SaaS startups, what do you do when a customer churns?
In any business, it’s difficult to retain every single one of your customers — nobody bats a thousand, no matter how good the product is. But don’t get discouraged!
Their departure brings valuable insight to improve your systems from start to finish, and helps prevent this common occurrence.
And you may even be able to save them from leaving altogether (if it’s valuable for you both).
2 types of churning customers (and why they’re leaving)
It’s pretty straightforward: They’re not getting enough value from your product . . . or not enough perceived value, at least. Maybe they haven’t fully utilized the service; maybe it’s all wrong for their business model. Either way, to them, things just don’t add up.
Now you can break down these customers into two categories:
- Unavoidable: It’s out of your control.
If you’re a B2B SaaS startup, and the company is going out of business so saving them as a customer is impossible. (We won’t focus on this group, but this scenario is still educational: perhaps re-approach your marketing and target more successful companies etc.)
- Avoidable: You can take action.
There’s a window here, so use it to boost value for them, but more importantly, discover what you can change as a business/product/service to prevent future customers from jumping ship. Now in a perfect world, you already have instruments in place to flag you when service falls short, e.g., infrequent logins or abnormally low usage. That way you preemptively intervene, stepping in before this last, possible moment.
And we’ll show you how to do that. But first, let’s discuss why you should, so you understand the importance of what you’re doing.
The 5 benefits to contacting churning customers
In these situations, reaching out to people is uncomfortable — customers are unhappy, impatient, and eager to move on to “something better”. But there’s powerful, beneficial knowledge to be gained from this group that your prospective market will never tell you.
For this type of info, you need customers that have already been through the doldrums, not fresh honeymooners.
Here’s a list of what you have to gain:
- You demonstrate that you care. You had the strength to call them and address what went wrong. They’ll know you care enough to find out why, creating a chance to win them back. Showing face and taking responsibility is the first step to regaining trust.
- If you botched the sales process, you’ll know when and why. Maybe they weren’t a good fit for the tools; maybe they needed more onboarding support; or maybe you failed to properly qualify them in the first place. If you had, perhaps you would have seen early churn signals: are they in trouble, do they need attention . . . whether the problem was your strategy — or theirs — you’ll know.
- Learn what they need and how they want it delivered. They wanted features that your product provides, but the supply method wasn’t a good fit for their use case. Anyone can be dazzled by great functionality, but if they don’t fully understand how it all works, they can’t know if it fits their workflow. So they must firmly comprehend how your product delivers results. This will also help improve your future qualifying process, and employees can be trained to discuss it early on.
- A true support test. If your product is good, and you properly qualified, then support could be your weak spot. You need to manage customer expectations by adjusting your marketing and the way you sell. Explain the type of support they can expect, so they know it tailors to their business. Maybe holding a company’s hand for the first 90 days isn’t worth the time, so businesses like that wouldn’t be a good fit for your product. This will help you adjust your marketing, copywriting, design, onboarding, and beyond.
- Sometimes it’s just the product. It’s not always about the marketing or sales funnel. Could be too many bugs, or it fails, fundamentally. People often don’t take the time to send feedback or respond to support emails, so you stay unaware of the problem. With a quick touch you can figure it out.
Ok, you know why you should. Now let’s discuss . . .
How to connect with a churned customer
So how should you go about contacting people as they’re on their way out?
Easy. Call them. You’re already good at that, so pick up the phone and dial!
If you can’t get them on the horn? Send an email. Reach out so they know they’re valued, even if they’ve already set sail with a different service.
All in all, you must ascertain 4 crucial pieces of information:
- Why they left
- Were there missed opportunities to save this
- What promises went unfulfilled
- What could have been done better
(I’ll share some scripts below, but I’d recommend you watch the video so you get a sense for the tone and energy in which the words should be delivered—because these qualities often will have a bigger impact than the exact words you use. Click here to watch the video and hear me deliver these ways of connecting with churned prospects)
Here’s a simple script that will get you off on the right foot:
“Hey (customer), I wanted to personally take the time to reach out to you. I saw you just canceled our service, which I’m bummed about, but maybe you can give me an idea of what happened? Is there anything we could have done better — I could have done better — that would have prevented this? And is there anything I can do next to create the most value for your business, regardless of whether you choose to stay with us or not?”
This is a great way to begin. Then, based on what they tell you, ask questions to dive deep and really understand what happened.
If your product couldn’t fulfill their needs, find out what can be done about it. (Important!) Don’t cut them off before you fully understand the problem. Submerge entirely in their pain and restrain from spiking the fact that your product actually does do what they need . . . they may not be done talking.
But if it is the case, just say:
“Look, I’m surprised to be hearing this problem, because we can actually do this. And I apologize we failed to deliver or communicate that to you, but hopefully it’s not too late for us to get in there and make this work. Let me guide you through this.”
Or maybe, they need a function that isn’t yet implemented, but it’s in the works, soon to be released (max 1–2 wks). So you follow with:
“I apologize, and you can’t have known this, but we’re about to release that exact function. Let me understand precisely how you need that feature/functionality, because if we’re about to provide that, then you don’t want to go. Why not stick with a known solution/partner before leaving and starting fresh.”
And when they do discover that you still offer what they want — and it would be of mutual benefit for them to stay — then make a compelling pitch for why they should!
Touch on the-grass-is-greener trap. Typically, the sentiment exists that a shiny, new, solve-all product is right around the corner; but in reality, every product is a little messy. So simply highlight what’s important about the relationship you’ve already built:
- You’ve earned their trust
- You’re a known entity
- Building a new relationship is risky
- You’ve always worked hard to deliver promises. When they failed, you took responsibility and rectified the situation (hopefully).
After you hit them with those, finish with this:
“Given all that, would it be a smart business decision to abandon this partnership and start a new relationship with all the associated risks, or does it make sense to stick around for a little longer to see if we can get you everything you need out of this solution? Because after everything you just told me, it is still very much the answer to your problem.”
Like I said, you won’t be able to save them all, but that’s hardly the main idea. It’s about learning from your mistakes so you can reduce your shortcomings — across the board — and prevent future bailouts.
And if you discover that you can’t provide what they need — can’t bring them success with your product — then don’t try to keep them! Because they’re going to churn eventually, and they’ll be even more malcontent then, than they are now.
So act in their best interest. It’s the right thing to do, for everyone.
Sometimes, “goodbye” can make you money
Reaching out to these churning customers will help you discover what it is about your business that you can maintain, or change, from beginning to end.
Once in awhile, you’ll get an opportunity to win them back as customers by revisiting the value in your product that they may have missed, and that you may have only half-delivered on: value for today.
If not? Don’t sweat. Even if you can’t convince them to stay, you’ve still learned something truly valuable . Take that feedback and bring it into the product (marketing, sales, support) so you can be more successful with it in the future.
By adjusting and adapting your product through the failures it’s had with your customers, you’ll get real-world feedback from people who have a need for your product and tried it, and this will help you to build a better product and mature as a company in your marketplace.
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