Disclaimer: Churn may cause sleepless nights, heartburn, receding hairlines, and premature aging. It’s a subscription business’ archenemy.
“The reason the SaaS churn rate dominates over virtually all other SaaS metrics is that SaaS churn is in direct opposition to growth; the primary objective of most SaaS businesses,” explains Joel York.
Today, we’re bringing you some good news. Good news and churn don’t usually happen in the same sentence, so pay attention.
Most people define churn in terms of customers who cancel your product or service. For subscription-based businesses, there are a number of customers who cancel but still have time remaining on their subscription. That’s who we’re focusing on today.
Subscribers who cancel but still have time left on their subscription are gold mines when you win them back before they actually churn at the end of the subscription period!
In this post we’ll cover:
- Why winning these customers back is important
- How to do it. Yes, actionable ways to win back cancelled customers
- How to improve so you have less cancellations in the future
First, it is important to mention that sometimes there are customers who are better to let go (when they cancel) without a fight. A few examples of the types of customers who are better to let go vs. target to win back:
- The customer was sold your product/service, but in reality it doesn’t solve their actual need. In short, that customer relationship was doomed from the beginning.
- The customer’s expectations of the level of support they would receive doesn’t match actual, available support levels. It probably doesn’t make sense for you to increase the support level for specific customers and incur that additional cost. You would simply work with your sales and support teams to make sure future customers understand the actual support levels available.
- The customer has complex needs that your product/service does not meet and does not plan on meeting. These customers can be a pain with feature requests and eating up your support team’s time.
In all those examples (and there will be others) it is best for both you and your customer to admit your product isn’t the best solution and let the customer go. Then you can focus on cancelled customers who have an issue you can easily fix such as alerting them to a “missing feature” that is actually already part of your product, helping them with a feature they weren’t using correctly, etc.
Why winning back cancelled customers matters:
Quite simply, it is less expensive to retain customers than to acquire new customers.
“The key here is to think about all of the pros of dealing with canceled customers instead of fixating on the fact that they hit the cancel button. They signed up in the first place. They have experience with your product and a ton of knowledge about it. The product may even still be a habitual part of their workflow. Of course there’s a reason they’re looking to leave, so the clock’s ticking on your opportunity to convert them back to MRR,” advises writer Andrew Tate.
There shouldn’t be a lot of convincing that needs to happen in this section, so let’s move on to how to do it…
How to win back cancelled subscribers before they churn:
Communication.
You should already have an exit survey that automatically goes out whenever a customer cancels.
If you’re lucky, a customer’s exit survey will be specific enough that you’ll know if it makes sense to spend the time to win them back. For instance, “I needed the product to do x but your product would only give me y.” Great, you’ll know right away if there is a solution that fixes the issue for the customer.
More often, though, you’re going to want to reach out to your customer to communicate further. At this point, you should be calling (not emailing) your cancelled subscriber.
“Get your churned customer on the phone. Only do email as a last resort. Having a real conversation with your departing customer is integral to learning something meaningful from the exercise. It’s all about going deeper, asking questions, and coming to a real, detailed understanding of your customer,” says Steli Efti.
Once you’ve identified the issue(s) that led to the cancellation…
Align solutions to customer problems.
This is pretty self-explanatory, but you would be surprised at how many companies miss the mark on this. If you discovered in your call with your cancelled subscriber that their issue had to do with pricing, then the solution you offer should tie back into pricing.
Examples of actionable solutions to win back cancelled customers before they churn can include:
- A pricing discount. We don’t recommend this be used often because discounting can weaken your brand perception, the short-term gains often aren’t worth it in the long run, etc. You can read more on our blog “Should Discounting Be Part Of Your SaaS Pricing Strategy?”
- Upgrade. If the customer canceled because their business has scaled and it seemed your product wasn’t able to scale with them, an upgrade to a higher tier may provide them with the additional features or support they need.
