An average SaaS company sees a turnover rate of 5-7% per year. Yes, revenue and growth potential suffer greatly due to this customer churn, especially when looking to expand internationally.
Software, SaaS, and Video game companies that are having difficulties in retaining customers and handling global payments will benefit from reading this guide, as this offers practical strategies to maximize international revenue and lower churn.
Expanding into international markets presents itself as a huge opportunity, but it also brings forward challenges in terms of taxation, payment compliance, payment processing, and even customer support. All of these and more can be resolved adequately through a stable partnership with a Merchant of Record.
Key Definitions
Merchant of Record (MOR): A third-party that takes on the legal and financial responsibilities of selling products or services online, including GDPR compliance. The MOR becomes the data controller for transactional data, helping companies offload many compliance responsibilities.
Churn: Describes the rate at which people cease utilizing services or subscriptions. High turnover rates reduce revenue and growth.
Customer lifetime value (CLTV): It is an estimate of the net profit that will be made during a customer's whole future relationship.
The Global Customer Acquisition Challenge
Gaining clients in foreign markets is costly and difficult. Conversion rates may be hampered by cultural variations, linguistic hurdles, and varying payment preferences.
By offering multi-currency compatibility and localized payments alternatives, a Merchant of Record enhances customer satisfaction and boosts conversion rates. For example, PayPro Global accepts 140+ currencies and 70+ payment options.
Better customer satisfaction, lower cart abandonment rates, and higher conversion rates are the outcomes.
Tackling Global Sales Tax and Compliance
For SaaS organizations, managing sales tax, VAT, and other payment compliance needs across several nations can be a major burden. Heavy fines and legal problems may follow noncompliance.
In order to ensure adherence to regional laws, a Merchant of Record manages every facet of tax management (VAT, sales tax) computation, collection, and payment. This procedure is automated by PayPro Global's Global SaaS Sales Tax system.
Peace of mind, easier tax management (VAT, sales tax), and a lower risk of non-compliance are the outcomes.
eCommerce Partner
Thrive with the industry's most innovative all-in-one SaaS & Digital Goods solution. From high-performing payment and analytics tools to complete tax management, as well as subscription & billing handling, PayPro Global is ready to scale your SaaS.
Sell your SaaS globally with PayPro Global!
Reducing Churn with Enhanced Customer Experience
Excessive turnover reduces income and limits growth. Customers are more likely to leave if they have payment issues, receive poor customer service, or lack personalization.
A Merchant of Record improves customer satisfaction and reduces attrition by providing localized payment methods, personalized offers, and 24-hour customer care. PayPro Global offers bilingual customer assistance as well as subscription management tools.
Tips and Best Practices
Customize the Customer Journey: Make offers and communications that are unique to each customer by using data.
Provide Flexible Payment Options: To accommodate varying consumer preferences, offer a range of payment options.
Deliver Outstanding Customer Service: Provide timely, beneficial assistance in a variety of languages.
Track the Churn Rate: Monitor your rate of client turnover and determine the underlying reasons.
Put a proactive approach to churn reduction into practice: Prior to at-risk clients leaving, get in touch with them.
Common Mistakes
Ignoring Localized Payments Preferences: Cart abandonment may result from a failure to provide preferred payment options.
Overlooking Payment Compliance: Failure to comply may lead to penalties and legal problems.
Providing Poor Customer Service: Customer attrition and unhappiness can result from inadequate service.
eCommerce Partner
Thrive with the industry's most innovative all-in-one SaaS & Digital Goods solution. From high-performing payment and analytics tools to complete tax management, as well as subscription & billing handling, PayPro Global is ready to scale your SaaS.
Sell your SaaS globally with PayPro Global!
Conclusion
For SaaS businesses, customer attrition is a significant problem that affects growth and revenue. Increasing client retention and profitability requires putting measures into place to enhance the customer journey. By offering a range of payment methods, personalized offers, and multilingual support, a Merchant of Record like PayPro Global enhances the global consumer journey.
Customer lifetime value (CLTV) rises as a result of lower churn. SaaS businesses can succeed globally and experience sustained growth by prioritizing customer satisfaction and aggressively managing churn reduction.
With the help of a Merchant of Record, you can invest in the customer journey and open up a world of prospects for long-term commercial success and cross-border eCommerce.
FAQs
What is customer churn and why is it important for SaaS businesses?
Customer churn is the rate at which customers stop doing business with a company, such as canceling a subscription. It's critically important for SaaS businesses because high churn directly reduces recurring revenue and hinders growth potential. Addressing churn is essential for long-term profitability and stability, especially since acquiring new customers is often more expensive than retaining existing ones.
What is a typical churn rate for SaaS companies?
A typical annual churn rate for SaaS companies is between 5% and 7%. While this is an average, rates can vary based on the business model, industry, and customer base. Even within this range, churn represents a significant loss of revenue and potential growth over time.
What are the main reasons customers stop using a SaaS product, especially internationally?
Customers may leave a SaaS product for various reasons, including payment processing issues, poor customer service, or a lack of personalization. Internationally, these issues are often amplified by challenges like failing to offer preferred localized payment methods, language barriers in support, and complexities related to global sales tax and compliance, leading to a frustrating customer experience.
How can improving the customer journey reduce SaaS churn?
Improving the customer journey directly tackles the reasons customers leave, thereby reducing churn. By offering flexible and localized payment options, providing timely and multilingual customer support, and personalizing communications and offers, businesses create a smoother, more satisfying experience. This enhanced experience increases customer satisfaction and loyalty, making them less likely to churn.
What is a Merchant of Record (MOR) and how does it help SaaS businesses sell globally?
A Merchant of Record (MOR) is a third-party company that acts as the seller for your transactions, taking on the financial and legal responsibility for processing payments, managing sales tax, ensuring compliance, and preventing fraud. For SaaS businesses selling globally, an MOR simplifies international operations significantly by handling these complex tasks, allowing the business to focus on its product and customers while ensuring a seamless checkout experience worldwide.
How does an MOR simplify handling international payments, taxes, and compliance?
An MOR simplifies global commerce by managing the entire financial backend of international sales. They provide multi-currency support and integrate various local payment methods (like PayPro Global's 70+ options) preferred in different regions. Crucially, they automatically handle the calculation, collection, and remittance of global sales taxes (VAT, sales tax) and ensure adherence to complex payment compliance regulations, reducing risk and administrative burden.
What role does localized customer support play in customer retention?
Localized customer support plays a vital role in retention by ensuring international customers receive timely and effective help in their own language. When customers encounter issues, especially payment-related ones, accessible and understandable support (like PayPro Global's bilingual assistance) can resolve problems quickly, preventing frustration and building trust, which are key factors in reducing churn.
Adina Cretu
Adina Cretu is a content designer and UX writer with a solid background in copywriting and marketing. She focuses on creating captivating product narratives, interesting interface interactions, and unique brand identities through taglines, style guides, and naming. When she's not working, she likes to read, write creatively, play detective games, make jewelry, and travel to new locations.
