Based on Churn Analytics
After analyzing the information collected from churn analytics, your business can adopt a range of strategies to retain customers and take a more proactive approach to its target audience.
Personalize and Improve Your Onboarding Flow
Onboarding new users is a common hurdle for any SaaS business. And isn’t it disheartening to get your customers to download your software, only for them to stop using it because it’s all confusing?
Evan Kolsky from ThinkJar provides inspirational statistics: up to 67% of customer churn can be prevented if their concerns are solved during the first interaction. If you’re offering SaaS services to B2B clients, personalize and segment your onboarding for different industries. If churn data shows that customers from particular industries or company sizes drop off early, it may signal a disconnect between onboarding and their expectations.
Plus, make sure not to forget about a clear and simple onboarding that doesn’t take too much time. With SaaS, there’s always a potential problem of the learning curve to address, and there’s no need to make it more difficult. Use the churn data to understand when your users drop off during the onboarding process and improve it.
Try to Reengage Your Low-Usage Customers
There is hope to get your customers back on track, but it takes time and effort. Fortunately, your churn data can be a great source of information, and it’s at your disposal. Churn analytics often reveals that usage decline precedes cancellation. So, go for it — identify your at-risk users and re-engage them with targeted campaigns. Offer in-app nudges, educational emails, or small incentives to keep them interested.
Use Feedback Loops to Demonstrate Change
Customers will admire your willingness to address their dissatisfaction because it shows that you’re actually following through on your promise to grow. Use your CSAT or NPS data to uncover specific concerns or errors. Acknowledge this feedback and act on it.
Then, contact the customers who are unhappy with the issue and explain what was done to stop it from repeating. For many users, this can be not just the moment of relative progress — it can even cause their loyalty to reach new records. How businesses solve the issue and take responsibility for the past missteps can be a key reflection of their values, and your users will admire that.
Keep the Involuntary Churn In Mind
Involuntary churn is there, and it’s more common than some might think. It stems from billing and payment problems or customers forgetting to renew their subscriptions. Churn analytics can help quantify this silent revenue leak. Fight it with proactive billing automation. In addition, implementing cloud penetration testing can ensure secure payment processes, mitigating involuntary churn caused by technical vulnerabilities.
For example, you can set email and in-app reminders, offer quick in-chat support to help them find a solution with your specialists, or implement self-service portals. Take this commonly overlooked customer pain point and fix it for them.
Facilitate Your Software Improvement
After evaluating your churn analytics, you will determine whether all features of your SaaS are working as needed. If you notice that your customers often drop subscriptions after interacting with a specific instrument, it may be a sign of a bug or of an overly complicated process.
The same goes for potential features advancement — some proactive users just want more from your product. Why not satisfy their need? Check for potential advanced features to introduce new payment plans, or third-party integrations.
Using Analytics to Uncover New Potential
While churn is inevitable, companies can do more than treat it as a by-product of their operations. Use the churn analytics you can gather to understand the deeper reasons why your users might want to leave. Instead of reacting to the gap in your user base, you can anticipate their needs and improve, not just to retain them, but to ensure your SaaS evolves.
Turn this churn into a powerful source of intelligence and implement strategies that actually work. Your customers will notice; they will see how you grow and address their concerns. That is one of the strongest retention strategies you can offer, as it demonstrates your values.