- Downgrade. When pricing is a concern a downgrade can help fit their financial needs while still allowing them to utilize your product. If a downgrade entails a loss of features or support, first make sure those aren’t vital to the customer achieving success with your product. Otherwise, you’ll likely find yourself looking at the same customer cancelling again in the future.
- Share upcoming feature releases. “By offering churning customers a glimpse of what’s coming down the line, you can excite them about future releases. Things that inspire people to stick around are usually features which save time (e.g. better importing), increase efficiency (e.g. integrating with 3rd parties), or offer additional value for no extra work (e.g. weekly reports),” according to Efti. Be sure to only share feature releases that are within a couple weeks of shipping, or else you risk the customer being upset if the feature isn’t released in the time frame they feel is suitable.
- Give them access to personalized training or consulting. The idea behind this solution is to get them back on track or help them to the “ah-ha” moment if they cancelled because they didn’t get there. If the latter is the issue, personalized onboarding assistance may be the most beneficial.
- “Offer partner services to help them bridge success gaps,” suggests Lincoln Murphy. Murphy advises always giving a customer who has expressed their intent to cancel (whether it is in-app or to your support team) at least one option that would allow them to continue use of your product in some form rather than cancelling outright.
- Allow account to be paused for a short time period. If your subscriber’s business is seasonal, having the ability to pause their account for a few months may be all that is needed to help get through the financial difficulty of a seasonal dip.
Thanks to technology, “particularly more-sophisticated customer databases, companies…draw on information about how people used their service the first time around to craft more-successful win-back offers and to identify and go after the most profitable defectors,” according to Harvard Business Review (HBR).
Finally, it is essential to weigh the opportunity costs of the resources it takes to win back cancelled customers before they churn.
“Knowing what kinds of offers lure back the most customers isn’t enough; the costs and returns of each are important too,” reminds HBR.
Use feedback to improve & decrease future cancellations (and churn).
In an ideal world, you would retain every customer that you talk to, but let’s be realistic…this isn’t going to happen.
Don’t let those conversations with cancelled customers go to waste! The feedback loop (above) is just as important here; you can use what you learn from cancelled customers to continue to improve.
Depending on the issues you’re learning about via customer cancellation conversations, you may want to experiment with:
- Better communication
- Better customer support
- Improving onboarding
- Pricing
- Trials (offering a trial vs. not offering a trial, trial lengths, requesting a credit card prior to trial signup, etc.)
- Marketing to re-align your value proposition (especially if you’re losing customers to competition)
- Reviewing buyer personas and how you’re currently marketing to those personas
- Ensuring your sales teams are properly identifying when a potential customer is a good fit and setting proper support expectations
- Cancel flows*
*A cancel flow “is an off-boarding workflow that allows them to cancel in-app if they want but reminds them what they’ll lose if they do and gives them another, compelling option other than cancelling,” explains Murphy.
LessChurn is a tool that automates the cancel flow:
The LessChurn screenshot, above, illustrates another element you may want to experiment with: your cancellation call to action (CTA). You can A/B test “Delete Your Account” and “Cancel Your Account” CTA’s. If you do, please share your results with us in the comments section!
Wrap-up
Subscription-based businesses need to continually provide value and delight to subscribers because the threat of churn always looms. Thankfully, when a customer cancels, it doesn’t always mean they have churned…yet.
Sure, it isn’t worth working to win all your cancelled customers back, but many are worth your time and resources. Sometimes you will win them back, but sometimes you won’t. When you don’t, try to learn from the feedback to help reduce churn in the long run.
Does your company work to win back cancelled customers before they churn? Share your experiences and tips in the comments below. We always enjoy hearing from you!
Related reads:
- Master The Customer Lifecycle Funnel: Acquire, Engage, Retain
- 13 Tips To Improve User Onboarding From SaaS Leaders
- SaaS Customer Success: The secret to reducing churn & increasing MRR
- 16 Tips To Reduce SaaS Churn From Industry Leaders
The post How To Win Back Cancelled Customers Before They Churn appeared first on Chargify Blog.