There’s no way around it - churn is bad for your business. Yet a fraction of customers will leave you in one way or another. The question is - what percentage of churn is acceptable?
According to a recent study conducted by Pacific Crest, the median annual churn rate across their sample of SaaS companies rounded up to 10%, or 0.87% per month. However, you should mind the fact that their pool of respondents included larger companies with a median yearly revenue of $5 million and a median lifetime contract value of $25,000. The number may be different, however, for smaller business as the Baremetrics platform indicates:
It’s also important to remember that in some cases, churn happens for reasons beyond your control. For example, a company may go bankrupt, change core technologies, or simply require features that you don’t offer now or plan to in the future.
What you can control, though, is the customer onboarding process and their further interactions with your business. By implementing the right strategies there, you can satisfy customers and create a sense of loyalty that will likely reduce the amount of attrition that you may be experiencing. The next four tips should steer you in the right direction.
Get Personal From The Start
Reaching out to customers in as personal a way as possible is key to building successful customer relationships. Once strong ties are established, you reduce the likelihood your customers will leave over small frustrations or simply because they spot a lower price elsewhere. This can be accomplished by reaching out via email or phone. Ask for their feedback and offer to address any concerns, and incorporate those tips to improve your product.
Take Your Time
Making connections is very important. So is ensuring that customers are happy and progressing well with your products. On the other hand, branded communications can quickly become spam in the eyes of the receiver. Don’t overload them with constant communications, tasks, and tutorials. Instead, consider a weekly or biweekly schedule of communications. For example, on one week send them a brief paper on product shortcuts and other tips. Then, two weeks later, offer an opportunity to watch a live demo showing advanced features.
Streamline The Payment Process
Ensuring that customers get the most out of your product is the primary goal of customer onboarding. However, it is not the only goal. It’s also of utmost importance to make sure that doing business with you is as stress-free as possible. If you can streamline the payment process, that removes a particularly frustrating bit of friction.
The one place where it’s even more important to eliminate any difficulties is the moment when the customer is taking money out of their account and sending it your way. You can simplify this process by implementing integrated payments, using invoice templates to give customers a clear view of what they’re paying for, and being flexible when it comes to payment methods and schedules.
Test Your Onboarding Tasks
If you want to be sure that your onboarding tasks are working, you’ll have to engage in some A/B testing, collect customer feedback, and analyze the results. For example, are customers happier receiving phone calls from reps earlier in the process, or would they prefer email? Do they prefer interactive training sessions, or would they rather watch a YouTube video? Without testing and feedback all you have to go on is your assumptions about the customer’s needs.
If you’re unhappy with your current churn rate, the best place to make improvements is the customer onboarding process. The more you can reduce frustration, and the quicker you can help customers achieve success with your products the better. Onboarding is your opportunity to get customers familiar with your products and services and excited about their potential to help them.