A Pause is Better Than a Cancel. And A Downgrade is Not Churn.

Many of you will come under a lot of pressure these days to pause accounts, to downgrade accounts, and more. It’s challenging almost everywhere. And even where it isn’t, there are at least big pockets of customers under severe stress.

Should you let folks easily downgrade? Should you let them even pause their account, and pick it up later when their business picks up?

You should.

This is a Customer Satisfaction lesson we should all take away from Slack’s early hyper-growth and Stewart Butterfield. In 2015, it seemed crazy that Slack would auto de-provision un-used seats. But it didn’t stop them.  And it won’t stop you today in 2020.

  • A pause is better than a cancel. They will come back later, if they love you and need you.
  • A downgrade is better than a cancelYour top customers will grow with you. You should also take care of them when they go through more challenging times. Downgrades are not churn. They are just less need for your product — for now. It may be time to segment your “churn” into lost customers vs. downgrades. They both may have similar hits to your MRR. But they aren’t the same vis-a-vis your long-term growth.
  • Not charging customers for more than they need, at least below the Site License level, is better than a perpetually frustrated customer. Fair pricing is always the best pricing. Assume every customer knows what everyone else pays. Especially right now.
  • A positive customer experience, even for a customer that leaves, is a new brand ambassador for your product. You need a lot of these to win.

Beyond that, you need to take a long view. The 7–10+ year view.

In a recurring revenue model, a customer that churns is a customer you never really had at all.

But a customer that pauses, and comes back later (or downgrades, but upgrades again later) … is just a customer with a somewhat lower CLTV.

Focus more on logo retention, and logo happiness today, than raw ARR growth.

That’s your future (vs your present). And in SaaS, it’s really only the future that matters.

___________

View original question on quora

Published on April 1, 2020

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