Customer churn is not something that happens overnight. It’s often the product of false expectations brought about by poor business strategies. High customer churn indicates a mismatch between the expectations set pre-sale and the actual experience of customers.
This is why true Customer Success requires that your overall strategy takes into account not just the factors that make customers sign up, but also the factors that make them stay. That, however, is easier said than done, and you see SaaS companies commit the same mistakes over and over again because as long as they are getting sign-ups, they think they are doing a good job, despite the high number of customers leaving them.
Maybe it is time to reevaluate your strategy to truly know if you are maximizing your company’s potential not only to acquire new customers but to keep them in the long run.
To help you out, here are some of the common strategies that can be understood as a sign of success when they’re in fact contributing to your churn rate.
Selling to All
This is a common, traditional sales strategy. The more people hear about your SaaS product, the better. The more people you are selling to, the more people are likely to sign up. This may seem to work for some, but this strategy also has its consequences.
First, you will end up selling your SaaS product to people who do not need it. Sooner or later, bad-fit customers will realize that getting your product is a waste of their resources because it does not fit their needs.
Second, you will be getting the wrong feedback. Since the customers don’t need your product but they signed up for it anyway, they may want to have it work for them by giving you feedback about their needs post-sale. By catering to their feedback, you’ll waste valuable resources and risk alienating your ideal customer. These customers will monopolize your Customer Success and Support team’s time as the product was not originally built for them.
Focusing on Low Price
A lot of companies are too willing to give discounts just to get people to sign up for their product. While there is nothing inherently wrong with negotiating price, focusing on giving discounts before selling customers on value can attract the wrong customers.
The best option is to talk value before price. Know your buyer persona and show those ideal customers how your product can fulfill their needs. In some cases, the customer does not fully know what they need your product for and it is up to you to demonstrate your value proposition. The point here is that before resorting to giving plenty of deals or discounts just to get customers, demonstrate the value of your product. You might find that your company did not even have to give those discounts in the first place.
Overpromising on SaaS Capabilities
Some people will say anything just to make a sale. That includes planned improvements to the SaaS product that are not yet in its existing incarnation. This strategy, however, can easily backfire on the company because you are selling an idea that is not real yet. If those improvements do not come to fruition, you can expect very unhappy customers. In a previous article, Linda Schwaber-Cohen explained why setting unrealistic objectives can be a problem during the onboarding of new customers. She said that customer’s disappointment fuels negative dialogue about their experience with your SaaS product.
That is why it is important that the expectations set during the sales process match the capabilities that your SaaS product can deliver. It is tempting to sell future improvements, but if those are not delivered, you can expect cancellations to follow. So, if it is not something that your product can do – even if you will have it in the future and it would allow you to close the sale – do not make that promise. Be truthful to your customer.
These three are just some of the common mistakes that can ultimately lead to high churn. We have got to move on from the old way of thinking about acquisition fueling retention. Acquisition and retention efforts should be tied together so that consistent expectations and delivery of service is achieved throughout the customer’s use of your SaaS product.