6 Ways to Improve Customer Engagement and Reduce Churn

A “good” annual churn rate for SaaS companies, according to recent research published by the CFO Club, is between 3% and 7%. The average churn rate, however, is often much higher. If your business falls among those with a higher than ideal churn rate, prioritizing ways to lower it can result in significant benefits. A low churn rate is a clear signifier of a satisfied user base, providing the business with a reliable revenue, increased opportunities for upsell deals, and positive word of mouth that keeps new prospects knocking without much extra work from sales and marketing teams. Creating a happy and active user base can be challenging, but more than worth the effort.

In this article, we’ll explore some of the biggest reasons for customer churn, how improving user engagement can reduce churn, and some tried and true best practices that can help your team keep your users satisfied and active on your application.

Why do customers churn?

Customer churn refers to the event in which a customer cancels their subscription or stops using a particular product. With software products, churn can occur for many reasons:

1. Lack of value or poor fit. If the software doesn’t meet the customer’s needs or fails to provide sufficient value for the cost, they are likely to switch to an alternative solution. This can cause even long-term customers to churn, as their needs may change over time.
2. Poor user experience. Software that is difficult to use, has a poor user interface, or lacks intuitive design can lead to frustration and churn. New users that struggle to get started due to these issues are more likely to churn early.
3. Competition. Competing software companies may provide features that your software lacks, offer similar features for lower costs, or give other incentives to customers who switch to their product.
4. Poor customer support. Unresponsive or unhelpful customer service can alienate users and drive them away.
5. Technological changes. If the software becomes outdated or incompatible with new systems or devices that customers use, they may switch.
6. Security and stability concerns. Software products revealed to put customers’ data at risk often experience churn as a result. Products that crash often or have many bugs that negatively impact user experience can also increase churn.

For many of these scenarios, churn rates can be reduced by improving user experience and increasing customer engagement.

How high customer churn damages businesses.

Without a reliable user base, the business will likely have an unstable income, which can make software maintenance, development, and growth quite challenging. If your software experiences a high churn rate due to poor user experience, poor support, or serious security and stability concerns, it can also greatly damage your brand’s reputation and make it much more difficult to draw in new customers. 

Software businesses can often grow just by retaining their customers, because loyal customers are much easier to upsell on new features or more advanced plans. According to a Forbes report, increasing customer retention rates by 5% increases profits by at least 25% due to upsell opportunities, increased brand value, and positive word-of-mouth generating more prospective customers.

The impact of customer engagement on customer churn.

Customer engagement — defined as the connection and involvement a customer has with a business or brand — is intrinsically linked to churn rates. Engaged customers — those with whom a brand has frequent positive communications — are far more likely to stay with the product and recommend it to others, while disengaged customers are at a higher risk of churning. Engaged customers are less likely to switch to a competitor due to the positive attachment they have with a brand or product. They are also more likely to provide feedback and participate in the brand’s community, creating a sense of ownership and investment in the brand’s success.

By making a concentrated effort to make your customers feel valued, understood, and appreciated via proactive engagement strategies, you can build a base of engaged and loyal users. These strategies include:

• Creating personalized and meaningful interactions with customers throughout their journey with your product
• Investing in an excellent customer support team and strategy
• Building a community for customers to talk to each other as well as give feedback on the product
• Incorporating customer feedback into your product roadmap

Read on to learn more about how these strategies can increase customer engagement and reduce customer churn. Discover how you can easily increase customer engagement for your SaaS product with Beamer.

Strategies to improve customer engagement.

Personalize customer experiences and communications.

Odds are that your customer or user base includes multiple demographics, whether that includes a variety of roles in a business, age groups, industries, etc. By segmenting your customers and tailoring product experiences and communications to each group, you can significantly increase customer engagement. 

Many successful online retailers already excel at offering highly personalized shopping experiences due to recommendations algorithms that take into account what each customer has previously purchased and searched for. Teams at software organizations can do the same, even without a complex algorithm — start by sending different, targeted communications the next time you roll out a new feature. In recent years, personalized experiences have become an expectation for most customers. According to a study by McKinsey, 71% of consumers expect companies to deliver personalized interactions — and 76% get frustrated when this doesn’t happen. 

The first step you’ll need to take to create personalized customer experiences is to collect relevant data about your customers. This can be as simple as a survey embedded into your user onboarding workflow.

Airtable has every user choose their team as part of their onboarding workflow, making it easy for the team to segment and personalize communications.

Once you have the data necessary to segment your customers, you can tailor the communications sent out to each group and ensure that the messaging is specifically suited to each recipient. Learn more about how you can leverage personalization to improve user engagement for a SaaS product.

Level up your customer support.

Building a world-class support team can play a crucial role in improving user engagement for software companies. Prompt, effective, and positive interactions with support builds trust with the company and increases users’ confidence in the product. Support teams can also provide personalized training and education for each customers’ specific use cases, enabling users to more easily take full advantage of the product. A team dedicated to addressing users’ pain points is also well positioned to collect valuable user feedback on product improvements that improve the user experience.

Below are a few ways that software companies can level up their customer support:

• Multiple support channels. Make your team available however your users are most comfortable contacting them, whether it’s via email, instant messaging, or a phone call.
• Train your support staff well and often. Support staff should be deeply familiar with the product, including newer features. 
• Publish high-quality tutorials and documentation. Users may often prefer to look for solutions to their issue on their own instead of asking for help — particularly if your users are software developers or engineers. Make it quick and easy for them to find the information they need.
• Create a system for collecting feedback. Make it easy for your support team to log and access user feedback, as this data can be instrumental in building a product roadmap that prioritizes users.

