how to reduce churn in saas companies

Reducing churn: Proactively identifying and targeting at-risk customers

Rachel McBryde
Apr 2, 2020

Have you ever experienced a phone call with a customer that has your heart racing and your palms sweat? For those of you who have experienced these phone calls, it is a commendable and hard place to be as you instigate a potentially difficult conversation knowing that it’s outcome could lead to a difficult place. So, why go through it? Why should you instigate conversations with customers who are identified as “at-risk” to proactively reduce churn? 

In the B2B SaaS world, the significance of our customers' renewal in their contracts can help in a multitude of ways, from ensuring ARR to the potential opportunity of a referral strategy. So, beyond the shadow of a doubt, it is more important than ever to ensure that no customers churn and continue to use your product and services. 

At-risk vs. churned customers.

In 2019, we discussed churn as a part of 10 KPIs every B2B Saas company should track. Ultimately, churned customers are customers who are no longer paying for your services and have ended their business relationship/ transaction with you. So, why is it just as important to gain feedback from churned customers as it is from ones who are currently in the twilight zone of your business?

  • You’ll strengthen the relationship between you and your customers in building trust; 
  • Find data that is crucial to helping your company progresses further in your services or product;  
  • Allow your customers to give you honest and valuable feedback, creating a positive force in making your product / service  better;
  • Mitigate the risk of a customer churning.

Evidently noted on hubspot too: “It's also easier and more cost-effective to retain customers than to acquire new ones, returning customers spend more and buy more often, and refer friends and family.” So how does a B2B SaaS company categorize an “at-risk” customer? 

Identifying “at-risk” customers.  

Depending on your business model, how you define “at-risk” is open to your interpretation, but most importantly, agreed upon by everyone in your team who knows and has had interactions with customers who have churned. So sit down with your team, and brainstorm a set number of criterias that is agreed upon. 

Blogs such as  7 examples of signs to consider  or SaaS churn threats are just some great thought trains to consider when conceptualizing your “at-risk” customers. Ultimately, just as you would identify an Ideal Customer Persona, you’ll need to identify and segment similar customers who you’ve known to have already churned and create themes based on these customers. Once created, you’ll be able to go through your current customer basis and pick out customers you’d consider to be “at-risk” of churning. 

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