10 Clever Tactics To Reduce Churn in Your SaaS

churn Jun 05, 2024
Reducing SaaS Churn

Churn is the enemy of any SaaS business. For most SaaS businesses, there’s usually a relatively high upfront cost to acquire a customer, so the business is only profitable if you can keep that customer for long enough to recover the cost of acquisition (and then some). 

If your customers are churning before they pack back the cost of acquiring them in the first place, it’s going to be impossible to grow your business.

In this article we’ll cover 10 different tactics you can use to reduce churn and thus extend your Customer Lifetime Value (CLTV).

But first, let’s take a quick look at what it actually means.

When we talk about churn in SaaS - what we’re really talking about is how many customers stopped using your software tool in a certain period of time. 

A good benchmark for churn in the SaaS industry is 12-14% annually

Churn rates vary wildly from vertical to vertical however - but an optimal rate of churn in your SaaS is less than 3% per month.

Also, bear in mind that there are two distinct types of churn:

  • Voluntary, active churn (customer’s actively choosing to cancel their subscriptions)
  • Involuntary, passive “delinquent” churn (customer’s subscriptions canceling due to failed payments or because they went out of business)

You might be surprised - and shocked! - to learn that typically 20-40% of SaaS churn is of the involuntary, delinquent type - especially if you take payments through cards (source: Paddle.com)

With all that in mind, let’s look at 10 different ways you can reduce customer churn in your SaaS business.


1. Say No To Bad-Fit Customers

Many SaaS businesses make the mistake of trying to cater to every single customer who signs up for a trial. But the unfortunate reality is that not all customers are created equal.

You want customers who have a long term need for your product, won’t be a drain on your company’s support resources and who, ideally, will upgrade to a higher pricing tier in future (and net you some of that sweet, sweet expansion revenue).

And you want to avoid customers who create accounts only for short term needs and then cancel, or who churn quickly and thus never pay back the cost of acquisition, or who are an unreasonably strain on your support team’s time.

Look into your churn data and see if you can identify some traits of customers who are likely to be unprofitable:

What marketing channel(s) did they come from?

Pro tip: check if they landed on your site by searching for something with the word “free” in it. “Free landing page builder”, “free email marketing tool”, “free project management software” etc.

These people are likely very price sensitive and likely to churn the moment they find a cheaper solution.

How big is their business? And how long has it been operating for?

If you can, ask some questions during signup/onboarding to get an idea of how big they are In terms of revenue, team size or number of locations etc. 

Generally, more established, larger businesses that have been operating for a while are less of a churn risk than recently-established startups, freelancers and very small businesses.

Once you have a clear idea of which customers tend to be at high risk of early churn, you might want to take steps to weed them out - like removing support from your lowest pricing tier, or only offering them a self-serve option rather than burdening your sales team with providing demos to these bad-fit customers. 

You could even send them to a competitor (and take an affiliate commission in the process) - after all, if they’re going to switch to a cheaper competitor eventually anyway, you might as well save them the hassle and get a slice of the revenue along the way!

2. Personalized Onboarding

Most customer churn occurs within the first 90 days of signing up - and a huge part of this is down to failure to onboard customers successfully.

Onboarding is the first time that your users really interact with your product. So if you nail your customer onboarding at the start, you’ll reap the rewards (lower churn) later.

You have to tailor the onboarding experience so that your users immediately understand how your product solves their problems.

You need to understand their needs and learn from their feedback, as Bill Gates said: “Your most unhappy customers are your greatest source of learning.” 

So what does tailoring your onboarding process actually mean?

Let’s take the example of a marketer and a product manager. These two people might use the same tool but have completely different goals. 

And your job is to create an onboarding process that caters to both.

So how can you understand what they need?

The simplest way is through a welcome survey. Tools like Typeform can gather insights about ýour users and their Jobs-to-be-Done (JTBD). 

Based on these responses, you can categorize users into logical segments. (E.g. Product managers, marketers, UX designers etc.)

Once you’ve segmented your users, the next step is to present an onboarding flow that’s specific to each JTBD segment. 

Your onboarding flow for a product manager could look like this:

  • Welcome and Introduction: Start with a decent, non-generic welcome message that introduces the product and its value proposition. This could be a simple screen with a brief overview of the product and its benefits for a product manager.

