A single mid-market customer costs SaaS companies between $1500 and $6000 on average. That’s not a small sum of money, and it doesn’t take into account the amount of time spent. Simply put, customer acquisition consumes a significant number of resources. churn reduction software is the right platform you to reduce churn.
Customers, on the other hand, sometimes leave without even a whisper. Sure, their exit costs revenue, but they also take something else with them: your company’s ability to learn and improve. Businesses that do not understand their customers will continue to lose them for the same reasons.
People want a personalized, seamless experience. By learning more about your customer base, you can improve customer experience (CX) while decreasing churn.
Managing Customer Churn
According to Recurly, a recurring billing platform, the average churn rate for SaaS businesses is around 5%. This is lower than in all other industries studied by Recurly, as illustrated by the chart below.
However, while the average churn rate for SaaS businesses is just under 5%, the worst-performing companies have a churn rate of 8.5%. The churn rate for the best performers — those in the lower quartile — is around 2.9%.
It makes sense for businesses to address churn by acquiring new customers, but focusing on customer acquisition rather than customer retention can harm your organization’s growth.
Competition is another reason to reduce churn with churn reduction software and retain customers. According to Chiefmartec’s Marketing Technology Landscape, there are over 8,000 SaaS solutions in the martech space. Because most solutions (including yours) are easy to replace, losing a customer today almost certainly means you’ll never see them again.
Finally, as previously stated, the cost of acquiring a new customer is significantly higher than the cost of maintaining an existing one. As a result, customer retention should be part of every SaaS company’s smart, intelligent, and data-driven growth strategy.
Including Customer Retention in Your Growth Plan
While some churn is unavoidable, there are steps you can take to reduce churn from existing customers, as follows:
- Consider longer contracts over shorter ones: Longer annual contracts have been shown to reduce
- ng on existing customers as a source of new business is an effective strategy for SaaS business growth. annual dollar churn. Larger average contract values have also been linked to lower churn rates, most likely as a result of the high switching costs associated with larger and more complex solutions.
- Target the right customers during the acquisition phase: One of the most effective ways to reduce churn is to ensure that the right customers are targeted in the first place. This can be accomplished by properly segmenting and profiling customers based on technographics, psychographics, and firmographics. Once you have a customer pipeline in place, you can use your existing CRM data to effectively target the most viable customers for your company. I’ll go into more detail about this in a moment.
Using CRM Data to Drive Business Growth
Referrals and word-of-mouth are effective sources of new business for SaaS companies, as previously stated, but the research required to identify the appropriate segments to target can be daunting. This is especially true for sales reps who are already overworked, spending approximately 35% of their time selling versus 65% on non-selling-related tasks.
Non-selling tasks may include screening and vetting unqualified leads or engaging with prospects who were never going to buy your solution in the first place.
Your existing CRM data can be used to identify the right businesses and market sectors to target specific accounts.
What Does All of This Have to Do with Churn Reduction?
As previously stated, churn is influenced by a variety of factors. Some churn is unavoidable, but poor user experience is one of the leading causes of customer churn. Identifying the companies and markets that are the best fit for your solution is thus a proactive way of reducing churn over time.
Similarly, basing your customer retention strategy on an intelligent, data-driven analysis of your existing customers can help you identify up-selling, cross-selling, and growth opportunities.
How Would a Churn reduction Software – SubscriptionFlow- lead to Lower Churn Score?
SubscriptionFlow is a customer success management platform that provides features and solutions regarding churn management. From revenue management, and employing retention strategies to finally leading to churn reduction, our AI-driven, and automated software help business lower their churn rate and improve their customer retention rate.
If you are looking for churn reduction software, then SubscriptionFlow is the right choice. Schedule a demo with us now and let us manage your churn score.