HubSpot, a leading CRM and marketing automation platform, is known particularly for providing excellent customer service. The company website offers multiple resources for finding answers to user questions and issues in addition to 24/7 email, phone, and live chat support.

Publish informative and relevant content.

Content marketing can also be an effective tool for improving user engagement. By regularly publishing educational content about your product, such as guides and how-to videos, you can help users better understand and leverage more of the product’s features and capabilities. Content that spotlights real-world use cases and success stories can similarly inspire customers to expand how they’re using the product.

Even thought leadership content that’s typically intended to spread brand awareness and establish the company as a trusted resource can end up positively affecting user engagement. As your team builds the company’s trust and credibility in your field, existing users may also be encouraged to engage more deeply with your product.

Build a community for your customers.

Customer-centered communities, both online and in person, can make a significant impact on user engagement. These communities can become indispensable tools for both new and mature users to discover new ways to use your software, address any points of friction, learn from others’ experience, and even network and collaborate. A thriving community can also foster a sense of belonging, encourage knowledge sharing and brand advocacy, and become a source for valuable feedback for your team. 

To kick start your community building efforts, take these best practices into consideration:

• Make it easy to access. Meet your users where they tend to gather, whether that’s a specific social media channel such as LinkedIn or Reddit, or directly within your product itself to eliminate friction and ensure all users can find the community easily.
• Set and enforce guidelines. Clear community rules supported by experienced moderators will help to foster a welcoming, inclusive, and professional environment.
• Provide participation incentives. Rewarding frequent posters with badges or leaderboards can help breathe life into an online forum. Be sure to especially reward those who post valuable instructional content, give feedback, and devote extra time to the community.
• Meet IRL. In person events — whether they’re whole conferences or a casual happy hour — can become important networking opportunities for both you and your users. These events can solidify online relationships and spark powerful collaborations.

Notion, an all-in-one workspace and CRM solution, enables any of their users to create and share templates. This has resulted in a large and loyal Reddit community of over 340K users, and tens of thousands of templates for everything from marketing calendars to personal journaling.

Collect more customer feedback.

Most of the strategies we’ve explored so far include ways to collect customer feedback. It’s no secret that collecting feedback is a vital step toward improving user engagement and reducing churn, as there’s no better way to show your customers that your team prioritizes their needs. Finding out how your customers are using your product, where they’re struggling when it comes to your product, and how they’re talking about your product to others comprise just a few of the critical information that any product and product marketing team needs to collect in order to keep their finger on the pulse of user engagement. 

Your team has a variety of options when it comes to collecting feedback from your customers. Using multiple channels that make it easy for users to give feedback however they prefer is key to collecting larger amounts of useful data. Here are a few options your team can consider:

• Meet your customers where they are. Ask for feedback via email, during customer calls, and within the product interface so they can choose the avenue they find most convenient.
• Survey your customers. Send brief, easy surveys to your users to gather specific feedback. For example, the NPS survey asks just one question, and the results help product and marketing teams measure user engagement and satisfaction.
• Create a customer advisory board. Conversations with your CAB can help add context to and validate other feedback you’ve gathered, as well as foster positive relationships with your customers.
• Use tracking tools to monitor how customers use your product. Solutions like Heap and Hotjar can help you gather information about points of friction and usage patterns quickly and easily. They can also help you identify the alarming signals and reduce churn.

Learn more about how you can collect valuable feedback from customers.

Incorporate customer feedback in product development.

Collecting feedback from your users can provide valuable information to marketing and product teams, but it won’t do much to improve user engagement and reduce customer churn unless that information is used to inform product development and shape the product roadmap. Below are a few ways you can turn customer feedback into product improvements that impact the user experience:

• Add validated feature requests to your roadmap. If multiple users send in similar feature requests, or a particular request gains positive feedback from your customer advisory board or during customer conversations, add the feature to your roadmap. Be sure to share this roadmap with your users and highlight user-suggested features to close the feedback loop. 
• Address bug reports quickly. This is particularly important for issues that impact a large percentage of your users, prevent customers from using your product as usual, or both. In addition to fixing the bugs, your team should also effectively communicate when the report is received, update users of the issue, and notify them when it’s resolved. These little steps will help reduce customer churn.
• Identify patterns and commonalities within customer feedback data. This can include a group of users with similar use cases that experience a particular pain point, or users of a specific role that request the same feature. When multiple avenues of feedback are gathered and analyzed, your team may be able to find unexpected patterns that can inform the direction of your product.

Communicating effectively with your users is key to maintaining a positive relationship with them. Product and marketing teams that prove their dedication to customers by reflecting their feedback in the changelog and roadmap are well positioned to improve user engagement and reduce customer churn.

When competitive intelligence platform provider Similarweb began collecting customer feedback, they realized that many of their active users needed to go elsewhere to find funding data. In early 2024, the team added this information to the platform, eliminating the pain point — and communicated the update via a changelog post.

Boost user engagement faster with Beamer.

We’ve explored how collecting, validating, and addressing customer feedback is key to boosting user engagement and reducing churn. This process, however, can be a challenge — building feedback gathering solutions into your product, pulling collected data in one place and analyzing it effectively, and closing the feedback loop can all take extra time and resources from your team. With Beamer Feedback, your team can start improving user engagement after just a few minutes of setup. Beamer Feedback empowers you to:

• Collect feedback in one place
• Validate feature requests quickly
• Close the feedback loop via push notifications, changelog posts, and a public roadmap
• Send feedback to internal teams
• Respond to customer feedback directly and establish a positive relationship

Read “How publishing a changelog can help you retain more users”.