Arman Eshraghi, CEO and Founder of Qrvey, hosts a podcast, “SaaS Scaled.” Our latest episode featured Baird Hall, SaaS Builder and Co-Founder at Churnkey, the platform that supercharges every part of customer retention, helping companies optimize growth. You can watch or listen to the podcast here and we’ve covered some highlights of their discussion below.

What is the ideal company & price point that churn-reduction solutions best serve?

“Probably the most interesting thing that we have found with churn is that, yes, average revenue per user matters. And that’s kind of why B2B usually has lower churn rates versus B2C because the lower the price, the more impulsive the decision to buy, which results in a more impulsive decision to cancel.

“But what we have found is that the pricing model and how you price your product also has a big direct correlation to churn. A good example of this is our customer SaaS companies that are B2B or B2C that use a usage-based model. Those customers are going to see higher churn because every month customers are making a decision, ‘How much am I going to use this? Am I going on vacation next month? Am I really getting value out of this?’ When it’s usage based, they’re thinking about their bill and their usage constantly So there are going to be a lot more cancellations. On the flip side, there are also going to be a lot of reactivations, and that’s what really brings the loop together.”

Is there a magic number that churn should never exceed?

“I think it’s great to look at customer acquisition costs in relation to your churn to understand the health of your subscription business, which is very important. I don’t think there’s a perfect range or zone to be in because it really comes down to whether your customer acquisition costs are going to correlate with your profit margins and whether or not you can support those acquisition costs. Retention is also helping decide whether or not it’s worth overspending if they’re going to stay for a long period of time. 

“But I think maybe what’s underlying the customer acquisition costs is how quickly do your customers make a buying decision? And that is what we find really correlates to churn. From a psychology standpoint, if somebody decides to buy a product very quickly, the chances are they’re going to be willing to cancel that product very quickly.

 

“The flip side of that is if somebody has spent a lot of time thinking about the decision, and a lot of process goes into it, they’re going to be that much less likely to cancel.”

Dos & don’ts for SaaS startups to reduce churn?

“It’s very rare for new founders to ask us this. Generally, what happens is startups do nothing but focus on growth. And then 12, 18 months down the road, they come to us for help putting fires out. But the advice I give is that early on in your company’s timeline, the information is going to be muddy because you just don’t really know who your best customer is. There’s a lot to figure out in that first year of growing your initial customer base. So, I recommend focusing on data collection over that time

  • Allow customers to cancel
  • Make sure you collect why they cancel
  • How they were feeling about your product when they canceled
  • What they wish would have been different

“And this can all be handled in a very nice, elegant cancellation flow. It’s also immensely helpful to track that data over time.”

Popular Posts

multi-tenant analytics

Why is Multi-Tenant Analytics So Hard?

BLOG

Creating performant, secure, and scalable multi-tenant analytics requires overcoming steep engineering challenges that stretch the limits of...

What is Multi-Tenant Analytics >

How We Define Embedded Analytics

BLOG

Embedded analytics comes in many forms, but at Qrvey we focus exclusively on embedded analytics for SaaS applications. Discover the differences here...

What is Embedded Analytics >

embedded analytics for startups

White Labeling Your Analytics for Success

BLOG

When using third party analytics software you want it to blend in seamlessly to your application. Learn more on how and why this is important for user experience.

White Label Analytics >