Baird Hall’s Post

Top tips to reduce voluntary subscription churn.

6 tactics to improve your voluntary subscription churn (when customers leave on purpose by turning auto-renew off): 1. *Always* ask why they are churning. These are the baseline questions: - The price is too high - Missing functionality (follow up with “What is missing?”) - Not working as expected - Switching to a competitor (follow up with “Who are you going to?”) - Don’t need it anymore (follow up with “Would you come back?”) - Don’t want to have auto-renew on 2. Auto-renew cancellation timing matters... a lot. It always falls into two extremes: 50% of people turn auto-renew off during the first two days of their subscription, and the other 50% in the last two days. The motivation and recovery rates for these two groups may be completely different. 3. Offer one-click "turn auto-renew back ON" via persistent banners & email. -> You should see at least 20% of them turning it back on. 4. Offer discounts within cancellation flows. Either extend the time in which you can increase the perceived value of your product or reduce the price to match the perceived value. Discounts can be anywhere from 10% to a complete 100% comp. -> Don't use blanket discounts! Use account engagement levels to determine the discount amount (sleeping bears can get comps vs all others some smaller amount, if any). -> This is often a multi-million dollar win for businesses! See tactics 5&6 on my blog here-> https://lnkd.in/eBXDT9jj And a huge thank you to my this week's blog sponsor - Churnkey! #growth

How to Improve Your Voluntary Churn: 6 Practical Tactics for Subscription Businesses Retention separates growth heroes from growth zeroes, especially in subscription businesses. Here are six practical tactics to improve voluntary churn and keep your customers coming back: 1. Determine and understand why customers cancel. Use multiple-choice questions to get higher response rates and valuable insights into your product shortfalls. 2. Pay Attention to Timing Cancellation timing matters. Early cancellations can often be won back, while late cancellations might respond well to discount strategies. 3. Offer a Persistent, One-Click Option to Turn Auto-Renew Back On Make it easy for cautious customers to re-enable auto-renew with a prominent banner and one-click functionality. 4. Use Discounts Experiment with discounting to match perceived value. Tier discounts based on customer activity to avoid training customers to cancel for discounts. 5. Offer an Option to Pause Subscription For one-time use cancellations, offer a pause option to retain customers who might return later. 6. Show What Will Be Lost by Downgrading Clearly display the functionality customers will lose if they downgrade. Visual representations can create a stronger impact than text alone. As great as these tactics are, remember they address symptoms, not the root cause. The best way to improve churn is to engage your paid customers and ensure they receive value far beyond the price they pay. Happy retaining! original article: https://lnkd.in/e4ZzAdQG #SubscriptionBusiness #ChurnReduction #CustomerRetention #SaaS #SubscriptionEconomy #CustomerSuccess #BusinessGrowth #RetentionStrategies #SaaSMarketing #UserExperience #CustomerFeedback #ChurnManagement #SaaSTips #GrowthHacking

Reducing Subscription Churn: Practical Tips-Ever struggled with keeping your subscribers around? Elena's latest blog dives into six practical tactics to help tackle voluntary churn, thanks to insights from Churnkey. Whether you're running a service like itspropel.com, Veed.io, or Copy.ai, these strategies could help save 20%-40% of your subscription revenue. Here are some key takeaways: Ask Why: When a customer cancels, it’s crucial to understand their reasons. A simple question can provide valuable insights. Timing Matters: Recognize that early cancellations differ from last-minute ones and approach them accordingly. Easy Auto-Renew: Make it effortless for customers to turn auto-renew back on if they’re just being cautious. Smart Discounts: Tailor your discount offers based on how actively the customer is using your service. Pause Options: For those with one-time use cases, offer a pause option instead of losing them completely. Show the Loss: Clearly display what they’ll miss out on if they downgrade or cancel – sometimes seeing is believing. These tips are not just theory—they’re practical steps you can start implementing today to build a loyal and engaged customer base. Check out the full blog for a deep dive into each tactic and see how you can make a significant impact on your subscription business. 🔗 Read the full article https://lnkd.in/dWQvYTu3 #SubscriptionBusiness #CustomerRetention #ChurnReduction #GrowthStrategy #SaaS