  • Use a short survey to understand the user’s role, goals, and experience level. For a product manager, you can ask about:
    1. Their responsibilities, 
    2. The size of their team
    3. The challenges they face

  • Give a guided tour of the product, focusing on the features that are most relevant to product managers (project management tools, collaboration features,  analytics dashboards etc).

  • Use interactive walkthroughs to guide them through important tasks. For example, you could show them how to create a new project, assign tasks to team members, and track progress.

  • Help them to set up their first goal or project in the system. This gives them a clear path to getting started and seeing the value of the product

  • Provide links to resources such as tutorials, documentation, and customer support. This ensures the product manager has the help they need as they start using the product.

  • After a few days or a week, check in with them to see how they’re doing. Ask for feedback and offer additional support if needed. (Bonus: If they get to speak to a human and not just a robot it will go a long way)

This type of personalized onboarding flow should highlight the features that are most relevant for the user to accomplish their goals with your product.

A personalized onboarding experience helps teach customers about the aspects of your product that are most relevant to them. 

And better educated customers who know how to use your product to solve their problem are far less likely to churn.


3. Decrease The TTV (Time-to-Value) Using Onboarding Checklists

One of the most effective ways to reduce churn and increase customer loyalty is by decreasing the time to value (TTV) during the onboarding process. 

In the SaaS world, a shorter TTV = higher customer satisfaction and lower churn rates.

The quicker a customer can understand and utilize the core features of your product, the more likely they are to continue using it.

As we mentioned in the previous section, onboarding is the first real interaction a customer has with your product. 

A great way to reduce TTV in your onboarding is to use checklists.

Which are basically step-by-step guides that walk your customers through the process of setting up and using your product. 

It gives them a clear path from sign-up to their “Aha!” moment.

Here’s how an onboarding checklist can help decrease TTV:

  1. Clarity: A checklist provides a clear and concise roadmap for customers to follow, eliminating any confusion about what steps to take next.

  2. Goals: Each item on the checklist should be tied to a specific goal or outcome, helping customers understand the value of each step.

  3. Progress: Checklists allow customers to track their progress, providing a sense of achievement and motivation to continue.

  4. Resources: Checklists can include links to relevant resources or support materials, providing customers with additional help if needed.

So how can you implement these checklists?

Firstly, you need to understand your customers’ goals and how your product can help achieve them. To create an effective onboarding checklist, try these steps:

  1. Pinpoint the key actions that a user needs to take to achieve their “Aha!” moment with your product.

  2. Break down these actions into clear, actionable steps and organize them in a logical order.

  3. For each step, provide context or explanation to help users understand its importance.

  4. Include links to relevant resources or support materials for each step.

  5. Continually test and refine your checklist based on user feedback and behavior.

In short, try to get your users to the “aha!” moment as quickly as possible and use checklists to map out each key step they need to take to get there.

In this way they will feel a sense of progress and will be more likely to complete the onboarding checklist - and thus reach the “aha!” moment where they understand the value of your product.


4. Provide Great Customer Support

Keeping your customers happy should be one of your top priorities. Of course, good customer support also costs money to provide - you have to hire, train and manage a team of customer support agents - often in different timezones to provide 24/7 support to customers.

And that’s just with live chat and email - if you want phone support you’re going to need a call center as well.

However, you can alleviate some of the strain on your support resources by:

1 - Creating a library of helpful resources for users to access whenever they encounter challenges or have questions. 

2 - Using chatbots to help answer common questions or direct users to relevant resources.

Please note that most people dislike chatbots and find them frustrating to use - so please don’t use them as an alternative to human support.

Instead deploy them as a way to increase the efficiency of your human support team by handling lower-level, common questions and freeing up your human support team members to focus on more difficult support requests.

Some tools that you can use to help you build this resource center effectively are:

  • Zendesk Guide
  • Freshdesk
  • Help Scout 

So you might be asking, what should this resource center include?

Well for one, diverse content that include things like:

  • Video tutorials, 
  • Webinar recordings, 
  • Knowledge base articles,
  • FAQs,
  • Troubleshooting guides

Each resource should be carefully made to address common pain points and provide clear, actionable solutions. 

For example, video tutorials can walk users through specific features or processes step-by-step, while knowledge base articles can offer in-depth explanations and troubleshooting tips.

