4 scalable growth hacks to reduce churn in your B2B SaaS product

As I embark on yet another project of designing & implementing analytics systems, this time for Dubsat, i’ve been focusing in a lot on Churn and the different ways of monitoring and managing it.

It goes without saying that Churn is an incredibly important metric for SaaS businesses, but many business don’t realise just how much revenue is being lost through customer churn. To illustrate this, I have given a quick example:

If you have 10,000 customers with an annual ARPU of $500 and your Churn rate is 15%, you are losing $750,000 worth of potential revenue every year. If you can reduce that Churn rate to 5%, the lost revenue drops to $250,000, netting you an extra $500,000 per year. 

Whilst this is a generic example, I think it demonstrates the potential issue. If you’re interested in calculating Churn for your own business, there is a really good spreadsheet which can be downloaded here (Note: I did not create this, but have had it for so long I can no longer remember where I got it from).

Now that you’ve calculated your Churn levels, let’s look at 4 scalable growth hacks for reducing it.

Implement customer marketing

One of the quickest and easiest ways to reduce churn is to actively market to your customers. If you’re practicing Inbound Marketing, it’s likely that you have a wealth of great content, including eBooks and blog posts, that are relevant to your existing customer base. Instead of just using this content to acquire customers, consider how you can use it to retain them as well.

HubSpot do a particularly good job at this using their blog and dynamic CTA’s. As a HubSpot customer, I am constantly being exposed to their eBooks and blog posts through a variety of channels including email & social media and once I click through to their content (say a blog post), I see the following CTA:

hubspot-customer-cta

For a non-Hubspot customer, this large CTA button would be for an eBook and they’d be trying to get me to download it and become a lead. Because i’m already a customer however, they use this space to market other features of their product too me that I may not yet be using. Using these features then gets me more engaged in the product, and in turn creates a higher value, long term customer.

Takeaway: Think about how you can use your marketing prowess to market to existing customers, not just potential new ones. Use your analytics systems to find out what features or actions make for an engaged, high LTV customer and use your marketing channels to drive existing customers towards taking those actions.

Implement trigger-based email marketing

Trigger-based email marketing can be defined as transactional email based that is sent based on user actions. For instance, if someone signs up for an account and completes action X but does not complete action Y, send them an email prompting them to complete action Y and providing links to a support article and/or video to help them achieve the task.

Tools like Intercom, Customer.io, Vero and even HubSpot (on the enterprise edition) allow you to pass ‘User actions’ to them which get stored against the users record in the database. You can then create segmented lists based on these user actions (I.e. Did event X but did not do Event Y) and when people meet the conditions of the list, the email campaign is triggered (it may be one email or a series of emails).

Chris Hexton over at Vero wrote a great post outlining 20 great trigger-based email campaigns you should be running and it’s worth a read.

Buffer, everybody’s favourite social sharing app, use this to great effect. Whenever I run out of tweets in my buffer stream they send me an email reminding me to add a few more so I that I can keep my social channels active. This email keeps me coming back for more and ensures I remain an active, engaged user of their product.

buffer-lifecycle-email

 Takeaway: Using your analytics tool, look at your most active, highest yield customers and study the actions they have and/or haven’t done. Use the insights from this study to create an ‘Activated user profile’ that details what makes an activated user (For instance, Twitter defines an activated user as someone who has followed more than 15 others). Next, setup email campaigns using one of the above tools to drive users towards completing the identified actions and becoming activated users.

Implement ‘business value’ marketing

I must admit, I may have made the term ‘business value marketing’ up just then but hey, coining a term does wonders for your personal brand… Just ask Sean Ellis or Andrew Chen. I define business value marketing as marketing activities or product features designed to showcase the value your product is creating for your existing customers.

