SaaS: Reasons for Software User Churn and How to Avoid It

Software as a service companies are expanding at a rapid rate. With the advent of high-speed internet and mobility, even some of the stodgy businesses of yesteryear are repositioning themselves as software as a service (SaaS) companies. Microsoft is a prime example of this, having shifted its traditional Office software business into Office 365 and kickstarting its SaaS strategy and a new and ballooning revenue source

One of the main objectives for SaaS companies is to keep their churn as low as possible. After all, SaaS businesses are looking to cover their customer acquisition costs and increase the customer lifetime value for that business. This increased customer retention and the resulting cash flows offers a two-fold benefit, viral growth and a further increase of marketing budget to target more customers.

Needless to say, that SaaS companies succeeding in this endeavor command higher valuations. This transforms into a self-reinforcing cycle of selective funding sources and access to the most talented employees, investors, and venture capitalists offering their expertise to amplify scale and accelerate growth.

Given these dynamics and what is at stake, we examine the reason why there is software user churn and what SaaS companies should do to avoid it.

Proactively address UI and UX issues of Software

The emphasis on improving the user interface and experience by SaaS companies has led to advances in easily navigating, software and applications. However, these accomplishments need to be upheld by continuously building on those experiences. A quick setup and the ability to quickly derive results after installing the software has become mandatory among customers.

SaaS companies should strive for as frictionless an experience as possible. Sometimes that simply involves the clients having the right experiences at the right time.

Focus on the Customer Journey

Customer Journey, Customer Success are relatively new terms in terms of business adoption, but they are impactful in nudging along customers into stickiness for their products. Customer Success aims to offer a certain level of handholding to your customer to guide them along the process from onboarding onto a self-reliant user of a company’s product offering.  

The concierge-type customer experience may involve group level or one-on-one trainings catered to specific personas or software use cases, consistent check-ins with the client to see how they are incorporating a companies’ products into their daily workflows.

This level of follow-up and customer focus will involve constant monitoring of usage trends and gauging how that stacks up against what is expected for users at various stages of their life cycle.

Customer Support – Aim for the complex. Because the easy stuff is already solved.

Customer Service can either make or break your business. For businesses with great client support teams, offering such an experience can do the marketing for many companies with the highly engaged environment online market, overall. 

Businesses can start with having a detailed, yet easy read with a Help Section showcasing a Knowledgebase addressing common issues customers can expect and how to resolve them. It can also include Frequently Asked Questions or specific video tutorials to directly address any friction customers may face in adopting specific software. Once businesses get and handle the daily mundane inquiries, they can easily focus on the more complex. Maybe that is figuring out how to remedy a specific bottleneck or figuring out specific value-adds that differentiate a SaaS company from the competition.

Sometimes businesses may become known for always answering calls immediately, or in the case of SaaS businesses, having an easily accessible Support number that is answered by humans rather than machines. These practices can get directly at the heart of a major common complaint, poor customer service.

All these various reasons for churn are interconnected, user interface, user experience, customer success, and stellar customer support. It all demands an investment of time and resources and the ability of businesses to play the long game. These obviously won’t all transpire overnight but will require constant effort and numerous iterations to both the product and internal processes. Remember product and business lifecycles may evolve into numerous other innovations, allowing the business to offer additional services or the option of bundling numerous other product offerings by the business that will be a constant work in progress.  

Be proactive in staff training

The investment companies make do not stop at just their product or the infrastructure used to offer stellar customer support. A company’s efforts in developing its product offerings and improving the customer experience can not be extricated from the experience of its employees. SaaS businesses have to be vigilant in training and upskilling their staff to offer the best-in-class service.

Staff will need appropriate training on common inquiries about the product or those coming from a specific client. Customer Support teams should also understand the process of escalating scenarios such as enhancement requests to the Product teams or a referral for the Sales team as these teams are on the front lines of client engagement daily.

The SaaS business model is a very lucrative business model and one that cannot be ignored. More and more mature companies are starting to pivot their business models into SaaS companies and reaping unprecedented rewards such as a higher growth trajectory, a flywheel effect of new business lines and product iterations, and higher valuations. One of the main drivers of SaaS companies is having a low churn rate which can reinforce viral growth, lead to quickly covering customer acquisition costs and lead to higher customer lifecycle value.

There are some key areas of focus that can help lower software churn such as focusing on the User interface (UI), customer journey, and training your staff on the optimal outcome of that journey for all customers.

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