Customer Churn (Why Do Customers Leave You?)By Femto15 Team - March 6, 2020
Customer churn is every business's fear. The states about how it affects the revenue and how CAC shows the advantage of customer retention cost over customer acquisition cost make it clear that churn should be every business's concern.
For a SaaS business, churn is a critical issue as the business depends on a monthly, quarterly, or annual subscription. Customer churn leads to revenue churn, which is reflected in your MRR.
In this article, we discuss the reasons that may be behind customer churn, because you can't stop it without knowing its source.
- Targeting wrong customers
- Onboarding chaos
- Service cost
- The Service is poor
- Bad customer support
- You don't care enough
Customer churn classification
Lincoln Murphy classifies churn according to two aspects:
- Expected and unexpected churn.
- Avoidable and unavoidable churn.
Let's illustrate these terms:
- Unavoidable: churn happens due to reasons you can do nothing about, like when customers go out of business.
- Avoidable: churn happens for reasons you can handle and prevent, but some times you don't do enough effort.
- Expected: you can tell if churn will happen according to the data collected about your customer.
- Unexpected: churn happens suddenly without previous signals.
Why does customer churn happen?
Below, we discuss some avoidable reasons for churn which you can handle and prevent.
You are targeting wrong customers
As simple as this!
Your marketing and sales strategies may be attracting customers who don't fit, which means your product or service doesn't fullfill their needs. You are a wrong choice for them, and by the time they will find no value in doing business with you.
After attracting the right customers, one of the main reasons for churn in the first three months is poor onboarding. Customers start to use your service but can't use it to perform what they need. If your customers can't use the features in your product or can't taste the value of it, they will just leave!
Why wouldn't they know how to use your service?
This can be due to various reasons, some of them are:
- The software is complicated and has many features and requirements.
- Poor user experience.
- The customer doesn't want to spend time exploring the SW, or just want a push at the beginning.
The service cost
If your service becomes expensive comparing to your competitors, it's normal that your customer will leave you to the other side. Pricing your SaaS is one of the hardest things to do. If done right, you can start educating cu
Your service is poor
That may be hard to admit, but, sometimes, it's just about the product. The quality of the product is bad, so customers stop using it. That's when you need feedbacks to collect data about how users want the product to be.
Once you find that out, you should work on improving it.
Bad customer support
Customer support is one of the most departments that interacts with customers and represents your business to them. Thus, it's a gate that lots of customers leave through.
To close this gate you need to give your customers a great experience when they deal with your reps, which we've discussed in previous articles.
You don't care enough
One of the most avoidable reasons is that your customers can't reach their goals using your product or service, which is why customer success strategies exist.
All the efforts you give into customer success are reflected in customer retention.
Churn causes may be overlapped and hard to track at first, but as an organization, it's your role to find out what affects your business's stability and work on fixing it.