Keep in mind that you regularly have to update and expand your resource center to keep up with user needs and product updates. 

Encourage your users to give feedback and insights so that you can identify areas where additional support or clarification may be required. 

Continuously refining and enhancing your self-service support offerings helps your users but also shows your commitment to their success.

Letting users find answers and solutions independently creates a culture built on trust, reliability, and support. 

So, invest the time and effort into creating a comprehensive self-service support system that truly adds value to your users' journey.


5. Invest in a Customer Success Program

Customer support and customer success are not the same thing. Supporting customers is about responding to customer requests and answering their questions promptly; it’s reactive

But many customers don’t bother to ask questions. Or they’ll look for a few minutes and if they don’t find an answer, they’ll become disengaged. These people are at high risk of churning, but are invisible to traditional customer support processes.

Instead, what you want is a proactive customer success program where you actively monitor customers’ usage of your product, identify customers at risk of churning and reach out to them to fix the issue before they mentally check out of your product and disengage.

Once a customer disengages, it’s very difficult to win them back - so reaching out proactively before they decide to disengage is absolutely critical.

Consider investing in a customer success tool like Custify, Helpscout or ChurnZero to reduce customer churn proactively.


6. Find out why customers churned - and respond accordingly

Ok - so far we’ve focused on proactive steps you can take to prevent churn from happening in the first place. 

But what can you do after a customer has churned? Is there any way to win them back? Or do we need to reconcile ourselves to losing them forever?

One thing I’d strongly recommend doing is a “churn survey” at the point of cancelation - and asking the customer why they decided to leave. It might feel like the post-breakup conversation with your ex—you're hoping for closure, but secretly dreading what you might hear. 

But a churn survey is a golden opportunity to get insights, fix what's broken, and come out stronger on the other side. 

So how can you use churn surveys to get the most out of them?

Firstly, your goal is to get the details from your customer as to why they churned:

  • Was it the price? 
  • The user experience?
  • Key features missing/not working as intended? 
  • The lack of customer support unicorns in the interface? 

Whatever it is, you need to know.

What’s more is that a churn survey isn't just about discovering why your customers left but it’s also a great way to get feedback you wouldn't normally get. 

If the feedback is related to the price then it might be time to

  • Re-evaluate your pricing strategy
  • Reassess your target audience
  • Double down on showcasing your product's value 

It could also be that your users are leaving because they can't figure out how to use your product without summoning a team of IT wizards. 

And that points to an onboarding problem which means you have to find ways to optimize and streamline it. 

Once you know why they churned you can develop strategies to stop other users from churning as well.


7. Use a Maintenance Mode/Pause Plan

Customers churn for a lot of different reasons: sometimes they no longer need your product, sometimes they switch to a competitor that better suits their needs.

But sometimes they just don’t need your product right now - and so don’t want to pay for something they aren’t using at present. 

Typically they will cancel, then create a new account a few months later when they need your tool again.

This often happens with customers who are small or seasonal businesses.

The problem with this is that some customers will inevitably switch to a competitor when they need a product like yours again - and then you’ve lost them for good.

So, as an alternative to cancellation you can offer them a “maintenance mode” plan instead.

How does it work?

Let’s say your customer typically pays around $100 per month for your service. When they try to cancel, you offer them a heavily discounted plan - say, $20/month - or even allow them to pause for a few months at no cost. 

This way you still generate some revenue from a customer who would have otherwise churned, and you also have a much better chance of hanging onto that customer when business picks up for them in a few months time as well.

In return, they get to save money while still hanging onto their account - which means the software stays updated and they don’t lose any data. They can’t actively use your product, but they don’t lose any work they’ve already done either.

To sweeten the deal even further for them you can offer them a discount on their first month when they decide to reactivate. 

Win-win for everyone.


8. Implement Dunning Campaigns

Thus far we’ve mostly focused on reducing voluntary churn - that is when a customer actively chooses to cancel because they’re unhappy with your product or wants to switch to an alternative solution instead.

But as we discussed previously, 20-40% of SaaS churn is of the involuntary, “delinquent” type where payment fails.

Some of this delinquent churn is down to a customer going out of business. Not much you can do about that (other than saying no to “bad-fit” customer - see point #1 above).

