The Metric that Controls the Fate of Your SaaS Business - Churn

•

17 likes•5,052 views

• 3. We’ll cover... 1 The Basics of Churn 2 Your Only Strategy to Truly Fix Churn 3 Tactics and Hacks to Reduce Churn • 4. The Basics of Churn • 5. What is churn? The number of customers who cancel within a given time period. • 6. The Churn Formula % customer churn = # of customers who churned total # of customers forentrepreneurs.com/saas-metrics-2-definitions • 7. You’re in for the long haul. • 8. If you don’t keep customers around... You’ll never survive because customers will never become profitable. • 9. Standard time to recover acquisition cost? 12 Months • 10. Standard time to reach profitability? Up to 24 Months • 11. So what’s our churn goal? • 12. 10% monthly churn and above... You haven’t found product/market fit yet. Your customers do not like your product. • 13. Results of the Pacific Crest Survey Median Annual Churn = 9% Median Monthly Churn = 0.72% forentrepreneurs.com/2013-saas-survey • 14. Who responded to the survey? Larger SaaS companies with a median contract value of $20,000. forentrepreneurs.com/2013-saas-survey • 15. If you’re targeting SMBs: Annual Churn = 15% Monthly Churn = 1.17% • 16. The Bottom Line on Monthly Churn 1 Over 10% = New Product or Market 2 2-10% = Major Problem 3 1-2% = Doable 4 Under 1% = On Track • 17. Your Only Strategy to Truly Fix Churn • 18. Here’s the bad news... The only way to fix churn entirely is to improve your product. • 19. You need to talk to your customers. • 20. Talk to two types of customers: 1 Customers that have never churned. 2 Customers that churned in the last month. • 21. Look for key differences between the two groups • 22. Specific items to look for: 1 Are they different customer types? 2 How do they use the product? 3 How do they describe the product? 4 Do they get continuous value? • 23. Start nudging people in the right direction. • 24. You’ll need to find your own path. • 25. Other items to look for: 1 Is your app stable? 2 Does it provide value quickly enough? 3 Slow support? 4 Better alternatives? • 26. Tactics and Hacks to Reduce Churn • 27. The Hacks 1 Ask People Why They Cancel 2 Push Annual Billing 3 Expired Credit Cards 4 Call At-Risk Customers 5 Go for the Upsell for Negative Churn • 28. 1. Ask People Why They Cancel • 29. 2. Push Annual Billing • 30. Send emails for your annual dicscounts. • 31. 3. Expired Credit Cards Inform customers their credit card is going to expire two weeks before it does. • 32. 4. Call At-Risk Customers Alert your support team when customers become inactive, then reach out. • 33. 5. Go for the Upsell When a current customer upgrades their plan. • 34. Common upsells: 1 Exclusive features 2 Expanding seats 3 Increased usage 4 Better support • 35. What’s negative churn? Increase in revenue from upsells exceeds revenue lost from churned customers. • 36. Low churn + great upsells = negative churn

Business Technology

The Metric that Controls the Fate of Your SaaS
Business - Churn

Lars Lofgren

Growth Manager - October 2013

Zach Bulygo

Content Marketer

We’ll cover...

1

The Basics of Churn

2

Your Only Strategy to Truly Fix Churn

3

Tactics and Hacks to Reduce Churn

What is churn?

The number of customers who
cancel within a given time period.

The Churn Formula

% customer churn =

# of customers who churned
total # of customers

forentrepreneurs.com/saas-metrics-2-definitions

If you don’t keep customers around...

You’ll never survive because
customers will never become
profitable.

Standard time to recover acquisition cost?

12 Months

Standard time to reach profitability?

Up to 24 Months

10% monthly churn and above...

You haven’t found product/market
fit yet. Your customers do not like
your product.

Results of the Pacific Crest Survey

Median Annual Churn = 9%
Median Monthly Churn = 0.72%

forentrepreneurs.com/2013-saas-survey

Who responded to the survey?

Larger SaaS companies with a
median contract value of $20,000.

forentrepreneurs.com/2013-saas-survey

If you’re targeting SMBs:

Annual Churn = 15%
Monthly Churn = 1.17%

The Bottom Line on Monthly Churn

1

Over 10% = New Product or Market

2

2-10% = Major Problem

3

1-2% = Doable

4

Under 1% = On Track

Here’s the bad news...

