Did you know that customer churn can cost you up to 5 times as much to acquire a new customer as it does to retain your current customer? Customer churn or churn attrition is a serious concern!
We all know customer churn is inevitable, that doesn't mean you can be a vulnerable spectator who has access to a front row seat to witness the ghastly consequences of losing your customers! First of all, what is a churn rate? Why is it such a crucial factor that determines the growth rate of a SaaS company?
Churn determines the measure of attrition or loss of customers, revenue, contract value, and much more over a month, quarterly, or yearly.
If you're a SaaS company looking to improve a chain reaction of unfortunate events leading up to losing your customers with a high churn rate, we are here to throw some light on some aspects and crucial factors that affects the churn rate; followed by some few contrivance and insightful tips on how to minimize the churn rate and increase the net dollar value of your company!
Ask the following questions righteously!
Before listing down the factors affecting the loss of customers, note down the following questions to know if you are heading in the right direction, do ask the following questions. If the answer to all the questions is a yes, then focus profoundly on the core problems. If there's a Nay, then work on improving your customer success and satisfaction.
- Are your customers achieving the desired outcome?
- Are you targeting the right group of customers?
- Are you providing better features compared to your competitors?
- Do you think your product has effective pricing compared to your competitors who are offering the best features at a low price?
Of course, Churn rate is on the cards for any SaaS company for some unscrupulous reasons, but you can always work on improving the churn rate and how to minimize the churn.
Factors that pose as showstoppers!
1. When you have an ICP like a square peg in a round hole
The ideal customer profile is defined by the customer who is a good fit to buy from you. Your organization needs to determine the right ICP and it is the real deal when it comes to building a company. When you lay out the future roadmaps of product and service updates straight, if done right you will be able to solve your customers' needs.
If a company fails to set this part right, it will end up spending too much time on leads that are not willing to close a deal.
Identifying your ideal customer is a great starting point else you will end up in a square peg in a round hole situation!
2. Don't promise your customers the moon!
Don't lure customers by making false claims and advertising scandals.
They know what you promised for and if your product doesn't meet the respective expectations, they're gonna call it quits! Disappointed customers will end up with higher churn rates and they will eventually switch to a better product or service that keeps up their expectation levels. Trust is what connects a brand and a customer, when that is broken the customer's journey is also broken.
3. When high demands meet inadequate customer support
Mold your company towards a human-centric approach that aims to please customers by providing high-quality services that they love.
Kindly assist your customers with an expert support team that is readily available 24/7 round the clock to assist with any issues or improve your product with any specific changes you need. When customers don't get a solution for their problems, they get disappointed, and eventually, your service is frowned upon! This in turn leads to higher churn rates.
4. When value and pricing doesn’t go hand in hand
You can't build a product with minimal features and endeavor to sell it at a proliferated price.
If customers don't find your product is worth the money or if you have features that the customer fails to know how to make the best use of, they eventually find no value in your product no matter how intricate and sophisticated features you provide them. This will lead to dissatisfaction of the customer, and they eventually want out!
5. Poor Customer onboarding process
Not every customer is tech-savvy; even if your service or product includes minimum to zero coding. A great and brief onboarding process can lead to loyal long-lasting customers.
If you provide your customers with a meandering and boring onboarding process which would make them zone out and eventually find it difficult to navigate through after the onboarding process, then they might not want to convert into a paid customer following the disastrous free trial.
An ideal onboarding process includes short video tutorials with exact specifications, overviews, and also in-person training. If needed, a customer should have access to other types of help.
6. Stellar customer relationship is the key to success
A company can spend money on minute details and features of their products and update their services, but if they don't have a good customer relationship, then all the money and time spent will go down the gutter!
A bad Customer relationship = A customer lost. One less customer and there you have a high Churn rate!
Customer relationships are crucial to the success of any SaaS company out there. Maintaining a stellar relationship with your customers is the key to success.
How can a community help improve the churn rate?
