Is Customer Churn Acceptable for SaaS Businesses

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Churn rate is one of the important metrics that always remain the point of focus for SaaS businesses. Churn is indeed concerning for businesses, however, it can be voluntary or involuntary. Voluntary churn indicates those customers who cancel subscriptions on their will. But involuntary churn rate shows those customers who get their subscription cancelled because of any technical issues.

Whether it is voluntary churn or involuntary churn, SaaS companies need to have failsafe strategies to deal with them and to implement these strategies, they onboard churn management software.

In this blog, we are going to help you know if churn is acceptable for SaaS companies or not.

Customer Churn: a Necessary Evil

Though all SaaS companies put in the effort to avoid churn as much as they can, churn is a necessary evil that cannot be avoided. So is churn acceptable for SaaS companies? No, it is not. However, SaaS companies try to limit churn by opting for various strategies as much as they can. The point is it is not possible to bring the customer churn rate to zero, but strategies are crafted and improvised to minimize the churn realizing that it is a necessary evil. The policies are made to bring churn to the level that is acceptable for SaaS companies.

What Is an Acceptable Churn Rate?

Acquiring more customers to compensate those who are leaving is not a satisfactory strategy to limit the churn rate. Though the churn rate depends on the market where you do business, 5-7 per cent is considered the acceptable churn rate for SaaS companies. Also, 3 per cent is considered a very good churn rate. But not all businesses succeed in limiting the churn rate to this percentage. It depends on competitors and the business market as well. Today, there are varying customer churn reduction platforms that are very helpful in limiting the churn rate. You can also adopt one.

How to Make Your Churn Rate Acceptable?

Now that we agree that churn is inevitable in SaaS subscription businesses, it is important to find ways to bring it to the level that is acceptable for SaaS companies. So, here we are to help you. Following are some of the strategies that are workable when it comes to reducing voluntary and involuntary churn rates.

Opt for Smart Dunning

Dunning is important to recover payments without affecting your customer relations. Dunning is the way of effectively communicating with the customer so that payments can be recovered from the customers. Also, specific templates for dunning emails and notifications are designed and used so that the tone to ask customers to pay their charges may not sound harsh. Many churn software for SaaS also offers dunning management. It is better to go for smart and automated dunning.

It is not easy to manage dunning manually. Why?

  • Dunning emails need to be scheduled
  • Dunning emails have a specific template and a format
  • Dunning notifications and messages have a specific tone

And to manage all these things for all subscribers is not a piece of cake. Therefore, SaaS businesses should go for smart dunning so that payments can be recovered from customers and they do not leave their services or products.

Proactive Approach

To avoid customer churn, a proactive approach is the best strategy. And what to do when you intend to be proactive?

  • Keep track of the customer journey
  • Do customer segmentation
  • Communicate with customers regularly

The most important thing is to never sever ties with the customers. Always maintain communication with the customer.

Conclusion

Nothing can help more than churn management software when it comes to filling the revenue leaks. Yes, it is a fact that customer churn cannot be avoided, but you can bring it to the level where it will be acceptable for your business. No strategy has helped any business in minimizing the churn to 0%, but that does not mean you need not work on it. You need to work on a churn reduction strategy that can help you in reducing the churn to the minimum level. Subscription Flow is one of the leading churn management software that can help you achieve revenue targets by minimizing customer churn rate.

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