The only way to fix churn entirely is
to improve your product.

Talk to two types of customers:

1

Customers that have never churned.

2

Customers that churned in the last
month.

Look for key differences between the two groups

Specific items to look for:

1

Are they different customer types?

2

How do they use the product?

3

How do they describe the product?

4

Do they get continuous value?

Start nudging people in the right direction.

Other items to look for:

1

Is your app stable?

2

Does it provide value quickly enough?

3

Slow support?

4

Better alternatives?

The Hacks

1

Ask People Why They Cancel

2

Push Annual Billing

3

Expired Credit Cards

4

Call At-Risk Customers

5

Go for the Upsell for Negative Churn

Send emails for your annual dicscounts.

1 month after a monthly user
subscribes, send an email with a
link to get your annual discount.

*Patrick McKenzie gets credit for this one

3. Expired Credit Cards

Inform customers their credit card
is going to expire two weeks before
it does.

*Another tip from Patrick McKenzie

4. Call At-Risk Customers

Alert your support team when
customers become inactive, then
reach out.

5. Go for the Upsell

When a current customer upgrades
their plan.

Common upsells:

1

Exclusive features

2

Expanding seats

3

Increased usage

4

Better support

What’s negative churn?

Increase in revenue from upsells
exceeds revenue lost from
churned customers.

Low churn + great upsells = negative churn

Q&A Time!
Lars Lofgren

llofgren@kissmetrics.com
@larslofgren

1 Get satisfaction data in Kissmetrics under 5 minutes Growth hacking t = time spent on customer relationship (perceived t - real t) = margin Automation + Scalabilty = Growth Marketing #1 Get satisfaction data in Kissmetrics under 5 minutes o/ NPS: NET PROMOTER SCORE How likely is it that you would recommend our service to a friend or colleague? IT STARTS WITH A SIMPLE EMAIL Trial Expired NPS Survey 1 day after SEND AN EMAIL AT THE END OF YOUR TRIAL PERIOD Each image has a unique trackable link On click, send to your website and record the value in your analytics Done ! Email template available at https://www.sendwithus.com/resources/templates RECORD THE DATA TO KISSMETRICS DATA ANALYSIS Higher NPS scores lead to better retention #2 Capture more data Guillaume Cabane Mention “ Net Promotor Score isn’t just a metric - it’s an excuse to dig deeper SEND USERS TO A FORM Send survey respondents to a form where they can give a reason for their score. Engagement is better while inside your app, so when possible display the survey in-app first, and default to the email in backup USE A DEDICATED NPS APP DATA ANALYSIS Churn by NPS reason #3 Action! Increase sales, reduce churn and create happiness Increase sales NPS FOR YOUR TRIAL USERS The key is to get that data back into Kissmetrics AND other tools, which is possible with all NPS solutions offering webhooks … or a Segment.com integration MAKE USE OF THAT DATA Reminder E-mails Display survey in-app for 5 days Send survey dataGet customer data Follow-up emails MAKE USE OF THAT DATA Trial expired In App Email Surveys Answered NPS Survey Review 100 mentions DISCOUNT AUTOMATION 72% Opened 9% Replied 15% Clicked TRIAL EXTENSION AUTOMATION Results Cumulated number of upgrades for NPS respondents. Month 1 Month 2 Month 3 x2 x3 x3.5 Reduce churn NPS FOR YOUR PAYING USERS Guillaume Cabane Mention “ A NPS rating is true at one point in your user’s lifecycle. Making conclusions on events happening months after is meaningless; it’s better to ask opinion every so often. MAKE USE OF THAT DATA Handled by handUpgraded NPS Survey 1 month after REACHING OUT GETTING DATA CUSTOMER SUCCESS PRODUCT FEEDBACK MULTI-TASKING NPS THINGS FIT TOGETHER Answer Rate Qualitative Handling Automation We are learning more On our customers, increasing sales, decreasing churn, and creating happiness.

