- by Jonathan Tarud
- Posted August 9, 2016
It takes a lot more than having some strategies for user acquisition in place to guarantee SaaS growth. In fact, the most critical stage in the funnel can easily be retention, not acquisition. The key to a successful retention plan is keeping customers satisfied and avoiding churn. Keep in mind that it’s easier and cheaper to retain a happy customer, than having to go out and find new ones.
Therefore, monitoring churn should be an important first step for identifying what can be optimized to retain more users and increase revenue.
In simple words, the SaaS churn rate is the annual percentage rate at which customers stop subscribing to a service, which can be subdivided into two categories:
· The user churn refers to the number of customers who discontinue the service during a specified time period divided by the average total number of customers over that same time period.
· The revenue churn is the number of revenue lost due to plans canceled or downgraded by users, over the total revenue for the analyzed time frame. This metric is useful to keep track of the money that is being lost due to cancellation and downgrades.
Why would you benefit from monitoring this metric?
Understanding why a customer leaves your app is as important as understanding why they subscribed to it in the first place. Churn rates allow you to better understand your users in relation to your product and whatever value it should be offering them.
Accordingly, this set of insights can be used as a “thermometer” of your company by indicating if there’s something wrong with your user onboarding flow, your engagement, and retention strategies, or worse: something wrong with your product.
But, most importantly, the relevance of churn rates lies in its direct opposition to growth; the main objective of most SaaS businesses. So, if you think strategically about growth, you should do the same with how to maintain and retain your customers.
How do integrations play into this?
Today’s competitive landscape makes it impossible to get ahead just by offering a good product, which opened the door for integrations to play an important role in the SaaS industry.
Many companies are using integrations to focus on data and connectivity to make their product more valuable and engaging, and offer new perspectives to future and current users.
A world of possibilities
If you provide your users with more possibilities and different perspectives of how to use your product, they will feel more inclined to take advantage of it. Integrations offer tremendous added value to users from the start, which makes it easier to keep them satisfied with the product, which in turn reduces churn rates.
Additionally, this could also be a great way to acquire new users, since the integrations may incentivize users of other apps to learn more about your own product.
Connecting two different services can be a very effective way to increase productivity. Integrations make it is easy to find companies that allow connectivity through APIs with CRMs and other marketing automation platforms, which in turn provides the automation of workflows and an increase in the overall productivity of a team.
For integrations to show their full potential, it’s important to find companies that align with your own product, in order to make valuable alliances that can result in benefits for both companies. In fact, strong marketing strategies can be built around this integrations, through the creation of content to promote the alliance, in order to drive better results quicker.
Additionally, aligning your brand with others is a great way to increase awareness, leverage social proof, and build trust.
Integrations are great allies to keep moving forward and finding new business opportunities for your SaaS. The better the ecosystem you build, the stronger your product will become, compared to your competitors, which won’t be able to replicate the impact of working with a complete community of SaaS apps.
Interested in finding out how you can use integrations to reduce churn?