Alright, so you’re getting the hang of things. Your messaging is resonating with people, they’re signing up for demos, and after those first 7 days they’re actually staying with you.
That’s it, right? You have a healthy funnel that’s sending customers to your door — job done!
…well, yeah…until the dreaded CHURN.
Once you’ve on-boarded someone, there’s a whole host of things you can do to boost their likelihood of sticking with you.
First…why do customers churn, anyway?
(For context, when I say “churn” here, I’m talking about people that actually pay for the service for a few months, then stop doing so.)
There’s a million reasons why someone decides to opt-out of your SaaS product…but they generally boil down to a few main categories:
- There’s misalignment between your pricing and the value of the solution to the customer.
- This one is more rare than you’d think.
- There’s no longer a need for your solution.
- Similarly, the pain behind the problem they were previously-experiencing could be lower now, such that the perceived value of your solution drops below the “care threshold”.
- Your solution does not solve their problem effectively.
- They’ve found a different solution that better suits their needs.
- They’re unhappy with some part of your solution.
There’s also a few other “fake reasons” that can obscure reality:
- Your product is “too expensive”.
- What does this even mean? Expensive compared to what?
- Your customer “forgot to renew their credit card details”.
- Your customer’s manager did not give them approval for the initial expense so they have to cancel.
On pricing objections…
For SaaS companies, most pricing objections are really another objection in disguise.
Often, customers will claim that “your product is too expensive”, when what they really mean is “I am not confident that your solution will deliver value to us such that we can justify the price”, or something else.
Although there’s lots of reasons for someone to churn, you can combat them all the same way:
Talk to your customers!
I feel like I’m flogging a dead horse with this one, but honestly the devil’s in the details.
It’s also quite important to get the right balance of efficacy and scalability here.
A customer interview (done well) is the best way to learn about why this person signed up for your service, and what you can do to provide more value for them.
Just make sure you’re not leading the witness and asking natural questions about their needs.
Here’s some good questions to get you going:
(Always try to start off with some natural rapport-building.)
Q: What problem were you experiencing that caused you to look for a service like ours?
Q: What were you doing to solve this problem before you signed up with us?
Q: What did our service offer that the previous solution didn’t?
Q: Did you consider any other solutions before deciding to go with us?
(If so…) Q: What did you like about their offering? What ultimately made you choose to go with us?
Q: Are there any other problems you experience in the [YOUR_SOLUTION] world that you wish would just go away?
Most importantly though, you just want to have a natural conversation with the person on the other side.
Use these questions as a starting point to generate a fruitful conversation, and then ask them to go deeper with their responses (“Why?” is your best friend here).
Oh, and given the option, you want to shoot for a video call, because non-verbal communication often says more than the words themselves.
What if I can’t talk to my customers?
In my 7 years doing this, I have yet to meet a business that doesn’t have direct access to their customers.
Usually, the reasons for not talking to customers are rooted in some sort of fear or discomfort.
I once consulted with a private security firm, and even they put me in touch with some of their clients to do some interviews.
Everyone can talk to their customers.
But…what if they don’t want to talk to me?
This is a fair point. Getting customers to commit to an interview is an art in-and-of itself. I’ll make another post on this topic in the near future that explains how I do it.
There is one legitimate concern though: customer interviews are not very scalable.
In situations like this, you can lean on another tried and true method: personalized & delightful, regular email follow-ups.
Regularly dripping your customers with genuinely quality content is one way to stay top-of-mind with them, and send the message:
“hey, we’re listening — how can we improve?”
Just like when you on-boarded this customer though, it’s important that you don’t default to the standard bad practices that you see in most corporate newsletters.
In general, here’s what you want to do:
- Stick to plain-text emails, or if you must: very-minimal styling.
- Highly-formatted emails fire red flags with customers, and they make the reader feel like it’s not a conversation.
- Personalize the emails as best as you can.
- Treat each email as a conversation, rather than an “email blast”.
- When people feel more connected to your community, they’re much less-likely to jump ship.
- Keep the quality content coming long after conversion.
- I see so many SaaS companies drop the ball with their newsletters. Once they have a conversion (and they’re “learn how to use our product” campaign ends), the content becomes dry and corporate. It’s no surprise people end up churning here.
- Use natural, organic language.
- Nothing causes people to disengage faster than the word “synergy”.
- As a general rule of thumb: take an honest look at your email. If you wouldn’t be delighted to receive it, just don’t send it.
Here’s an example of how newsletter onboarding is done right:
A more applicable company that does this well is Calendly, my go-to scheduling software that I use for my practice. I regularly receive emails from them asking me about new features, and helping me to see that they’re adapting their service offering over time (justifying that monthly fee I’m paying them).
Getting your customers on the phone.
I’ve put together a guide to help you get customers on the phone. It has a whole bunch of email templates that you can straight up steal and use for your own SaaS product.
People churn for various different (often emotional) reasons, though you can’t really get to the root of it unless you’re actively involved in a conversation with them.
Although it would be ideal to hop on a video call with them, a more scalable way of gauging how your customers feel about your SaaS product would be to get them talking through a personalized, delightful, conversation-centric email newsletter.
You can use the insights you get from these conversations to both help the customer feel that you are listening, and to help them engage more with your service.
In the end, you want to be connected with your customers. You should have a feeling as to whether or not someone is going to churn long before they actually do.
If you don’t, then you don’t have a churn problem, you have a customer discovery problem in disguise.