However - a decent chunk of delinquent churn occurs because a customer’s credit or debit card has expired, lacks funds, gets flagged for fraud, and many other reasons. This means otherwise-happy customers churn without meaning to (involuntarily) because of an unintended issue with their payment method.

You can somewhat prevent this by encouraging customers to add a backup card or use an alternative payment method - like PayPal or another digital wallet, or by enabling direct debit.

Both of these lead to higher authorization rates and payment acceptance.

But what you really want is a dunning program.

“To dun” literally means “to make persistent demands.” Dunning programs are designed to recapture failed subscription payments. Generally, these split into two sides to help “resurrect” a customer account and reduce churn:

  • Payment automation (automatically retrying payments)
  • Customer campaigns (through emails and in-app notifications to a form to update their payment method).

Dunning programs break into multiple tactics and can be spread across multiple and different services. This can include tools like Churnbuster, Baremetrics Recover, and Paddle Retain.

For example, here are some of the dunning tactics Paddle uses to reduce delinquent churn:

  • Automated card updaters (up to 5% improvement)
  • Retry the card again (up to 10% improvement)
  • Email & in-app campaigns (up to 40% improvement)
  • Payment update forms (up to 15% improvement)
  • Lockout users from their accounts (up to 8% improvement)

You can expect failed payments to be significantly worse for annual subscriptions paid by cards since cards are much more likely to expire over a 12-month period. So when looking at churn, it’s important to differentiate between monthly subscriptions and annual subscriptions.

For most SaaS businesses the biggest bang-for-your-buck dunning tactic is to reach out to customers via your emails and in-app communications.

Your dunning email campaigns (if you have any) are likely to be tied to your subscription billing software. 

Try to send more emails over a longer period of time, and review the content within each message. And try to remind the customer of the value of your product in each of those emails - include a testimonial or review, mention how much time or money your product has saved them etc.


9. Launch a “Winback Campaign”

Ok, this tactic isn’t technically about reducing churn - it’s about recovering former customers after they’ve churned.

Just because someone is unhappy with your product now doesn’t mean they won’t give it another try in the future - provided you manage the relationship well and actually address the issue that caused the churn in the first place.

As an example, I recently decided to launch a podcast. After reading several reviews and watching a bunch of videos, I decided to use Riverside.fm as the software tool for recording interviews.

It had a number of advantages over other options I looked at - it recorded at both my end and the guest’s end locally, so (unlike Zoom) even if there was a jittery internet connection there were two local recordings to choose from, which meant I could still have a smoothly edited video recording at the end.

It also had some AI magic to reduce the amount of time my video editor needed to spend on each video and - importantly - it allowed recording in 4K quality.

But then I used the product and - honestly, it sucked. For a completely different reason.

When I interviewed my guest (on an admittedly poor internet connection), the audio froze for literal minutes at a time. I couldn’t hear the guest at all, and only caught a few words here and there every time I asked a question. It was impossible to actually conduct the interview like this.

Frustrated, I decided to cancel my account and switched to a competitor (SquadCast - which doesn’t offer 4K recording quality but honestly is pretty good otherwise.) 

Riverside made it easy to cancel (good). They asked me to fill out a quick feedback survey asking why I’d churned. I told them it was because of the issue with call quality and that the product just wasn’t robust enough for my needs. So far so good.

But then their (very poorly executed) winback campaign started. They were bombarding me with emails offering me discounts and product tutorials and testimonials from happy customers.

Everything except that they’d fixed the issue with the product that had caused me to churn in the first place!

I was fine with the price - offering me a discount isn’t going to bring me back if the product is still broken.

I also knew how to use the product - education wasn’t going to bring me back either. It’s just that the product had a fundamental, fatal flaw that made it unworkable for my needs.

Had Riverside responded with..

“Hey Ryan - we’ve fixed the issue now. Look, here’s a video we recorded with a weak internet connection, see how the call quality remains unaffected even though it takes longer to upload the local video recordings afterward? By the way, here’s a discount if you’d like to come back and give us another try!”

…Then I would have actually been tempted to go back to them. But instead they kept hounding me with all sorts of stuff that didn’t actually address my reason for churning in the first place.

Moral of the story - winback campaigns can work. But only if you really listen to your customers, properly segment your comms based on churn surveys and most importantly actually take meaningful steps to fix the issue that caused the churn in the first place.

