Cloud

The SaaS churn challenge: How to hold onto your customers

This is a guest post by Viralheat CTO Vishal Sankhla

The rise of Software-as-a-Service (SaaS) businesses has created a land grab for users. This is forcing many companies to focus heavily on user acquisition, often at the expense of customer support. Marketing and sales departments (tasked with lead generation) have multiplied, while existing customers fumble around on unfamiliar user interfaces and are left to navigate a new product on their own.

Thousands of new customers mean nothing if thousands give up on you and leave at the same time.

It is more difficult and costs 6 to 7 more times to acquire a new customer than it does to keep an existing one. Advertising, promotion, selling, and time invested are all factors in the high cost of acquiring a customer. So it’s important not to neglect the customers you’ve already won. Your churn rate will tell you how bad the problem is.

So, how do you keep churn low?

Though a high churn rate is common among young startups, the company I work for — a social media intelligence company called “Viralheat” — managed to reduce its churn rate by 50 percent since January 2012 and has continued to reduce it by 10 percent month over month through the implementation of a customer success program.

Let’s take a closer look at five facets of the plan and how each has contributed to reducing churn.

  1. Contact new customers: Go beyond the traditional welcome email and support-ticket route if you realize that the type of support customers need is more hands-on. New services can be intimidating to new users, some of which are using a product like this for the first time. Customers who feel inundated or overwhelmed by a product or service are more likely to leave than customers who feel comfortable and educated. By personally reaching out to new customers, the customer success team was able to learn each client’s specific needs and sufficiently guide them through usage of the product. Customers were more knowledgeable with the tool and able to use it to its full capabilities, resulting in less customers leaving.
  2. Create a learning center: SaaS companies have a lot of information for their customers. Many questions can be answered simply, but FAQ sections don’t resonate well with most customers. Visual resources provide a better service, with hands-on product tutorials. Creating a customer Learn Center where how-to and informational resource pages and videos are housed proved to be extremely useful for us.
  3. Offer real-time online chat services: In today’s fast-paced world, and especially in the technology field, potential customers want answers, and they want them now. The difference between choosing services could be the response time to a question about a product, especially in the early stages of shopping around. In our case, implementing an online chat on the homepage allowed current and potential customers to immediately reach a member of the customer success team for support.
  4. Conduct new user demos: SaaS products often require training or visual demonstration of the product’s capabilities. Product demonstrations are especially helpful for prospective and new users as they directly see how to use a product. Some companies offer a prerecorded demo to highlight features, but often these demos are hard to follow without rewinding and pausing along the way, and any questions viewers have at the end are left unanswered. Offering live demos twice a week where attendees join a web demo allows the customer success representative to demonstrate the product in real time. Moreover, customers are able to ask questions during and after the demo for an immediate response.
  5. Interact on social networks: Customer support solely through email correspondence is quickly becoming a thing of the past. Social media networks like Facebook and Twitter serve as ripe stomping grounds for customers. Consumers can pose questions or voice their dissatisfaction. Ignoring those reaching out through social networks is a mistake — we’ve all seen the damage that can be done by doing so. By constantly monitoring the social web, the customer success team ensures that they quickly reply to all inquiries or feedback. In fact, many users have lauded companies for their quick responses on Facebook and Twitter.

The implementation of a customer success program should be geared toward satisfying all customers — potential, new, or existing. A happy customer is less likely to leave a product or service than an unhappy customer. Ensuring that customers feel satisfied at all stages of their relationship with a product also ensures higher acquisition and retention rates. And although SaaS companies enjoy rapid growth and increased popularity, they must remember not to focus all their efforts in acquiring new customers. Its the long-term customers that keep you in business.

Vishal Sankhla is the co-founder and CTO of Viralheat. Vishal’s expertise is in large scale network monitoring and analysis. 

Top image via wavebreakmedia | Shutterstock

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