For SaaS Companies, customer churn is an inescapable part of doing business. Even with an exceptional Customer Success strategy in place, it's impossible to avoid churn completely. For this reason, you need to pay attention to the quality of your company's offboarding process.
When a customer indicates they're ready to go, it's vital that the experience not be negative; however, for many SaaS Companies, the cancellation flow presents an untapped opportunity to present subscribers with an alternative to ending service.
Customer Onboarding vs. Customer Offboarding
Before we discuss alternatives to cancellation, it's important to compare two vital bookends of your customer journey: onboarding and offboarding.
Customer onboarding sits at the front end of your Customer Success flow and typically gets a high degree of attention, and for good reason. SaaS Companies want to ensure new customers have a positive experience. Onboarding sets the stage for the entire customer journey and hopefully extends the customer lifecycle.
Conversely, customer offboarding, or the exit flow process, tends to get the short end of the stick. This is unfortunate since saying goodbye to a subscriber is just as important as saying hello. A poor offboarding process can create a disgruntled customer; this matters since 30% of customers who have a negative experience will share it online. Further, the cancellation flow presents opportunities to save an account if the reason the customer chooses to leave is fixable.
Common Reasons SaaS Customers Churn
To assess if a customer on the brink of churning can be saved, it helps to look at the most common reasons that drive SaaS subscription cancellations:
Not Enough Value
Sometimes SaaS Companies have customers excited to subscribe who later find that they aren't using the product or getting as much value out of it as they expected. They may feel that they're paying more than a product or service is worth. This can occur if a customer has not been thoroughly educated about what your company sells and the best way to use it.
Acquisitions Over Loyalty
Unfortunately, it's a common mistake for some SaaS Companies to pay more attention to acquiring new logos versus keeping existing accounts happy. A robust Customer Success strategy attends to customers throughout each customer lifecycle stage. When you onboard a customer and then abandon them, you increase the chances that they will cancel service.
Competitors will always keep SaaS Companies on their toes; for instance, they may offer a comparable product at a cheaper price point. This may be a plausible reason for a customer to churn; however, savvy businesses know competing on price alone is a losing battle. You have to show your customers that your product provides benefits worth the price you charge.
Negative Customer Experiences
If a customer has a poor experience with a company, they will likely leave without notice. This often results in little to no chance to turn a bad experience around to create a positive outcome for the customer. Customer Success exists to prevent this scenario.
5 Alternatives to Canceling a Subscription
Offboarding should be considered a last resort when best practices in Customer Success are applied. If a customer signals that they are likely to churn, presenting them with alternatives to ending a service within your cancellation flow can help save the account.
Your cancellation flow refers to the steps users must follow to cancel a service. By developing a finely-tuned process that offers subscribers alternatives to cancellation, SaaS Companies can actually provide greater value and enhance the customer experience.
- Extend a trial: If a customer is still within a trial period, offer to extend the trial. This provides more time for them to learn how to use the product and integrate it into their workflow.
- Offer a demo: Allow a customer to request a product demo or provide customer education. Learning more about the product's functionality may encourage them not to cancel.
- One-on-one support - Allow a customer to schedule a one-on-one support call. Addressing any issues or concerns, they may have with the product in a personalized way helps build trust.
- Downgrade instead: Offer the customer the option to downgrade to a lower-priced plan or offer them a discount. The reward of saving money often reduces churn.
- Pause the account: Offer the option to pause an account instead of simply canceling it. Leaving this door open allows the customer the freedom to re-engage services when it's more convenient.
Customer churn is part of running a SaaS Company, but it doesn't have to be accepted as a foregone conclusion once a customer is headed toward not re-newing their contract. Focusing on presenting valuable alternatives within your cancellation flow can significantly impact your retention rate. Providing customers with alternative options has the potential to not just save accounts but improve a customer's experience with your brand.