Churn rate is currently one of the hottest topics in the SaaS community. This is something that concerns pretty much everyone in SaaS. For a new product, a high churn rate can be like an aggressive form of rust that gradually brings your business model to its knees.
In this article, we are going to learn about how you can reduce churn rate through customer success. Beginning with your go-to-market strategy (GTM strategy) and your initial value proposition, the process of reducing customer churn rate starts much earlier than most people believe.
How can customer success help us to limit customer churn? Customer success is often talked about as the solution to customer churn. To explore the potential link, I reached out to Andy Mura, who has extensive experience in SaaS customer success trends, tactics and strategies.
Andy Mura has been working in tech for almost 10 years as a consultant, initiator, mentor and founder. Andy has recently been working as the Head of Marketing at Userlane, spending the past three years primarily focusing on onboarding, UX, and building roadmaps for customer retention.
Are you ready to learn some practical tips on how to reduce the customer churn rate for your SaaS using a go-to-market strategy? Let’s dive in.
As we began to discuss the potential link between customer success and a reduced churn rate, Andy started to talk about how your sales team’s marketing strategy can influence customer churn.
The Importance Of Customer Retention & Advocacy
As Andy explained, “No matter what performance channel you use in marketing, if you only focus on customer acquisition, your company will see customer acquisition costs increase. At that point, growth is not scalable. The only way to scale is to reduce churn and actually boost retention and advocacy.”
Andy encouraged us to think of customer success as a method of survival. “The only way to survive is through customer success”, he said. In many ways, this is absolutely true, If your SaaS company isn’t generating results for your target audience, your new product will have a weakened value proposition.
Andy continued, “When we talk about retention, this is not an add-on. Retention starts at the very first touchpoint that a customer has with a brand. It starts even before people land on your website.”
Every time customers or potential customers see promotional messages on social media or educational content on your blog, you are already building a relationship with them. As Andy said, “Retention is like a seed that you plant at the very beginning of your relationship with your customers.”
Customer success is routed in the very first stages of the relationship. Many SaaS companies do not consider retention and advocacy in their marketing plan for customer acquisition. From their perspective, it almost feels slightly premature, but this definitely isn’t the case.
Developing the strategies for customer retention begins at the very first touchpoint with your brand, through marketing channels such as social media. The second touchpoint is with your product. For instance, the first touchpoint that your target market has with your brand could be through a blog post talking about your product launch.
The second touchpoint is when your target market actually starts to use your product. Lots of people think that this is when the magic begins. In reality, customer retention begins at the very first touchpoint, when your target market first comes into contact with your brand.
It’s all about opinion building. This is why first impressions are everything. As Andy said, “During the onboarding phase, [decision makers] are getting to touch your product and brand. At this stage, they will begin to form an opinion on your product and whether it is useful or not.”
Onboarding starts with great educational and promotional content, along with the copy on your website. This is where you set the right expectations for your customers. A great marketing strategy is about establishing a tone that is carried forward throughout the customer journey.
As Andy explained, If [your sales team] oversell your product or you promise something that you can’t deliver, this might destroy the relationship with your customers. A quick onboarding phase leads to product and feature adoption.”
He continued, “A great user experience, together with a proactive customer success program should lead to retention and eventually advocacy.” This is a crucial perspective on the customer’s journey that your SaaS company cannot afford to overlook.
You have to take care of customers right from the very first touchpoint with a great user experience to make sure that they don’t churn. This begins with a solid marketing strategy from your sales team and ends with a great product that has a clear value proposition and addresses a pain point of your target market.
What can increase customer churn rate?
Andy Mura likes to use the analogy of a romantic relationship to describe how things can very quickly turn sour between you and your customers. When your SaaS company loses a long-time customer, it can be devastating.
Trying to understand why your customer decided to go elsewhere can be challenging because it’s almost never down to just one reason, especially when they have been using your product for a while. The decision maker’s choice to leave is usually the result of multiple micro-aggressions.
As Andy explained, “I’m sure you know plenty of couples that have broken up over stupid things. Couples don’t break up over a single issue. It’s the whole history, everything that happened before. This builds up until it’s too much to bear. It’s never just one problem.”
He continued, “Companies want to be perfect at everything, but we all know that it’s impossible. There are always going to be problems that a customer may face with your product. However, if the overall experience is good, customers are more prone to forgive you. This is exactly the same in a relationship.”
The Instances Of Micro-Aggression
Andy explained the concept of micro-aggressions, “Individual problems do not lead to churn. However, every instance of micro-aggression leads to more frustration. Bad experiences over time can pile up. Eventually, there might be one final problem that leads to churn.”
When you lose a SaaS customer, it’s never about the ‘straw that broke the camel’s back’. This only led to the breaking point, when the decision-maker felt that enough was enough and wanted to part ways with your product.
Andy Mura believes building great experiences from the very beginning of a customer’s journey can improve customer retention and make them less likely to react negatively to an incident that happens later.
As Andy said, “If you have had a great experience from the very beginning and then something bad happens, this only becomes a problem if customer support can’t help you. If you keep having problems over time, with delays and frustration, at some point, you will decide that you cannot invest any more time in this product.”
Each of these problems can be seen as micro-aggressions, minor instances along the customer journey that can leave them frustrated. As Andy said, “All these different instances of micro-aggression can be connected to frustration.”
He continued, “If the user doesn’t know how to do something with your product, it can frustrate them. All these bad feelings lead to bad associations. This can have a very bad effect on the brand itself, not only the product.”
Andy believes these micro-aggressions can be split into two kinds of consequences: immediate and long-term. As Andy told us, “The first impression sets the mood for the entire future relationship with your brand. That includes the initial promotional messages and the onboarding steps.”
He then circled back to his original analogy, “It’s just like going on a first date. The first five minutes will determine whether it will be successful. It’s really hard to recover from a bad first impression.”
Right from the very beginning of a customer’s journey, your sales team needs to be mindful about first impressions, looking beyond customer acquisition and their go-to-market strategy.
In the short term, first impressions have the ability to alter a potential customer’s feelings towards a new product, damaging your sales strategy action plan and weakening any competitive advantage you may have over other SaaS products.
In the long term, first impressions can set the tone for the rest of your relationship with a customer. This is why it is important to nurture customers from the very beginning of their journey with you as a brand. This is something that should be welded into your business plan.
In the SaaS world, consumers have an abundance of choice, available at their fingertips. The question is, why should they choose you? From the very beginning, it’s all about nurturing your customers.
As Andy told us, “We are all overwhelmed with products and solutions. Once a user decides to invest time in your product, that’s precious. We have to be very respectful of this.”
Micro-aggressions are inevitable, but if you are helping customers reach their goals and ambitions, these minor instances of frustration will be forgiven. This is why you should always aim to nurture your customers and support their long-term and short-term objectives.
We hope you have found this brief exploration into the link between customer success and churn rate useful. This change in approach can be easily applied to your SaaS marketing strategies to support retention and build a highly-successful customer base.