Don't let involuntary churn drain your subscription business. Discover how smart companies are saving up to 8.6% in annual revenue with Recurly's data-driven churn management solutions. Unlock the potential to recover lost revenue, boost renewal rates, and retain subscriber relationships. Learn more here: https://bit.ly/48sGMtQ

You probably already know that customer churn is a critical metric for SaaS companies. Churn can be voluntary (customers intentionally cancel) or involuntary (due to payment failures, organizational changes, or economic factors). Either way, churn analysis is key to reducing churn, involving identifying churn triggers and risk flags through data-driven insights. By understanding why customers leave and recognizing warning signs of dissatisfaction, companies can develop proactive strategies to retain customers and improve overall business health. 🔋 Need to effectively reduce customer churn but don’t know where to start? 💡Learn about proactive strategies that re-engage customers and prevent churn here https://lnkd.in/geXPNfdN #SaaS #CustomerChurn #BusinessGrowth

If you are a founder of a subscription business, you care about keeping your customers and growing them. I believe the best way to solve a customer churn problem is to prevent it. My solution is to set up a pulse program to get a heartbeat of your customers throughout their journey. By asking the right questions to the right customers at the right time, I can see 12-50x more customer insights, improving retention by 5%-10%! This is huge. I hear a lot of founders say, we have product usage, we send surveys, we do NPS and we talk to our customers. Why do we need a pulse program? These are good things to track, I am not talking about replacing what you are doing, but adding a layer of coverage Early to catch what your current systems missed. Product usage is good for catching two situations: 1. Catch your customers who don’t use your product at all. 2. Catch your customers who don’t use your differentiated products. - it’s a matter of time they switch to a low price competitor. Product usage doesn't catch customers in need if they are using a little or a lot of your product. What about the situations where product usage can’t apply, for example, on-perm products, system integrated products ( till the day the product is uninstalled, the usage will look amazing). The idea of if they use it, they must see the value is false! For example, I used to use a Gong competitor and according to their product usage data, I was their top 5% user. So when I churned, they were very surprised, but your product usage is so good. Exactly, the reason I churned is because I don’t want to spend 6 hours a day listening to call recordings! Surveys and NPS are one off and only represents the customers feeling one moment in their journey. It doesn’t give you a chance to catch customers in need timely. And frankly, most companies are lazy and only do NPS , which are not actionable and have no coalition to churn! Greg Daines has lots of data to prove this, if you want it, I am happy to share. Talking to customers is great, but you can’t talk to everyone. And Not every AM/CSMs knows how to read between the lines and ask strategic questions. Unless you get the amazing training from Bob London:-) As a result, you do it infrequently and miss key moments with your key contacts or miss the nonkey contacts that you don’t speak to. One use case I kept hearing from customers about a pulse program is that it catches new users who are brought into your system without proper training and onboarding. And You don’t even know they exist until the pulse results come back! Thanks for sharing the use case. Srikrishnan Ganesan and Timothy Pegnim That is why I want a pulse program provider for the rest of my career and because there isn’t one, I decided to create one. I think Hannah supports this decision. :-) A little motivate on a Wednesday afternoon:-) #churnprevention #customerretention #ProductUsage #nps

#churnrate is the rate customers cancel their recurring subscriptions, measured as a percentage. There are essentially two types of churn, and you should be tracking both: 1. User/customer churn: Measured by how many customers you lose over a specific period. This is calculated by dividing the number of customers lost by the number you had at the start of the period. Multiply that figure by 100 to get the customer churn rate. Suppose you had 2000 paying customers in Feb 2023, which was reduced to 1,700 in March 2023 with no new customers added. It means you’ve lost 1,000 customers, hence your customer churn rate is 2000-1700/2000 * 100. That’s 15% churn for the month. 2. Revenue churn: In SaaS, revenue churn is the amount of lost revenue over a given period. It can happen when users downgrade subscriptions or stop renewing them entirely. To calculate your net revenue churn rate, select a time frame first. For example, at the beginning of January 2022, your MRR was $55,000. By the end of December 2022, it dropped to $48,500. So, your revenue churn for one year is (6,500/55,000) * 100 = 11.82%. The difference between customer churn and revenue churn is that "Customer Churn" tells you about the number of customers you’ve lost in a specified period. At the same time "Revenue Churn" gives you insight into how much revenue you’ve lost due to users leaving. What is a Good Churn Rate? "A good or "acceptable" churn rate is from 2% to 8%, especially for B2C SaaS businesses that offer self-serve solutions. The lower, the better, or it can significantly impact your Monthly Recurring Revenue (MRR).  "Netflix: 3.3% Monthly Churn Rate" "Disney+: 3.7% Monthly Churn Rate" For B2B SaaS businesses with high average contract values (greater than $1,000 per month), churn rate should be below 2%."

