Churn is an aspect that is often overlooked by SaaS start-ups. In their “land grab” phases, SaaS companies normally do not have the time or money to worry about churn. It makes sense for the first year or two, as recovering from the painful and resource consuming process of product development requires building the user base in the first place. However, for a SaaS product to continue its growth, the company has to re-sell the sale to the customer. Companies get stuck in the loop in chasing new customers and entirely forget the existing customers. However when first subscriptions start to expire, churn starts to negatively affect the Monthly Recurring Revenue (MRR).
Churn is a cumulative problem. The income lost during a year continues to be lost next year and the year after. Statistics show that even if company constantly increases customer acquisition efforts as an attempt to compensate churn, the attrition will still pose a major threat on growth and profitability on the long run.
SaaS companies often suffer from customer churn. Churn rates of 1% to 5% are common, sometimes they can escalate to whopping 15% – 20%. This can mean significant losses in yearly revenue. Ignoring churn can negatively affect a SaaS business in the following ways:
- – Sabotage medium and long-term growth
- – Lower overall company valuation.
- – Increased customer acquisition costs
- – Decrease profitability
Tackling SaaS Churn white paper helps top-level decision makers understand the core nature and root causes of churn in an easy-to-read manner. It is structured as a step-by-step informative guide that offers efficient and cost-effective solutions to stop churn and prevent it in the future. The research paper offers an insight on the following aspects of churn:
- The nature and triggers of churn
- How to calculate churn and align data correctly
- The impact of churn on KPI’s and long-term company growth
- Service industry best practices in churn management
The Tackling SaaS Churn White Paper outlines current challenges in churn management, describes leading practices for developing a knowledge of true churn causes and priorities, and covers the organizational challenges that must be overcome to eliminate the root causes of churn and increase profitability as a result. It is based on a collection of best practices of top-performing service providers in areas including planning, development, marketing, sales operations and customer care. Adopting these practices will help companies retain more customers, boost revenue, and create a sustainable competitive advantage.