How to Reduce Churn by 50% and Increase Customer Happiness with NPS Processes

Kissmetrics on SlideShare

Webinar series part 2 recipe for a successful saa s company - migrating sing...

kanimozhin

Recipe for successful saas company part 1

kanimozhin

Introduction to Cloud Computing

Bharat Kalia

Saas Challenges and Solutions

Techcello

Evgeny Marchenkov, DataLead

White Nights Conference

Churn and the sales funnel

Bryony Thomas - Marketing Speaker | Writer | Consultant

Increasing Response Rate and Net Promoter Score

Adhiraj Singh

What is average first reply time? This metric shows how long it takes for your support team to get back to a customer’s first request. Why should you measure average first reply time? First reply time is more important than overall reply times because it’s an acknowledgement to the customer that their issue is being looked into. It also indicates how quickly your team is addressing new tickets, and helps you see if you have enough team members to deal with volume. Different channels have different expectations for first reply time, but in general a high first reply time means that customers may channel switch because they aren’t sure if you’ve received their message or are working on their case. Learn everything you need to know about customer service metrics: https://blog.kayako.com/customer-support-metrics

How to Calculate Average First Reply Time

Kayako

What is Net Promoter Score? Net Promoter Score was developed to measure customer loyalty. It indicates the likelihood that your current customers would recommend your product or service to people in their network. Why should you measure your Net Promoter Score? Net Promoter Scores are very effective at indicating customer loyalty (the likelihood that a customer will purchase from your company again). It helps you identify which customers are at risk of churning. It also helps identify your promoters who are helpful for case studies and referrals. This survey usually includes a follow up question that helps identify why customers are demoters or why they are promoters, which is equally as important. Read everything you need to know about customer service metrics: http://blog.kayako.com/customer-support-metrics/

How to Measure Net Promoter Score (NPS)

Kayako

The Net Promoter Score (NPS) is a simple but powerful tool to measure client satisfaction with one single question, an indication of the growth potential of your company or product. Read further for an overview on the use, application and pitfalls of NPS. Net Promoter and NPS are registered service marks, and Net Promoter Score and Net Promoter System are service marks, of Bain & Company, Inc., Satmetrix Systems, Inc. and Fred Reichheld.

Net Promoter Score (NPS) - Measure Customer Satisfaction in 1 Question

CheckMarket

Growth Hacking at SPN

Alexandre Jubien

21 Actionable Growth Hacking Tactics

Jon Yongfook

29 Growth Hacking Quick Wins

Mattan Griffel

BCG matrix with example

Mayur Narole

The most successful eCommerce businesses turn a higher percentage of first-time purchasers into long-time, high LTV, all-star customers. Those all-star customers drive referrals, brand awareness, revenue, and growth! But how do they do it? It comes down understanding your customer by creating granular segments and creating highly targeted interactions with them. Kissmetrics for eCommerce integrates seamlessly with Shopify to give you the insights you need to turn more one time purchasers into all-stars and power growth!

How to Turn First Time Buyers into High Value All Star Customers

Kissmetrics on SlideShare

eCommerce wars are raging. There’s little to no chance your store is destined to succeed based on the uniqueness of the products you offer. You have to outmaneuver your competition with superior sales and marketing tactics. What promotions best engage onsite shoppers? Which strategies inspire visitors to place products in their carts? How do you win and retain the trust of your buyers? Where does content marketing enter the equation? How do you gather useful data about your shoppers to help you create more effective marketing? What tactics work best for retaining customers and upselling? What tactics make the shopper’s user experience special? How do you bring back shoppers that slipped away? What effective social media approaches might you be neglecting? What “value-add” ideas can you present to turn undecided shoppers into buyers? Which advertising tactics generate click-throughs and purchases? Buckle up for this webinar. Online marketing expert Barry Feldman has created a long list of answers to all of these questions. And in less than 60 minutes he’s going to present 32 ideas — with a generous heap of examples — eCommerce companies can easily add to their marketing arsenal to boost engagement and sales.

