Why SaaS users churn (and what to do about it)
One of the most frustrating challenges in SaaS is understanding why SaaS users churn. When you first start to see the first interest and few users join your product, it can be a bit of a “honeymoon” phase.
You’re thrilled people understand the concept and see value in your product but every honeymoon phase has an end.
Even if your product gets off to a really solid launch with a huge reception, you’re bound to start losing users at a certain point. Why? Because churn is a part of SaaS.
Anytime, you’re subscription based, you run the risk of not having every user consistently.
What ensures that your company survives and revenue grows consistently in the long run is reducing churn.
Once your product is launched, reducing churn should be a huge focus for your team.
So if they’re interested in your product at first, why do SaaS users churn?
This is a question your product and marketing team has to keep on top of to both keep existing users on board and attract new ones. We’ll explore the causes and solutions.
1. You’re just not attracting the right customers:
Let’s say you launch your product, you get some initial users, and then within mere weeks, they’re not returning at all to your product. Their free trials are ending, they’re not logging in, or they’re canceling subscriptions. What happened? It could be that you just didn’t meet the right customer segment in the first place or you have poor product market fit.
Discovering your ideal product market and positioning your product correctly is an art that your sales, marketing, and product teams all have to master. Read more about market positioning and how to apply it to your SaaS.
How to attract the right customers:
- Have a clear understanding of your SaaS buyer persona
- Ask questions
- Align your messaging, marketing, and sales to reflect the problems you’re solving for users
- Add new features and make changes to better fit the changing needs of your users
2. Your onboarding process isn’t strong:
It’s hard to guess ahead what parts of your product users are going to understand and which they aren’t.
Your onboarding process is so important because it shows your users what they can do with your product – the value to them. Your onboarding process should inspire action right away. As users come into your product, should teach them how to use features and tools in your product. It should be straightforward and easy to understand.
Without a clear onboarding process, users will be frustrated or miss key elements of your product. Read more about improving your onboarding process.
Here are some ways you can improve your onboarding process:
- Make it actionable: take users through tasks in your product
- Make it as visual as possible: videos, GIFs, arrows, highlights, etc.
- Cover the most valuable features
- Make it short and easy
- Have it in context within your product
- Offer a live demo session with your team
3. Your product doesn’t integrate into their current processes enough:
When customers first discover your product, it’s not likely they’re going to completely jump ship on other products and processes they’re used to.
Even if your product is a great solution, there’s going to be a segway. If your product is too segregated and inconvenient, users will be less likely to adopt your product completely which may lead to them churning out.
Your product could be great, but if it’s not easy to start using from day 1, it will be a more risky onboarding process.
With Beamer, we knew that a lot of our customers were already using other tools to reach their customers bases. We added integrations with these tools so our customers could use Beamer to improve their process. For example, Beamer integrates with Mailchimp and your social platforms via Zapier. It made Beamer make more sense for teams trying to engage customers. An easy way to improve the way your product interacts with processes and tools your users already use is to look into APIs for easier integration. It’s relatively easy to create useful connections between products with APIs. A small change could make a big difference for your users.
4. They don’t experience the value soon enough (or for long):
Users just may not see the value in your product in the long run.They may have that honeymoon phase and not see your product as fulfilling all their needs after a month or so.
It’s like downloading a new app you think will be cool and only opening it a few times. Sometimes, something is just not “sticky” or engaging enough to keep us coming back. Your product may not be perceived as useful enough to keep paying for. Because customers are always paying to use your product, you have to continue to sell it.
Here’s some ways you can highlight the value of your product to users:
- Share tutorials on how to use it beyond just onboarding
- Re-introduce features within your product
- Use Beamer to share new updates, content, tips and tricks, etc. to boost engagement
Beamer is the perfect way to keep users engaged and highlight the most valuable parts of your product. Beamer is an in-app changelog where you can announce new features, updates, content, etc. to users. Users click a “What’s New” tab in your navigation and can explore new updates. You can add videos, photos, GIFs, etc. to make them visually interesting and help better explain your product. You can also enable push notifications to bring users who might churn out back to your product.
Here are some ways you can use Beamer to showcase your product’s value:
- Announce new features
- Help users discover features within your product
- Share tips, tricks, and best practices
- Share helpful resources and case studies
- Use segmentation to target users with relevant content
5. You have too many unaddressed bugs and problems:
Would you keep using a buggy product? You’d probably get frustrated quickly and wouldn’t trust the product. Your users feel the same.
No one trusts products with long-standing flaws. They may accept a few bugs here and there but months of bugs and broken UX experiences and users will churn out.
You have to remember, users are used to streamlined, fast apps and websites. Their expectations are high even if you’re a new company. The more put together and professional your product looks and feels, the more trust and engagement you will have with users off the bat.
6. Your team isn’t supportive enough:
With SaaS products, you can’t forget to provide the “service” element. Your product is a living, breathing part of users’ own processes – they may need your help.
Your team should be available to show users that your service is worth paying month over month for. This is especially important for newer products. Your product is going to be going through a lot of changes. Customer service can be instrumental in both solving problems and collecting valuable feedback from customers.
Here’s how your team can show great customer service:
- Get a chat bubble
- Build a strong FAQ and help center
- Ask for feedback within your product
- Announce fixes and updates within your product with Beamer
7. A better solution emerged:
Sometimes, the winner takes it all. There’s always going to be a little competition. If you’re playing in a newer space and there’s a lot of enthusiasm around your product, expect competition.
Your team’s job is to stay ahead of keeping customers happy so they don’t churn out. You have to have a deep knowledge of the other players in the market and constantly be improving your product to stay one step ahead of the competition. Learn more about how to perform a market research for SaaS here.
Here’s how you can stay ahead of competitors:
- Collect feedback from customers
- Scan the market and competitors as well as substitutes
- Release new features your users want and need
- Make updates to improve current features
8. Your pricing is not affordable for some users
Some SaaS users may find your prices too expensive. That doesn’t mean you have to slash prices or offer massive discounts that can hurt your revenue. Discounts and price cutting may actually affect the perceived value of your product in the long run. If they are churning because of price, they may not be a mature enough market fit and your market positioning may be off. This may be an indication of your marketing and sales focus rather than something that a sign you need to change pricing. It’s irritating and frustrating, but it’s one of the “less harmful” reasons for churn. To fix this, you want to focus on improving market fit so that you draw better qualified leads and users who can actually pay for the value of your product. It may be worth looking at SaaS pricing models as well to better understand different types of pricing.
The SaaS sales process never ends. Your team is selling to the same users month over month. Reducing churn can grow your revenue exponentially in the wrong run. All it takes is keeping your customers happy and engaged. Try Beamer for an easy way to engage users.