Did you know that about 50-60% of the churn rate can be reversed with the help of a community? A poignant community that is inclined towards a customer-centric experience can increase your company revenue up to $1 billion dollars. It adds more value to your company and enhances the customer experience if you succeed in establishing a thriving online community!
A community could be of great help and a solution to improve your churn rate, and how to improve the customer success and satisfaction rate. No one has got the actual understanding of how and where exactly a community can give a hand.
Keep reading to know more about how a community can help you in ways you never thought of!
The power of a community
1. Brand awareness and discovery
Okay! Let's get into the nitty-gritty stuff.
First off! You must create awareness of your brand to people. You must allow people to discover your product or service, so what is the effective way to do it? Having a community sets a platform for you to tell about your brand and people who love you will be a part of and that piece of people can be your ICP. A community helps your company to gain customer acquisition and build successful strategies. Through community, you will target the right group of people who might be potential customers.
Community is the gateway to bring people/customers together.
2. Constant feedback and tracking of your customers
A community is not only a place to share ideas and long-form thoughts but you can get user feedback on how to improve your product by tracking the customers' interactions on a time to time basis. It will also allow you to articulate and come up with better ideas on updates and services to your product.
It will throw a light on grumpy customers who are not satisfied with your product, you can easily work on it based on their reviews! This way, a community will keep you going on the right track of how to retain your already existing customers and also to know what your customers love!
3. Backup for your backup (support communities)
To bridge the gap between customers and the company lies wholly on stellar customer support. A support community can store lots of useful and frequently asked questions (FAQs) that customers can go back to and refer to at any time without the need for customer support.
BONUS: If you are facing any issues at any moment, you can ask the support community (provided you have a dedicated support community) and you will be able to get an instant solution. This is spontaneous, less time-consuming, and establishes a great customer experience. You'll be blown away on how many SaaS companies have carried out brilliant tactics by building their communities for effective customer support.
4. Pricing and value
Pricing strategy plays an important role in any product or service, if customers don't find any value in the product and its pricing, then the company's objective won't be met.
Albeit, it’s impossible to know the perspective of each customer and create your brand around it. That's when a community makes this an easy-peasy task by storing knowledge base with, how-to guides, tutorials, use cases, product documentation, etc. helps customers to understand the product better.
When people start trying out the different features the brand offers, they start finding value in it. Eventually, when people are satisfied, they are happy with the product and its pricing, paying wouldn't be a barrier anymore.
5. Community - Part of the onboarding process
Having community in your onboarding process gives the journey an easy and smooth start. People feel privileged to be a part of something huge, and this feeling would bring people close.
A community projects your vision and value to your customers and they will start resonating with it. Utilize this opportunity and try to meet your customers' expectations. All this is crucial at the beginning of an onboarding process.
6. Build relationships
Community is a really cool place to bring people together and share their ideas and thoughts but at the same time solve their problems with a great solution. It is not always easy to make introverts in a community to open up, neither is it easy to get sustainable engagement in a community during initial stages.
A Community will make people fall in love with your brand. You can establish your own niche with the help of creating a dedicated community for your company!
This is a great way to keep a track of ICP, follow up potential leads, making your customers be a part of something huge, something unique, something that makes them feel special by giving them the privilege of being a part of a community!
You name it, a community has it!
Let us do a quick flashcard recap from the article!
- A Customer success manager(CSM) is a valuable asset to your company, they will help you in improving churn rates and Net dollar values, hence hiring an expert and undeterred CSM is a must for a successful growth rate.
- Focus on narrowing down and targeting the right ICP.
- Advertise what you sell and offer -- No exaggeration please!
- Make sure your dedicated customer support meets aggrandizing customer demands.
- Follow a strategic pricing method and a smooth Onboarding experience to your customers.
- Stellar customer relationship is the stepping stone to the success of your company.
- Community could solve intricate conundrums in a more cost-effective, sophisticated, and an effortless way. So establish a thriving online community to increase the growth rate and minimize your churn rate.
By the way if you are looking to have some fun and candid conversations, do check out our community cold coffee conversations and book your slot soon, since we are always completely booked, so book your slot in advance here.