32 Ways to Boost Engagement and Sales on Your eCommerce Site

Kissmetrics on SlideShare

When it comes to eCommerce marketing strategy, segmenting email lists can have a huge impact on your success. Have you come to a standstill when you think about remarketing with email? We’ve got the perfect webinar for you – AND, we’re going to take it one layer deeper to teach you how social can play a pivotal role in your eCommerce email targeting plan. Get your notebooks ready! In this webinar, Hanapin’s Associate Director of Services, Carrie Albright, will outline some awesome tips for you to attain email lists and target your audiences flawlessly and creatively. You’ll learn: Where you get email lists and where to use them Ways to creatively layer your audiences into your digital marketing strategy How to identify where social comes into play for your email targeting Real life examples of success, failure, and the unknown

The Perfect Email Remarketing Strategy for eCommerce

Kissmetrics on SlideShare

Success! You’ve got a regular stream of sales coming in, but the cost of acquisition is so high, how do you make this more profitable? How do you increase the lifetime value of a customer by enticing them to come back? A healthy customer retention rate is a key factor in any high growth business. You can’t be a high growth without it! During this webinar, Tom Robertshaw, Ecommerce Evangelist at Space 48, will take you through how to factor in customer retention in all areas of the business. Whether this is improving auditing and improving website user experience or through identifying targetted email campaign opportunities. You’ll learn: A wide range of opportunities for re-engaging with customers Different ways to evaluate your website performance and customer satisfaction How to prioritise the newly identified opportunities so that you can take the next step and test them Real-life examples of how our customers have increased revenues through successful customer retention strategies

Achieve high growth by keeping customers coming back to your ecommerce website

Kissmetrics on SlideShare

Customer psychographics don't have to come from expensive third party tools. There’s a way to learn about your customers affinity groups, purchase behaviors, and interests – without running a survey and without spending money. In this webinar, You’ll learn: How to use your customer list to understand your audience’s interests without surveying An advanced method for getting meaningful psychographic information out of Facebook Ways to leverage newfound psychographic insights, from content strategy to copywriting to product development Plus, we’ll give all attendees a spreadsheet of US psychographic benchmarks to compare to your own insights.

Understanding your customer psychographics without surveys or spending a lot ...

Kissmetrics on SlideShare

Is your onboarding email series costing you? Not seeing enough trials turn into paying customers? Onboarding is tough to get right: what do you send? To who? And when? What do you need to do to get leads coming back and taking action? In this webinar, Joel Klettke, conversion copywriter to SaaS and B2B businesses at Business Casual Copywriting, will show you how smart companies are using email to turn more trials into paying customers and reduce churn. You'll learn: How to plan an onboarding series, including what to send and when Practical tips anyone can apply to improve open rates and clicks 4+ different types of emails to incorporate into your onboarding series How to leverage behavioral insights to make your emails more effective (and convert more leads!)

How to Smarten Up Your Email Onboarding

Kissmetrics on SlideShare

Communication has changed. We’re rapidly expanding beyond email and into messaging. As a society, it’s where we have our most meaningful conversations. Facebook Messenger is the fastest growing channel in the world. With 1.3B users, it’s already larger than Instagram, Twitter, and Pinterest combined. It’s also the only channel of this magnitude that isn’t saturated with marketers (yet). But why? Herein lies the secret of this webinar. With all eyes and dollars aimed at building chatbots for customer service, we’re going to teach you how to use them to scale customer acquisition, generate more revenue, and get ahead of your competitors. In this webinar Samir ElKamouny, co-founder of Fetch & Funnel, will show you exactly how modern marketers are using Facebook Messenger & Chatbots to increase sales and leads at a fraction of the cost. - What messenger marketing is, and the role of chatbots - The most impactful acquisition strategies and use cases - How to build a new subscriber list, AND get 10x results over email from your existing list - How to get a 40x bottom of funnel ROAS - 3 powerful chatbots that are easy to implement and will produce exceptional results, applicable to nearly every business - Which messenger bot platform is best for your business

Messenger Marketing & Chatbots: How To 10x Sales & Leads Before Your Competitors

Kissmetrics on SlideShare

What exactly constitutes "good" content? Is it content that goes viral? Is it content that gets a ton of shares and views? Sure, all of those things are great if they happen, but content is only as good as the goals it helps you and your team achieve. As marketers, you already know that so much content is being created daily and that yours needs to stand out for it to even attempt to make a lasting impression. In order to achieve this, you need to know what the members of your audience are looking for in the content they consume. Then you have to apply art and science to craft a compelling story, measure adequately, and use this content in each department of your company. In this webinar, Brittni Kinney, VP at Influence & Co., will dive into the identifiers of good content, discuss what kinds of insights are helpful in creating a content story that speaks to your audience, and explain how to use this content to achieve the various goals of your company. You'll learn: The art and science of storytelling How to use qualitative and quantitative insights to inform your content How content can fuel your business and how various departments can use the content you create

Data-Driven Storytelling: How To Use Qualitative and Quantitative Insights To...

