7 Things SaaS Companies Can Do Immediately to Decrease Churn

(I’m the co-founder of Klaus, a QA platform for support teams. We’re a SaaS company and the following is based on what we actually implemented and saw success with.)

We’re living in unprecedented times. Many of today’s companies have never seen turbulence like this before and the ride isn’t going to get smoother any time soon.

Uncertainty about the future is the economy’s biggest enemy. Why? Because uncertainty creates fear. Fear, in return, makes people save and hold on to their money.

The economic machine works in a simple manner — one person’s spending is another person’s income (check out Ray Dalio’s excellent video on that). If companies cut back on spending, the economic machine slows down, revenues decrease and companies that don’t have cash reserves need to start making cuts or go out of business completely. We’re seeing the latter happening at a fast-forward speed in the travel industry right now.

There are many good posts out there advising founders and execs on what to expect and how to get through these tough times, so I’ll spare you from the repetition and I will zoom in on churn (and CX) specifically as a potentially overlooked lifeline.

Here are my 7 recommendations for having an impact in hours, not days:

#1 Create a list of Top Priority Customers

When the world around you is diving headfirst into chaos, you must sharpen your focus and direct all your resources on what matters the most after keeping yourself and everyone around you alive — the customers that keep your business alive.

If you don’t have a customer list sorted by revenue, then getting your hands on one needs to be your top priority.

I know that some of you are thinking:

“We don’t function like that, every single one of our customers is important.”

On any other day, I’d agree.

But guess what — we’re in the middle of a crisis.

If your biggest customers start churning, your company will need to start making cuts and, eventually, *ALL* your customers will suffer.

Maintaining your revenue streams ensures that you have enough resources to keep your operations running and you’ll be able to retain the rest of the customers. You will come out stronger from this situation.

#2 Know your customers’ crises

Nobody seems to be untouched from the current crisis caused by the outbreak of Covid-19. Even if it doesn’t directly affect your company, chances are that these uncertain times will have an impact on at least some of your customers’ businesses. So, sooner or later, you will feel it too.

If you don’t know which industries your customers are in — and how much they will suffer from the crisis -, now is a good idea to find out.

If you don’t have that information on file, put together a team that looks up every single customer.

Got a hotel chain that’s bringing in 3% of your revenue and they haven’t canceled? You just found an axe hanging over your head.

Dive into the list of your customers and tag all the companies that either belong to or mainly work with the following categories:

• Restaurants
• Accommodation
• Tourism and travel
• Offline retail
• Live events (conferences, concerts, etc)
• Offline entertainment (theatres, cinemas, museums, etc.)
• Sports (including fitness clubs, leagues, etc.)
• Co-working spaces, business hubs
• Luxury goods
• Medicine
• Insurance
• … and any other that you think might be influenced by the current situation.

These are some of the most vulnerable industries in today’s crisis. Put red flags to all of your top revenue drivers that belong to these categories and you’ll be able to measure the potential impact that the crisis might have on your business — even if your company doesn’t operate in any of these fields.

#3 Reach out to your customers

Once you’ve sorted your customers by revenue and highlighted those that are at high risk of being affected by the crisis, you’ve compiled yourself a neat master list to work through.

Start getting in touch with your customers. Start from the top and work your way down.

Bear in mind that this is not the time for shooting out mass-emails from your marketing software. You care about your customers, now is the time to show it.

Reach out to your customers personally.

Ask specifically if the situation has hurt their businesses and what they’re struggling with most. There might be something you can do to help.

Be ready to think outside your subscription plans when offering assistance. At Klaus, we started talking to our customers on how to switch to a remote setup, through sharing our own experience and individual conversations. Or it could be something completely different like offering free marketing advice or sending out those monitors that have been gathering dust in your storage room.

#4 Fight churn as one, unified team

Going through your subscriber lists to prioritize customers and get to know their backgrounds takes time, reaching out to them one by one even more so.

“We don’t have resources for this.” You do.

Think of it this way: before the crisis, it was five times more expensive to acquire a new customer than to retain an existing one. How much is it going to cost now? Getting new customers on board during the next few months is going to be way more expensive — and in some cases (almost) impossible.

All your customer acquisition resources can be your tools for fighting churn. Turn sales and support into customer success. Snap out of the reactive mode and use your customer-facing teams to proactively start conversations with your customers.

#5 Offer your services for free to those who need it

Everybody’s getting hit by the crisis and nobody likes to see their revenue streams dry up. Though it might feel counterintuitive, be ready to offer your service for free, or at a heavily discounted rate for a while.

Make the offer yourself proactively if you can. This is about reducing churn, remember?

Things will get better and once they do, your revenue numbers will bounce back. You will have a hard time recovering from the crisis with a serious dent in your customer list. Avoid this worst-case scenario by offering your services on the terms that your customers can afford at the moment.

You will not regret taking a short-time revenue hit to keep your customer numbers from dropping. Your customers who are struggling right now won’t forget it either.

#6 Turn product development into customer success

You’ve probably already understood that you’re going to have to do a lot of prioritization to keep your head above the water in the coming months. Product development will be no exception.

Help product teams understand which bug fixes or feature requests to prioritize.

Keeping your current customers happy is paramount — especially, during the crisis. The best way to do that is by sending them good news about that glitch or missing feature they’ve been hammering about. Tasks that you’ve sent to the backlog due to your rapid growth goals can become your number one issues in times of crisis.

How do you know which ones to prioritize? Just connect feature and bug fix requests with the master list you already have. Focus your limited resources on the top priority companies to keep them happy during these hectic times.

#7 Rework your churn flow

You already have a churn flow in your product. Just like with your product roadmap, it was probably designed for times of growth.

Rework your churn flow. Do it immediately.

There are many ways of doing this. Whatever you do, keep in mind that your main goal should be to reduce “panic” churn and enable companies to stay on board without any financial commitments they’re uncomfortable with.

Some of the things you might consider:

• A “Pause my account” button next to “Cancel my subscription”. Having inactive subscribers on your list is better than having none at all.
• Replacing the “Cancel” button temporarily with email us at this@that.com to cancel your subscription.

Yes, these are not in the UX best practices list, but they will be in the next “crisis best practices” list.

Remember, your customers didn’t just start hating your product, they feel unsure about the future and want to protect themselves. You can help them do that without forcing them to quit using your product.

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The leadership and effort spent on fighting churn will reap dividends long after this crisis is over. Any nuggets you’d like to share are welcome in the comments below.