Signaling Customer Churn for SaaS

Red Flags Signaling Customer Churn for SaaS And Require Immediate And Utmost Attention

Add some customer care, a few discount options, and a customer-centric pricing strategy, and there you go with the recipe of customer retention and churn management. Is that enough to treat churn? Well, no! When it comes to overcoming customer churn, you will need to go the extra mile. However, first, you need to pay attention to the red flags that show your SaaS customer churn rate is increasing to an alarming level. Here is an account of a few red alerts to combat customer churn reduction for SaaS startups and enterprises.

Also Read: Top 5 Factors That Leads to Higher Customer Churn Rate

Poor Lead Nurturing

Your churn rate is linked with how you manage your potential leads. Your leads need a higher level of segmentation and custom outreach management to be translated into customers who add value and revenue.

Experts say that inbound marketing helps SaaS businesses to attract marketing qualified leads more effectively. However, it is required to engage your marketing and sales teams to formulate and execute strategies in accordance with the buyer personas based on the goals, objectives, and interests of your customers. When you have formulated your buyer personas, start targetting your potential customers. When leads are nurtured well, you not only get customers but they are the loyal ones.

Churn Rate Greater than the Acquisition Rate

Another red flag that indicates you are swimming in the wrong direction is the increasing churn rate which is getting greater than your customer acquisition rate. Any contact or department can become the reason for a cold customer experience that may cause them to churn off. If you do not get qualified leads to nurture then chances are the newly onboarded customers will soon cancel subscriptions for your SaaS product. In that case, the customer churn rate will continue increasing unless you revamp your lead nurturing and manage customer acquisition costs.

Secondly, look beyond sales and marketing to manage the churn causes. The other reasons might relate to the product’s level of sophistication such as

  • Your product is not mature
  • Your pricing is comparatively higher
  • You have poor customer care services
  • You have below-the-mark after-sales services
  • Your customers are dissatisfied with the payment experience

There can be a lot more reasons for increasing customer churn. However, you will need to evaluate everything from leads to customer data analytics for churn reduction for SaaS startups or enterprises.

Also read: Lessons to Learn from Churned Customers for Improved Customer Retention

Shrinking LTV

LTV or customer lifetime value is the benefit or the revenue that a certain specific SaaS customer makes you earn. It is evident that the longer the customer stays on board, the more will be LTV. The simple formula to calculate LTV is:

LTV = Average Value of Sale * Number of Transaction * Retention Time Period

So, what is your LTV calculator? If it shows that your LTV is shrinking, then beware. You have to restrategize so that customers stay on board for a longer duration. Customer loyalty is the thing that can help in curbing the shrinking LTV.

Revenue Leaks

Every business operates to earn revenue, and every business has its own revenue targets. The achievements of these revenue targets are important for they attract investors, boost the morale of employees, and customers also retain when they see the business is progressing. The point is simple, no one wants to board a sinking ship.

When revenue leakage increases, it is a red flag regarding churn. Understand this, the churning of customers is not necessarily because of those customers who leave willingly. Sometimes, there are some technical issues because of which SaaS customers get their subscriptions to get rejected.

Less Customer Activity

SaaS subscription management software allows users to track the customer journey. SaaS businesses monitor the customer journey all the time. When you are doing that keep a keen eye on the activity of the customers. If the activity is decreasing, it is concerning. Take quick action.

Communicate with the customer on an immediate basis. Try to find the reason for the inactivity of the customer. For instance, if Netflix finds that subscribers are not using the platform for quite some time, it should quickly communicate with the customers. Why? Because OTT platforms like Hulu and Disney plus are already there to hunt the subscribers who leave you. Communication with inactive subscribers will help you stop the cancellation of the subscriptions. You can offer your customers something lucrative enough so that they will continue your journey with you.

Spikes in the Performance of Certain KPIs

Data is the need of every SaaS subscription business. The analytics based on customer data shows the situation and the standing of your business in the market. Key Performance Indicators (KPIs) like Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Average Revenue Per User, and LTV are needed to be monitored continuously. If these KPIs are showing poor performance, then your customers are churning, and you need a better strategy to fill the revenue and the customer leaks.

Also Read: Combating Churn for a SaaS—Use Content to Attract, Educate, Convert and Retain Customer

To identify these red flags, you need a robust SaaS subscription management platform that offers enough functionality for churn reduction and retention optimization.

Sophistication equipped with retention tools like RetentionFlow is the system that empowers B2B SaaS businesses to act proactively. How? This platform is using AI algorithms so that the user gets customer health forecasts based on precision and accuracy for churn scores. When you know precisely the red flags of churn and which customers are about to churn, then half of the work is done. Now, you just need a strategy to communicate with your about to churn customers. Schedule a demo for SubscriptionFlow right away so that you can learn the data-driven mantras to stop your churning customers.

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