Winback campaigns aren’t a silver bullet. Don’t get your hopes up - once most customers decide to leave they’re never coming back. But if you’re very early stager and you know your product is riddled with bugs and lacking key features, you’d be surprised how many customers you might actually be able to recover later once you fix those bugs and build out those missing features. 

Don’t give up too easily. You might just surprise yourself. And if there’s one thing that can turn people into loyal customers, it’s that you actually listened to them and took action.

10. Start an Online Customer Community

Starting an online community can be a game-changer for nurturing customer relationships and fostering long-term loyalty. 

With online communities you can create a sense of belonging and engagement in which you not only reduce the risk of churn but also create an ecosystem where users actively support and advocate for your brand.

But as with many things in SaaS - there’s a right way to do it and a wrong way to do it.

The right way is to be actively engaged in your community and use it not just to help customers and answer their questions, but also to ask for feedback and provide education and training that can help them get the most out of your product.

The wrong way is to treat it as a cheap alternative to actually having a support team. Don’t expect your customers to provide free support for you so you don’t have to pay for a customer support team. Nothing will alienate your customers faster.

Too often, SaaS businesses start communities that turn into the latter - with predictable results.

So, if you’re going to start a community, make sure it’s active and engaged and you resource it properly so that it’s a valuable complement to your product.

Here are some actionable steps you can take towards building your online community:

1 - Choose the right platform 

Before starting you need to find the right platform that aligns with your audience and objectives. 

Consider platforms like 

  • Discord
  • Circle.so
  • Facebook Groups (yes, people still actually use them)
  • Mighty Networks
  • Vanilla Forums
  • Slack

These tools offer a wide range of features, including discussion forums, member profiles, event scheduling that can help you to facilitate meaningful interactions.

But in my opinion, the best community tool to choose is whatever your audience is already familiar with and uses regularly. If they have to dig through emails to find a login link it’s going to be very difficult to build a thriving, engaged community.

This is one of several reasons why we use Slack for the StartupSauce SaaS Founder Community, even though Slack really isn’t ideal for communities. Our members are all founders and CEOs of SaaS businesses and most use Slack as part of their daily workflow already - they have it open in front of them all day. 

So there’s way less friction for them to participate in a slack community than, say asking them to download a dedicated community tool that they aren’t familiar with and wouldn’t use for any other purpose.

2 - Create good content (that will lead to good conversations): 

A thriving online community hinges on meaningful interactions and valuable content.

Encourage members to share their insights, ask questions, and contribute knowledge. Remember the tone you set in the beginning will eventually be carried out by all the members in the community. 

Consider launching discussion threads, hosting Q&A sessions, or spotlighting user success stories to spark engagement and create a sense of community spirit.

3 - Make communication easy 

Ease is the name of the game when it comes to managing multiple communication channels. 

Invest in an omnichannel support tool—such as Zendesk, Intercom, or Freshdesk—that consolidates emails, social media, help center inquiries, in-app messaging, and live chat into a centralized hub. 

This not only streamlines communication but also ensures consistent and personalized support across all touchpoints. 

It’s never a good look having customers posting “why haven’t you responded to my email?” in your community…

4 - Empower community moderators

Behind every successful online community is a team of dedicated moderators who keep the peace, foster engagement, and uphold community guidelines. 

Identify passionate and knowledgeable users who embody your brand values and empower them to take on moderation roles

You can provide training, clear guidelines, and ongoing support to ensure they have the tools and resources they need.

5 - Listen, learn, and iterate

Building a solid online community is an ongoing journey, not a one-time endeavor. 

You need to constantly monitor community activity, get feedback from members, and analyze engagement metrics to identify areas for improvement.

Be open to user suggestions and iterate on your community strategy accordingly.

Creating an online community isn't just about reducing churn—it's about building a vibrant ecosystem where users feel valued, connected, and empowered. 



To sum it all up: some churn is inevitable, but there are many concrete steps you can take to reduce it.

Reducing churn starts even before a customer signs up. And it doesn’t even end once a customer leaves; you can still bring them back by offering a maintenance mode plan, implementing dunning campaigns or even launching a winback campaign.

In the words of Jason Lemkin:  “Churn is the silent killer. Treat it like a fire alarm, not a snooze button.”

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