Keeping Track of Churn Reasons
For most SaaS companies, churn remains one the most important factors. Software is usually sold at a relatively low monthly cost and to make a profitable business it's important to keep your customers for a long time.
Few SaaS companies doesn't deal with churn while most do. However, churn isn't just churn. If you are raising cash for your startup your future investor might want to dig deep into the reasons. For instance, most investors tend to conclude that high churn means bad product. If you are working within certain verticals you might have to deal with bankruptcies among your customers and if you're not careful this could easily be seen as a bad product/market fit and cause your investor leads to lose interest.
In my opinion, there are three key reasons why a customer stops using any software product:
(Customer or 3rd party) Technical issues
If the customer is having issues integration to your system or is blocked by for instance internal politics from using your product
Low Perceived Value / Bad product
It sounds harsh, but it's true. The customer tried your product and decided to stop use it because they failed to experience enough value or your product lacks key feature that they customer believes they need. This could lead to them choosing a competitor who is cheaper or simply not using a similar service at all.
Out of business
This is pretty obvious, but if you experience this a lot you might want to evaluate if you have the right target market / ideal customer profile.
These are the reasons customers churn but of course it might make sense to track additional information, such as what the customer did instead. For instance, you could have a list of churn reasons like this:
- Technical Issues - Integrations
- Technical Issues - Internal policy
- Low Perceived Value - Changed to competitor X
- Low Perceived Value - Stopped using any product
- Out of business
Did you know that you can use Fenerum to track your churn reasons? Get in touch with us if you would like to help to activat this feature or book a demo if you are interested in hearing more about Fenerum!