Kissmetrics on SlideShare

On January 12, Facebook declared organic post reach dead for pages. It’s time to seriously re-think our Facebook and social media strategy. Big time. In our webinar with Larry Kim, he will highlight the top 10 strategies you must deploy this year to survive the Facebook News Feed Armageddon. You'll learn: What Facebook engagement loopholes still work and which ones are dead Unusual Hacks to connect with Facebook Users without using ads or the news feed Important new Social Media Marketing strategies for 2018 and beyond

Facebook News Feed Armageddon Survival Guide: 10 Hacks To Stay Alive This Year

Kissmetrics on SlideShare

The Metric that Controls the Fate of Your SaaS Business - Churn

1. The Metric that Controls the Fate of Your SaaS Business - Churn Lars Lofgren Growth Manager - October 2013 Zach Bulygo Content Marketer

2. @larslofgren

3. We’ll cover... 1 The Basics of Churn 2 Your Only Strategy to Truly Fix Churn 3 Tactics and Hacks to Reduce Churn

4. The Basics of Churn

5. What is churn? The number of customers who cancel within a given time period.

6. The Churn Formula % customer churn = # of customers who churned total # of customers forentrepreneurs.com/saas-metrics-2-definitions

7. You’re in for the long haul.

8. If you don’t keep customers around... You’ll never survive because customers will never become profitable.

9. Standard time to recover acquisition cost? 12 Months

10. Standard time to reach profitability? Up to 24 Months

11. So what’s our churn goal?

12. 10% monthly churn and above... You haven’t found product/market fit yet. Your customers do not like your product.

13. Results of the Pacific Crest Survey Median Annual Churn = 9% Median Monthly Churn = 0.72% forentrepreneurs.com/2013-saas-survey

14. Who responded to the survey? Larger SaaS companies with a median contract value of $20,000. forentrepreneurs.com/2013-saas-survey

15. If you’re targeting SMBs: Annual Churn = 15% Monthly Churn = 1.17%

16. The Bottom Line on Monthly Churn 1 Over 10% = New Product or Market 2 2-10% = Major Problem 3 1-2% = Doable 4 Under 1% = On Track

17. Your Only Strategy to Truly Fix Churn

18. Here’s the bad news... The only way to fix churn entirely is to improve your product.

19. You need to talk to your customers.

20. Talk to two types of customers: 1 Customers that have never churned. 2 Customers that churned in the last month.

21. Look for key differences between the two groups

22. Specific items to look for: 1 Are they different customer types? 2 How do they use the product? 3 How do they describe the product? 4 Do they get continuous value?

23. Start nudging people in the right direction.

24. You’ll need to find your own path.

25. Other items to look for: 1 Is your app stable? 2 Does it provide value quickly enough? 3 Slow support? 4 Better alternatives?

26. Tactics and Hacks to Reduce Churn

27. The Hacks 1 Ask People Why They Cancel 2 Push Annual Billing 3 Expired Credit Cards 4 Call At-Risk Customers 5 Go for the Upsell for Negative Churn

28. 1. Ask People Why They Cancel

29. 2. Push Annual Billing

30. Send emails for your annual dicscounts. 1 month after a monthly user subscribes, send an email with a link to get your annual discount. *Patrick McKenzie gets credit for this one

31. 3. Expired Credit Cards Inform customers their credit card is going to expire two weeks before it does. *Another tip from Patrick McKenzie

32. 4. Call At-Risk Customers Alert your support team when customers become inactive, then reach out.

33. 5. Go for the Upsell When a current customer upgrades their plan.

34. Common upsells: 1 Exclusive features 2 Expanding seats 3 Increased usage 4 Better support

35. What’s negative churn? Increase in revenue from upsells exceeds revenue lost from churned customers.

36. Low churn + great upsells = negative churn

37. Q&A Time! Lars Lofgren llofgren@kissmetrics.com @larslofgren

The Metric that Controls the Fate of Your SaaS Business - Churn

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (13)

More from Kissmetrics on SlideShare

More from Kissmetrics on SlideShare (20)

Recently uploaded

Recently uploaded (20)

The Metric that Controls the Fate of Your SaaS Business - Churn