ARR or Annual Recurring Revenue in very simple terms, is the total money a company expects to make in a year from its subscription services. It's like calculating how much you'll earn annually from all the customers who subscribe to your services. This is also a tangible representation of the health of your business. A net positive ARR indicates that customers are continuing to invest in your product or service, meaning profitability should increase over time. This can help companies gain customer traction, significant market share and a higher total revenue. Another impact of a healthy ARR is that it can significantly improve a company's cash flow management. So, instead of constantly hunting for new customers, which can be costly and time-consuming, companies can have their existing customer base bring in revenue regularly. However, ARR can go south for different reasons and one major reason is CHURN. Churn in very simple terms is when valued customers bid you farewell. To illustrate the impact of churn on ARR, Let's do some math. Please note that this calculation is at a foundational level and doesn't take into account factors such as upselling, cross-selling, and other revenue generating strategies. However, it provides a basic overview on the impact of churn on ARR. Company X started with $20,000 monthly revenue, and a 10% monthly churn rate. At the end of the year, their ARR stands at $216,000. Company Y started with the same $20,000 monthly revenue, but employed a customer success strategy that reduced churn to 3%. At the end of the year, their ARR was at $232,000. Why does this matter? Imagine being the founder of Company X. You've put in the effort to acquire customers, yet by year-end, your revenue potential is significantly impacted by churn. Now, contrast this with Company Y which because of it’s lower churn rate has a higher ARR outcome. Optimizing your ARR Some of the ways to optimize your ARR are; Keep churn to the barest minimum - There are different reasons why churn happens, which isn't the focus of this article. However, if you have consistently high churn rates, it's essential to dig deep, identify and address the root cause(s). Leverage CLTV to boost ARR- Customer Lifetime Value is a powerful metric that can boost ARR. Some of the strategies you can employ here are tailored offerings, upselling and cross-selling, referrals and rewards programs, predictive modelling and so on. Partnerships and Collaborations: Explore partnerships with other companies that target similar customer demographics as yours. Optimize your customer acquisition : Focus on acquiring high-value customers who are more likely to stick around and generate a significant ARR. TL;DR - Maintaining business growth and stability is tied to your ARR's growth potential, which is, in turn, tied to how well you manage churn and extend customer lifespans.

SaaS leaders: what's your take on leveraging discounts to prevent churn? I'll go first. I used to be a discount skeptic. At best, I thought they were a Band-Aid solution in the short run... while cheapening our brand, keeping bad-fit customers around, and delaying churn in the long run. And truth be told, I still believe (wholeheartedly) that churn is mostly a top-down problem without any 'quick fix'. So, why am I no longer a skeptic? Four reasons 👇 1. CUSTOMER DATA. As my previous company began to grow and scale, we realized how little we knew about why our customers were leaving. So, we started to ask them just that - "what's your primary reason for leaving?" - at the point of cancellation. Long story short, we discovered there was A TON of room to not only learn from those cancellations but also give customers opportunities to stay. 2. DISCOUNT WINDOWS. If you view your job as 'done' after rescuing a customer with a discount, you're approaching it the wrong way. Instead, view it as one last chance to prove the value of your solution to them. That's why temporary - not permanent - discounts have always been my recommendation. They should be 1-3 months long, not indefinite. 3. VALUE REALIGNMENT. At the end of the day, people cancel their subscriptions when the value equation falls out of alignment. If a 3-month, 30% off discount (and some additional customer support) is the cost of turning an ordinary customer into a customer for life, I'm taking that deal in a heartbeat. 4. UNIT ECONOMICS. Rescued customers increase LTV - a core SaaS/subscription metric - even if they have a higher likelihood of churning in the future. More LTV equals more runway, and more runway equals more cash to spend on customer acquisition. __ Churn is a multi-pronged problem. It needs to be attacked by ALL facets of the organization at ALL stages of the customer lifecycle. Nobody/nothing is off the hook. #b2b #saas #churn #revenuegrowth #customersuccess