How to Reduce Customer Churn rate: Top 3 tips

In episode #8, Roman Šedivý and Rishabh talk about KPI’s, user training, and boosting product adoption.
One of the key issues with a lot of SaaS founders, is the product usage and the trial user churn, what is your experience in that space?
So I would split it into two parts. The first is that we used to do trials, we aren’t doing them anymore because we saw that it was something we gave them for free and then the customers didn’t appreciate it.

When we get something for free and sign up for it, you then start to think, “Do I even have time to learn something new?” As our tool is for marketers and they really like KPIs, strict goals, strict targets and so on, so we start charging for it right from the start.

We call it proof of concept, and it is usually three months, because it helps to remove prospects who are not that interested in the solution or are not in the right place or time. So they really need to think if they have time to invest to learn with new tools, to learn new processes. So this helped us a lot.

The second one is about product usage. What’s really important is to measure everything, each of the key features and make sure that you know whether people are using it or not. We also had our product adoption as part of the KPIs for our CSM which back then we thought was a good idea because we know what is the best for our customers.

But then you realise that this is not customer-centric at all and there were a lot of assumptions and what happened is that we simply had some sort of checklist and we went through the features. We did the training so now the customer should know everything. Onboarding is done and the customer has to be happy.

We were surprised when we did a churn analysis that the most frequent reason for customers leaving us is that they didn’t experience the value of the platform so they were not able to justify the cost. The monthly average cost is around 2500 euros. So people care about how useful it is. Our customers are more like high-value SMBs or enterprise businesses.

So what we did is that we tried to think about how we can be more customer-centric, so we changed our processes. Now what we’re doing is that we have a kick-off meeting where we have interviews and we try to identify the key challenges of the customer right in the beginning.

We also have a library of solutions that can solve the pain. A solution like a help centre consists of features that can be presented because customers don’t care what you’re going to do to make them successful. They just want to be successful.

Since the solution consists of the key features and we know that certain solutions can solve certain types of challenges, we make sure that people are using the key features. Otherwise, they will not be successful.

But the key is how you present it, it’s not that you have one general story but identify the challenge that you want to solve and always be relevant. Because if you start pushing some feature that is not relevant for the customer then they will never ever use it.
Okay, so the analogy which I had is with one of our customers who had an academy that purchases Thinkific Academy at $40 a month and they had put these courses by CSM.

CSM people are not teachers right, so they know how to solve it and they can tell you how to solve it but teaching is different than telling you.

What I would recommend is to get somebody like an instructional designer or script writer who would make the content engaging and enriching.

So apart from this scaling problem, how else are you tackling customer churn? I mean what would you advise a small to medium SaaS in terms of the top two or three things to avoid customer churn?
So I would say, number one, understand the client and don’t assume that every single customer has the same challenge because it’s not true. Understand the bigger challenge and deliver relevant solutions. Nothing worse than when you assume how we can help the client as it doesn’t help and then they leave. Stay in touch with the users and if it’s high-value customers then try for better post-sales service.

Don’t rely on the user to report to the managers because then the decision-maker is the one who is signing the renewal contract and if it’s the first time they hear about you then it’s not a good sign. So, understand the challenge and be relevant and make sure that people know about you.

And the second one is on the customer side, it’s related to the cost because we are a little bit more expensive. For us, it’s really important to have multiple stakeholders on the customer side to find a way how we can be interesting for not only the end-user or the market but also for the leaders or the managers.

Is there a way not only how to control the ads but how we can help you with reporting? Since they are spread amongst multiple stakeholders so it is easy to justify the price.

And the third one is becoming a more strategic partner like some sort of must-have solution instead of nice to have. So, find a way to become a must-have for the customer.

If you find multiple stakeholders then you are way stickier and the customer can’t imagine life without you. I will add one more thing to this, that if the platform you are offering has multiple solutions and features then focus on the fact that the customer is really using those which are unique. You become a must-have solution this way, something which is really difficult to unblock and live without. As we know, the user will like it only when it is economical else they will plug out of our platform.

If it’s something unique and I know that it can drive a lot of value then try to adopt and make sure that it’s placed above some thresholds. If it’s dropping then immediately call the customer and ask them how can I help you, what type of challenges are you having because the things that you discovered at the beginning during the kick-off call doesn’t seem to be relevant anymore. For example, six months down the line you managed to solve one challenge, but what is the next one where your business is heading.
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