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Reduce Customer Churn

How NOT TO let Customer Churn kill your SaaS Business

AvatarShirley Roseton | May 26, 2016

No wonder ‘The Cloud’ is becoming the favored choice for many entrepreneurs, tech developers, and business owners. The facility to ensure data security and enable ease of data accessibility has ensured a rising obsession towards leveraging cloud technology to create better and more relevant products. And as a consequence of this trend, the SaaS (Software-as-a-Service) has entered into the fold and is now the preferred platform for businesses to serve clients.

In fact, according to a study by Gartner, Software-as-a-Service is predicted to be increasingly important in most Enterprise Application Software (EAS) markets. The worldwide cloud services are forecasted to reach $204 billion in 2016 of which SaaS takes up $37.7 billion with a growth percentage of 20.3. Such high growth rates indicate a strong shift away from traditional softwares and increase in revenues for SaaS.

Despite this phenomenon, SaaS businesses continuously struggle in retaining their customers. Josh Webber from Totango says, “When you are at a company experiencing rapid growth it can be incredibly exciting, but churn can halt you in your tracks.

While there are many discussions on how to reduce churn, we at CloudCherry bank on investing in customer experience, nurturing customer relationships and building loyalty to be the most effective counter to customer churn.

And here’s why we believe that customer focus is key to kill churn.

1. To understand the ‘WHY’

When it is hard to understand why a customer is leaving the subscribed service, tracking the customer’s journey with your business – right from the onboarding to the exit phase – and collecting feedback at crucial touchpoints, can present a clearer picture. If you can understand the customer’s mindset and behavior patterns in real-time, SaaS business can fix issues before they blow up and become a organization-wide catastrophe and way before a customer contemplates whether to switch to another service.

2. Get to the root of the problem

Using a Customer Experience Management (CEM) platform, SaaS vendors can understand the real root cause of a problem by asking customers relevant questions. An efficient customer experience strategy helps make various kinds of analysis on the answers your customers give; find the alarming signals with the customer’s feedback and behavioral changes over time. This allows the vendor to take precautionary steps in order to avoid churn. Also, most CEM tools can be integrated with a Customer Relationship Management (CRM) system and raise notifications to the right team whenever there is a red alert identified through customer feedback.

3. Provide a great onboarding experience

While churn is more a process than it is an immediate decision, it has to be fought right from the beginning by keeping the customers engaged with the product all the time. According to the article on High-Touch customer onboarding for SaaS companies, quick and quality onboarding experience tailored to each customer can fight churn and leave a lasting impression on the customers. And the only means to a quick and quality onboarding experience is if you understand customer expectations – what they expect from your SaaS model at the point of signing up. If you are well versed in this regard, it becomes easier to set up a “Concierge” type onboarding experience by understanding your customer’s specific needs and customize your service to map to their requirements.

4. To understand ‘WHO’ your customers are

Net Promoter ScoreSM (NPS®), developed by Bain & Co in 2003, is the ultimate metric to indicate whether your customers are loyal to you or not. NPS categorizes your customers into Promoters (loyal customers), Detractors (unhappy customers) or Passives (neutral customers) based on their scores on a 10 point scale. The Net Promoter Score model plays a major role in identifying those customers who are in the danger zone and likely to stop using your service and those customers who would continue using your service and evangelize it.

5. To Delight and not just Satisfy your customers


An ideal way to kill churn: Delight, delight and keep delighting. And the insight you gain on your customers by investing in customer experience processes is precisely how you convert endangered customers to your most loyal ones. With your customer’s data collected and analyzed, your SaaS business is given a heads-up about their sentiments and emotionally connect to your brand and this, in turn, gives you the upper hand to take the right steps to go beyond their expectations and deliver customer delight.

Customer Churn in SaaS companies ought not to be treated lightly. What most companies don’t realize is that most of the software they use to collect feedback aren’t dynamic enough when it comes to real-time solutions or even notifications. And this could potentially affect a customer’s decision to churn. This is where they need to consider investing in a CEM product which equips them not only to notify the most relevant person in real-time about a certain unpleasant feedback but also to analyse it and address it instantly. This empowers the company to save a potential churn situation and convert into a customer retention success story.