HubSpot do this very well in the keywords tool of their all-in-one marketing application. As you can see from the screenshot below, the keywords tool shows you your rankings for specific keywords and the amount of traffic those keywords generate. It also shows you how much you’ve saved by investing in organic SEO (through HubSpot) as opposed to buying PPC ads for those terms (it calculates it based on number of visits from keyword x PPC cost of bidding on keyword).

hubspot-keywords-tool

Whilst it’s not the most accurate figure in the world, it does a great job of displaying the value using their product is giving your business. I wouldn’t be surprised if this figure has been used several times in justifications or reporting to senior management and i’m sure its helped HubSpot keep some customers over the years.

 Takeaway: What measurable value does your product bring to your users? Can it be displayed in a dashboard or somewhere in the application? Even if it isn’t going to be a rock solid number, just run it as an experiment and see what happens. For instance, we know from talking to customers that our product saves them about 15 minutes per ad sent. One of our upcoming tests would be to put a figure on the dashboard that says time saved = X, where x is 15 minutes multiplied by number of ads they have sent.

Build stickyness into your product

Whilst this may not be as quick of a win as some of the other growth hacks mentioned here, it can be one of the most significant and long lasting over time and therefore worth investing in.

David Skok, VC at Matrix Partners and investor in HubSpot others states that there are two main ways to increase product stickyness: become an integral part of their workflow or become the central repository for key data.

With our Adsend product (which for those who don’t know is like a delivery platform for delivering prints ads to publishers), we face the issue whereby our product is perceived to be fairly similar to our competitors. Whilst there are a few differences in features, none are perceived as ‘deal-makers’ and the choice of which product to use usually comes down to relationship with the vendor.

This of course, makes it fairly easy to switch vendors and accounts are won and lost fairly regularly as switching costs are so low. Seeing this problem, we built an add-on product called AdGate which, without going into too much detail, automates a lot of the processes associated with creating & proofing ads and then integrates with Adsend for the final delivery of the finished ad to publishers.

By tying up the full length of the ad creation workflow in our products, we’ve made it so that if a customer was to switch, they’d have to rebuild their entire workflow which obviously takes a significant amount of planning, implementation and training. The high switching costs combined with the fact that the Adsend + AdGate combination saves them hundreds of manhours each month, has meant that we have managed to achieve an almost 0% churn rate amongst customers who use both products.

Takeaway: Think about the workflows and processes of people using your product. How can you become so deeply ingrained in those workflows that the cost savings and/or extra features offered by competitors just isn’t worth making the switch? Alternatively, consider the data your application is holding for your customers. Is it critical data? Can it be easily transferred to other solutions? Perhaps there is an opportunity wrap up more of their data and make it more of an effort to move it out.

Aaron Beashel
ab@aaronbeashel.com

Just two loves: marketing & surfing. When I’m not in the ocean, you’ll find me helping B2B SaaS companies acquire and retain customers.

3 Comments

  • Liam Gooding

    17.11.2013 at 22:38 Reply

    Hey Aaron,

    Great post. Churn is one of those “unsexy” metrics that gets far less attention that acquisition activities, and yet in my opinion, it’s usually the best low hanging fruit in terms of fixing a funnel and increasing profitability. I mean, you’ve already paid the CAC on those users right, why throw more water in the bucket if you have a slow leak?

    Quantifying the value of your product to a customers business is an awesome idea – might need some creativity with some products to find a comparable metric or something relative, but I’d certainly be intrigued to see other b2b saas apps that have done this and what the feedback was…

  • Stuart @ Gleamio

    18.11.2013 at 05:24 Reply

    Totally agree with the business value stuff, difficulty here is that the value is different for people but if you can crack that nut you’re on the road to great retention rates. For that very reason we’re planning to roll out revenue tracking for Ecom shortly 🙂

  • Greg Brown

    18.02.2014 at 19:52 Reply

    Aaron – great post! One thing I’ve learned working at HubSpot is that automating these processes is key to scale, but nothing can replace human contact for on-board and support. The AOV and LTV of your product certainly determines how much 1:1 support you can offer, but I’ve found human based support can greatly reduce churn and increase customer happiness. How do you manage support at Dubsat?

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