How to save and win back Churn Accounts

Hi, Markus here. Welcome to a new episode of the Customer-Value-Led-Growth Newsletter.

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Last time I checked, the costs of acquiring new customers were up to 25 times higher than keeping them. And yet, churn is growing in most SaaS companies because they don’t have effective measures in place.

Resolving churn does not come from trying to prevent it at all costs like trying to bribe customers with excessive discounts. The only sustainable way is to eliminate its root causes with strategic solutions.

With strategic solutions, you can prevent churn from happening for the same reasons over and over. But as they take time to build, they are coming too late to stop churn that is happening right now, already sealed.

In today’s post, you’ll learn how to build a structured, tactical solution to save and win back Churn Accounts.

1. Differentiation

There are still a lot of people, quite often leaders, who think of churn and retention as black and white. But the reality is more nuanced. There’s bad retention when bad-fit customers stay (for whatever reason) and there’s good churn - when they (finally) leave.

So before you jump into hasty action and spend a lot of time and energy to turn the tide or try to recover lost customers, you need to have a decisive answer to one question - do we want to keep this customer/win them back?

If it costs more to maintain those customers than they bring in revenue, the answer is a ‘definitely not’. And in most cases, those are the same customers that are generally hard to work with.

It’s a smart decision to have financial data in place to segment (existing and former) customers by their profitability. It does not only help you to distinguish between profitable and non-profitable customers, but to prioritize the right accounts in general.

2. Churn Analysis

You can’t fix what you don’t understand. Too many SaaS companies are running superficial exit interviews that give them no actionable insights. They are settling for the proxy reasons customers give like

• “The product was too expensive”

• “Competitor A has a better offer”

• “Features X, Y, and Z are missing”

If any of these reasons are valid, why would they have purchased your product in the first place? They knew the price. They compared different vendors. They checked the features. So unless they did not do their due diligence, their explanation is wrong.

Besides, what’s the solution for any of these reasons? Are you lowering the price, copying your competitor, or adding features just like that? There are only 2 reasons why your customers are leaving - lack of value or external developments like going out of business.

As external reasons are not under your control, they can be neglected. However, the lack of value is a different beast because there can be many sources. You need to figure out where and why things are going south.

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