The stats around customer churn can make SaaS business owners and subscription companies weep:
- Around 40 to 60% of free trial users engage with products and services once only and are never seen again.
- More than 2% churn a month — which can be an indication that a SaaS business is in serious trouble. New startups rarely focus on churn reduction.
- A simple 1% difference in churn can have a 12% impact on how a company is valued over the next five years.
A large number of customers rarely get to see the new features that are added in the future. You can prevent this by having an amazing customer success team and onboarding experience that greatly improves the value of your product.
What’s the Deal With Customer Churn?
Customer churn is all about customer satisfaction. If customer satisfaction is low, then churn will be high. Customers can easily lose interest in your SaaS product because they may get confused or they’re not sure how the service benefits them.
Customer retention comes by offering tons of value. You need to give your customers a clear roadmap about how to use your product and how it will benefit them.
Why Do SaaS Customers Abandon Trials?
There are so many reasons why customers may decide to abandon your product. They include:
- Switched to a competitor because of better pricing or a better experience.
- Decided that your product couldn’t meet their needs.
- Felt absolutely lost as your product wasn’t as easy to navigate as your sales team claimed.
These are legitimate reasons why customers abandon their trials. However, most customers don’t quit for the three reasons above. Most customers abandon services because they don’t see the value which leads to high churn rates.
In essence, the product has failed the “what’s in it for me?” test.
For example, HubSpot’s Sidekick had a serious issue with what they refer to as ‘drive-by’ users. These are people who signed up to use the software and were never to be seen again after one week.
One of the tactics HubSpot used to tackle the ‘one-week runaway users’ was to zero-in on week one retention. They allocated a specific team to focus on the user experience during the first seven days.
How To Ensure Onboarding Success
The great news is that your actions have a direct and positive impact on most of the factors that result in users abandoning your SaaS product during the onboarding process.
Start as you mean to go on and see onboarding as your best chance to secure recurring revenue from your SaaS products or your membership sites. Customer retention is essential to startups that want to scale up in the near future.
Use onboarding to shine the light on your product’s value to convince your customers that they absolutely must have what you’re offering. Your onboarding should take your users step-by-step through the key features of your product so they’ll understand how the benefits apply to them personally.
The name of the game in successful onboarding is to blow any expectations out of the water.
According to the Head Of Marketing at Groove, there are two major milestones in the life of a customer. The first one is when the customer signs up for your product, and the second is when the customer achieves their first success with your product.
Bottom line: What you do between when your customer first signs up and then receives the first success will affect how many customers you keep.
Onboarding Should be Simple and Sweet
Your onboarding process should be simple and effective. Streamline your onboarding process by clearly explaining how to use your products and highlighting the value at every single point. Customers are after quick and painless experiences, and your onboarding should deliver it.
Sometimes an onboarding perk could be a simple greeting, an acknowledgment that your customer has signed up for your service.
Think about using easy-to-read language when sending an onboarding email. The email productivity app, Boomerang found that email messages written at the reading level of a third-grader had a higher chance (36%) of receiving a response, than those written at a college reading level (17%).
Concentrate On the Things That You Can Control
There are some customers you can never retain. They may have made up their minds that they only want to use your product for seven days to get a quick-win before canceling.
Unfortunately, you may never convince these customers to stay, so you should focus on the things you can change to convince customers who are interested to remain.
A simple way of doing this is to focus on building great relationships with your customers. Think about offering something like a personal concierge service with a dedicated customer service agent.
Project Management Software ClickUp does this brilliantly while injecting their brand personality.
Here’s ClickUp’s welcome email below:
“Customer service in general sucks (along with other project management tools) 🙂
but at ClickUp, we do things differently. I'm Katie and I'll always be your personal point of contact.
I'm an email away, but if a walkthrough would be helpful, we created this great on-demand version for you to check out any time!
Our Client Success lead also hosts a weekly webinar, feel free to register for this week's or watch the latest here.”
You also need to test and test again. Think about hosting a live demo of customers using your product to record where the sticking points are and where customers are having difficulty.
An example of making the onboarding process shorter is the password sign-in. Before, you would need a different password for every SaaS product or every membership site. Now, some SaaS companies are enabling people to sign up through their social media accounts such as Facebook, or use their Google accounts.
Don’t Overwhelm Customers
Simply stated, if you bombard your customers with different onboarding tasks, webinars, tutorials, and notifications every half an hour, they’ll get analysis paralysis in their customer journey.
They might feel overloaded with the information and simply give up trying to use your product. Instead, go for incremental and small wins. For instance, you can send an introduction and a tutorial in the first week. Then hang back and offer a webinar in the second week.
Your onboarding needs to take customers through a planned journey. You should have specific objectives for every new customer.
With a clear roadmap, your customer retention will increase and your churn levels will drop.
Raise Your Onboarding Game with Checklists
Just because some customers have bought your SaaS software or signed up to your membership site, doesn’t automatically mean you’ll benefit from their recurring payments.
Use simple tools to keep your customers’ interests. Checklists can be a great tool for onboarding because people tend to dislike leaving tasks undone. Providing a checklist encourages customers to go through and accomplish all the tasks listed.
This type of self-directed learning provides a high level of motivation.
You can use different types of checklists, including bullet points and tutorials. If your SaaS product is quite complex, you may need to have a tutorial checklist to ensure that your users get the most out of their onboarding process.
Think about dividing your onboarding into different types of users. For example, you can have beginners, intermediate, and advanced areas. This type of checklist makes use of the IKEA effect, which says that if you build something with your own hands (or use mouse clicks), you place more value on it.
So, when you ask users to do some work as part of the onboarding process, they may feel more satisfied with your product because they have contributed to actually building some of what they need.
Quick-win checklists give your customers a fast and easy way to complete tasks. These releases feel-good chemicals in the brain because they can quickly see how they’re making progress. Quick-win checklists enable you to engage your users frequently and easily to give you an edge on your competition.
For example, Evernote uses a quick-win checklist to create consistency and commitment. Evernote’s first checklist item is to create your first note. This reflects Evernote’s proposition that you can organize and access your notes anytime and anywhere.
Evernote’s tactic is a great one because it enables a user to go through the onboarding process to create and check off the action in a few seconds. This gives the user instant gratification, so they are more likely to continue to use Evernote.
Ensure that your customer experience, customer support, and more are on point. This will lead to happy, loyal customers that improve your bottom line.
Whether you own a SaaS company or run a membership or subscription site, reducing customer churn should be high on your list of priorities. Onboarding is one of the best ways to ensure that you communicate your value to new customers so they remain with your company and continue to pay their subscriptions.
However, even if you have onboarded your customers successfully and over time you find customer churn is increasing, we’d love to help. We'll look into your customer base and figure out ways to reduce cancellations and decrease customer churn rate.
Book a call with Gravy today to find out how we can help you to identify the causes of your customer churn. We’ll work with you to provide a full-time focus on retaining your customers’ service and recovering your payments which will increase your MRR.