Churn is one of the most important—and often overlooked—metrics in SaaS. It's easy to focus on customer acquisition and forget about retaining your customers, but churn can be a massive drag on your bottom line. In fact, according to Bain & Company, "companies that retain 50 percent of their top 20 customers...generate 60 percent more revenue than those with average customer retention." So what can you do to reduce churn? Follow these five steps:

1. Identify Your Customer's Real Needs

The first step to reducing churn is identifying your customers' real needs.

To do this, you need to listen to what they say about the product and their experience with it. You can do this by asking for feedback, collecting data on customer behavior, or even just observing them as they use the product.

The next step is understanding the customer pain points that are causing them dissatisfaction with your SaaS offering. You can then begin working with your team members on solutions that will address these customer issues in order to provide a better overall user experience.

Once you've made these changes, you must communicate them to your customers. You can do this by sending emails and in-app notifications explaining the new features or changes. You may also want to consider using a drip email campaign to ensure that users know all the improvements being made.

2. Measure Customer Success with Customer Health Scores

You can measure customer health with a simple survey. The survey should be administered immediately after each successful payment and once per year, as follows:

  • At the time of payment submission (immediately after a successful payment), ask customers if they are happy with their current subscription plan and if they would recommend your product/service to others.
  • Once per year (approximately one month prior to renewal date), ask customers similar questions about their satisfaction and loyalty, but also include more specific questions such as "How likely are you to renew?" or "On a scale of 1-10, how satisfied are you with our product/service?"

By measuring customer health at these two intervals, you will gain valuable insight into where your most significant opportunities for improvement lie. For example: If most customers say that they're very likely to renew but only give your company an average score on satisfaction measures (7's and 8's), then it's likely that there is something about pricing or onboarding that needs improving; whereas if most customers give low scores across all metrics (6's or below), then it could be time for some major changes in marketing strategy! Once again - measuring customer health scores regularly allows you to stay ahead of any fluctuations in retention rates before they become problems!

3. Cut Back on Accounts

In some ways, cutting back on accounts is a lot like reducing churn. The goal is to get rid of customers who are not a good fit for your product or service and stop wasting time, effort, and money trying to sell to them. This can be done by making sure that you're choosing the right fit when you onboard new customers—and by also being willing to cut ties with those who aren't a good match.

As we mentioned above, it's crucial not just to identify what makes an excellent B2B SaaS customer but also what makes a bad one—and then act accordingly in terms of creating marketing strategies and sales tactics that target the former while avoiding the latter.

4. Make a Good Impression

Do this by providing excellent customer service and support, having a great product, and being proactive in your client communications. The best way to start is by making it easy for customers to do business with you, which means providing them with helpful information they need when they need it.

Make sure that you have the right team in place so they can provide excellent support, handle client requests in a timely manner, and resolve issues quickly.

5. Gather Data on What Drives Churn

If you're doing everything else right but still have a high churn rate, data can help you understand why customers are leaving.

You should gather all kinds of data about your customers and their experience with your product. Look at how many users use your service in the first month after signing up, then again two months later and three months later. Are they sticking around? What kind of feedback are they giving you? Do they seem happy or unhappy? You should be taking advantage of every touchpoint with existing users—even if it's just an email confirmation or a survey—to learn more about what drives churn and how to reduce it.

With expert advice and the right tools, reducing customer churn is possible

As you can see, many factors contribute to churn. However, with expert advice and the right tools, reducing customer churn is possible.