Mia Jacobs — May 12, 2020 
A SaaS churn analysis is more than a quick calculation of your customer churn rate. It provides a window into the causes and effects that are affecting your churn rate, including your customers’ needs and whether they are being met. These insights will fuel your next steps and help you determine where resources are best invested and what improvements need to be made to ensure business continuity.
SaaS Churn Analysis Benefits
It is tempting to want to minimize churn rate and its impact by rationalizing and overshadowing it with optimistic retention projections. This is because churn is often viewed as a sign of failure, rather than what it really is—an opportunity to learn and grow.
A SaaS churn analysis maximizes your ability to capitalize on what you can learn from customer churn by:
- Highlighting current strengths and weaknesses in products and processes.
Analyzing churn data related to when and why customers leave can reveal common motivators. Use this information to optimize positive engagements and minimize negative ones to reduce churn.
- Illuminating opportunities to improve customer communication.
The better you know your customers, the better you can tailor your messaging to their goals and interests. Improving experiences through properly personalized engagements is key to making customers feel valued and inspiring long-term loyalty.
- Improving your team’s ability to predict, and prevent, future churn.
It is much more difficult to change a customer’s mind once they decide to leave. Analyzing patterns in past instances of churn improves your team’s ability to identify at-risk customers ahead of time and then take appropriate proactive action, which is critical to improving retention.
Ultimately, a SaaS churn analysis helps ensure enterprise stability. Building and maintaining strong enduring connections with the customers you already have helps protect your core business through good times and bad.
The Value of Churn Analysis During a Crisis
While churn analysis benefits all businesses at all times, SaaS churn analysis has become absolutely critical to sustainable success for subscription-based enterprises. The COVID-19 crisis and subsequent economic downturn have made acquiring new customers more difficult and expensive than ever. That makes optimizing customer retention more important than ever. The customers you serve well now will help your enterprise survive the current situation and drive future growth after the crisis. Remember, 20-50% of all purchasing decisions are based on word-of-mouth recommendations.
Conducting an Effective Analysis of Churn
SaaS churn analysis for large enterprises can be complex, with many factors to consider. Both customer and revenue churn rates must be calculated and tracked regularly to ensure your enterprise is heading in the right direction. Variables such as contract lengths, expansion metrics, and the difference between avoidable and unavoidable churn must all be taken into account.
Effectively analyzing SaaS churn and retention rates depends on having the right technology at hand. A customizable platform that can easily track, synthesize, and distribute data to the right people at the right time facilitates analysis and encourages innovation. Churn may mark the end of a customer’s relationship with your company, but it also signals an opportunity for positive change. Utilizing the expertise and technology necessary to make that change is what separates enterprises that last from those that do not.
Conducting a customer churn analysis will generally involve the following basic steps:
- Assessing customer risk status and the reason for the status
- Analyzing the time period before the churn and whether the risk was tracked
- Analyzing the main reasons for churn
- Building a play book on how to handle this type of situation before it is too late
Encouraging Retention with the COVID-19 Customer Engagement Toolkit
At Totango, we know your customers are just as anxious as you are about the COVID-19 situation and how it is affecting both private and professional life. We are here to help. Our recently released COVID-19 SuccessBLOC for Spark facilitates customer segmentation and provides a framework that lets you quickly and easily gather, organize, and distribute important information about your business’s practices and services with your customers.
Keeping your customers in the know during times like these helps maintain a sense of stability and encourages confidence. Most importantly, it lets customers know you are there for them during a difficult time—and that it is worth sticking this situation out together, rather than going it alone.
An effective SaaS churn analysis should be customizable based on your needs and the customer’s goals. With the right solution, your team will be able to walk through each step of the customer journey to identify what led to the customer churning, and give them the capability to improve internal processes.
Business & Finance Articles on Business 2 Community
(69)
