Why users leave your product: how to detect early signs of churn and work them out?
Content:
- Calculating churn rate
- 7 opinions on how to detect early signs of churn
- How we manage churning users at Dashly
- Analyze your customers
Churn rate is one of the main metrics of any SaaS business. Why’s that?
Churn is the number of users who stop any relationship with your company. Users have deleted their account, stopped paying for the subscription or even opted for a competitor’s solution — all these are undesired contributors to the churn rate.
The growth of any SaaS business is connected with getting more users in the funnel. However, the more users you get, the higher the churn rate is. How to reduce the number of churning users and increase MRR? In this article we are covering 7 expert opinions on how to detect early signs of churn and manage churning users.
Calculating churn rate
Briefly, you can calculate the churn rate in the following way:
The number that you get will be actually the answer to this question:
How many people have decided to abandon my product?
There’s no need to calculate the churn rate for the lifetime of your product. Better check the churn rate over a certain period of time. This will help you work on other metrics and prioritize accordingly. Do it this way:
Let us make it clear. Imagine you had 100 users last month. This month you have 125 users. 30 out of them are new users.
Even though the users base has increased from 100 to 125, 5 users have left the product.
Note: you may be losing users during the growth. Actually your growth is the difference between acquisition rate and churn rate. Which is why, churn decrease affects the revenue.
So if we continue playing with the above mentioned numbers, the churn rate looks like this:
That is it! Easy. Now when you face the churn rate, it’s time to get to know other important metrics. These are interconnected with churn.
What metrics are affected by churn rate
Average Customer Lifetime (ACL) shows how much time users stay with you.
Example:
churn rate over a year equals 20%
ACL = 1/0.2 = 5 years
One more example:
churn rate over a week equals 4%
ACL = 1/0,04 = 25 weeks
Customer Lifetime Value (CLTV) shows how much profit you get from a customer during their relationship with your product.
Get ARPPU figure, divide it by Churn rate figure — here’s the CLTV.
Churn rate affects your revenue directly. The lower the churn rate is, the higher the revenue is. That is why companies strive to decreasing the churn rate.
7 opinions on how to detect early signs of churn
We have talked to experts from TripleLift, Jobber, LiveIntent, Maxmrr, New Day at Work, Seeknshop and LinkedRocked. Let’s see how these companies detect early signs of churn and manage the communication with churning customers.
One way I’ve seen companies track churn is integrating with a technology that tracks user activity in UI. The technology should allow you to track logins, button clicks, page visits, etc. So you can build out custom segments based on what churned looks like to your business and then target those segments with a tailored message or notification.
Aisha Abdali, TripleLift
Using a SaaS product, we track logins, products used, and other actions taken in the platform. We’ve built campaigns with rules to automatically engage users with either an email or in-platform message. This is one way we try to encourage repeat product adoption and prevent churn. We also share reports about account activity with our Customer Success team to give them a heads up when we see behavior we’ve defined as worrisome.
Jessica Munoz, VP Product Marketing at LiveIntent
Generally, I consider churn a lagging indicator (or even inactivity) so I’m always focused on identifying key behavioral metrics that will help predict which customers will churn. These metrics would be tracking whether or not the user performs the tasks that provide the true core value of the product. This is especially effective in the first 72 hours of a trial.
Nathan Beck, Jobber
Tracking churned users is easy. They already left and you find out about that from your recurring billing platform
But you can find user behavior which leads to churn by analyzing all of data on a given customer — product usage (or non-usage), billing history (failed payments, dunning issues, etc), support tickets, feature requests, web chat (if it’s disconnected from support tickets), pricing tiers, conversion source, and basically any other related data point which touches the customer..
And you can ‘back into” all of this behavior which leads to churn by analyzing all of this data on previously churned customers.
Eric Axelrod, DIGR
It’s on my to-do list, but I’m thinking of creating a triggered win back campaign. It will also email me as soon as it happens. It will track churning customers… anyone who has stopped paying for any reason… failed CC, canceled subscription, etc. This is how I’d break it down:
– As soon as someone stops paying, there will be some kind of notification/message/data point;
– When the customer stops paying, then the status of that customer is changed from “customer” to “churned customer”;
– Once the customer is added to a “churned customer”, the email campaign is triggered. It might include something like:
Email #1: Here’s an X% discount if you resubscribe in the next X days;
Email #2: Maybe something about the benefits they received and missing out on;
Email #3: Survey asking them why they left, and how we can improve.
West Tres, LinkedRocket
Happy to share how we do this. In short, we have set up a dashboard that measures the number of active users, which parts of the products they use, how often they sign in on average, amount of support tickets, amount of new users within their company, and more.
Mark Grasmayer, Workspace 365
We believe prevention is better than cure. So, we have a monthly health check with every existing customer either through a survey or a quick 5-minute call with them on “how things are and if their requirements are being addressed or if some other related problems can be solved with few enhancements etc.,”
Also, if some customer has notified us of ending the contract, we typically get on a call to understand the reason for churn.
Currently works because we are NOT too scaled yet but we plan to do this even at scale.
We generally prefer our Product Managers/Account managers to do this so that we can learn about how customers use our product. This is almost like product feedback in the product maturity cycle.
Ssvs Sarath, Seeknshop
How we manage churning users at Dashly
- Track the frequency
Here your best friends are such events as “Session started”, “Page visit” and “Product is activated” (I mean, the event defining that a user has started using the product).
If a user hasn’t been back to you for more than 2 days, isn’t it time to ring the alarm? Set the audience with the following conditions:
and form the content of the message — with a CTA, of course:
2. Track activation into features
When a user hasn’t activated into the key features of your product, it means they do not get the value. The chances of adding to the churn rate are increasing.
Create auto messages based on the events that hasn’t been defined.
Use Dashly pop-up builder to create stylish pop-ups (without developers and designers). These will be shown to a user when they are back to the admin panel:
3. Send triggered messages
If the trial period of your product is 14 days, and the user has been active during the trial, but then abandoned your product, he is likely to be churning.
Another type of situation is when a user has activated into your product but hasn’t used it much.
Save this segment as “Churning”. Then use it for sending triggered emails that either have a special offer (and the subscription will get activated!) or a CTA. Asking to share feedback is always a good idea.
Quick reaction saves revenue! Once Dashly detects the event of a cancelled subscription, then it will send an email that brings a user back to your product.
4. Bring them into your product back — now from the landing page
Users visit your landing page but don’t sign into your product?
First, choose the right trigger and timeout settings:
Then work on the audience:
And create the triggered message in chat:
Don’t forget to set the goal. It will help you to track the effectiveness of the triggered message:
5. Be notified about churning users in real time
One of the most popular integrations in Dashly is the integration with Slack. Get notifications in a certain channelю
Configure the integration with Slack. Choose what event you’d like to be notified of, and the channel.
So you get the notification in Slack with the link to the lead’s card. Click on it to study more the lead’s history of events and conversations. Use the contact details to get in touch with the churning lead asap.
Analyze your customers
If you want to decrease churn rate, better start the investigation of HOW CHURN HAPPENS with your customers. Analyze why users leave your product. Analyze what features make your product valuable to them. These questions may help you:
- Why users leave?
- Does the product solve their problems?
- Do they face any problems because of your product?
- What are the key features for users?
- What is your ideal customer profile?
- On what step of the customer journey a user faces issues?
You can always quickly find why users left you over the phone conversation. Alternatively, send an email with the question(s). The faster you get to know the problem, the faster you can introduce the changes that will help you decrease the churn rate.
We’re always ready to help you. Good luck!
