How can I reduce SaaS churn rate?
You’ll get a ton of advice, but two high-level efforts always work:
- Measure it, segment it — and make it a core goal to drive it down. I’ve yet to work with a SaaS company that made driving down churn a Top 3 goal … that didn’t go on to drive down churn. Segment it by a few segments (small, medium and large customers, for example). Put someone 100% in charge of it (i.e., your head of customer success). And make it a Top 3 goal for everyone in the company. In a quarter or so … it will go down. Not overnight, but within an quarter; and
- Measure your NPS, segment it, and set goals to drive NPS up. Again, magic happens if this is a Top 3 goal for the company. If it isn’t, nothing sort of happens.
The first goal (e.g., driving churn down from 2% a month to 1.5%) makes sure everyone has a direct financial metric to be responsible for.
The second goal (e.g., drive NPS from 20 to 30 this quarter) aligns everyone around the strategic upgrades they can make.