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Written by Dan Wilkinson Content Manager
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09 Apr 2019  |  Monetizing

3 Stage Action Plan To Reduce Churn For Software Companies

7 minute read

Looking to minimize churn for your software service? Our latest on-demand webinar breaks down the short, medium and long term solutions to achieve higher customer retention rates. Presented by our Account Manager Wahid Tashkani who works with some of Paddle’s largest SaaS businesses and Churnbuster’s Growth Lead Kristen DeCosta, who’s an expert at tackling passive churn. We’ve highlighted the key takeaways for you so you can start tackling this common challenge today.

Wahid Tashkani is one of Paddle's most senior Account Managers, working with dozens of million dollar software companies. He’s advised multiple companies on practical ways of increasing retention and has been at the forefront of finding new strategies to achieve negative churn.

Kristen DeCosta dedicates herself to educating companies and founders on the importance of customer retention and the dangers of ignoring churn. Her work as a growth lead at Churnbuster gives her a unique insight into how to prevent customers from churning. Churnbuster’s expertise has led to it having safeguarded over $1billion in recurring payments for major SaaS companies.

This session’s goal was to offer software businesses actionable insights to reduce the three most common types of churn experienced in SaaS. This translates into three sections: short term churn which can be tackled today through a series of small changes. Medium churn which usually means tackling passive churn, where silent issues arise in the background and long term churn which we look to tackle by achieving the gold medal: negative churn. Here are the key takeaways from across all three sections.

  1. Looking at the first point of the webinar you’ll learn that onboarding plays a key role; if a customer can’t even navigate your product, you’re in trouble. The solution we offer is to tailor the experience based on whether the customer is using the product personally or professionally. Additionally, another aspect is to communicate the simplicity of using the product by gamifying the experience of finishing a tutorial.

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    Canva’s tutorial is a perfect example of a gamifying your customer's motivation to complete the onboarding process  

  2. Feedback plays a crucial role in reducing churn as it gives insight into the customer. In the webinar, we lay out a three-step feedback process. The first step is gathering feedback, of which there are two types: explicit which could be a survey seeking direct input on features and implicit, which can be more valuable, as it’s indirect feedback on what the customer wants but hasn’t yet verbalized. The latter will allow you to pinpoint and address more significant issues in the customer journey.

  3. If you’re looking to preempt churn one of the three factors to be aware of is past behavior, such as your business seeing a pattern of lower retention for certain periods. A solution we recommend is to try implementing a coupon branded as a loyalty discount to retain these customers through that period.

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    Above is a Paddle seller who improved retention by noticing a pattern of customers dropping out at certain periods

  4. Kristen’s section in the webinar focussed on involuntary churn, which is churn based on an unresolved billing issue. One major learning from the section was to turn off pre-Dunning emails centered on notifying customers before their card expires. Kristen recommends turning them off because it involves the customer into what is a non-issue for them and allows you to retry the card before emailing the customer. In the full webinar, Kristen also covers building trust through emails, payment optimizations, and key metrics to monitor.

  5. Looking for the long terms aspects, we delve into the concept of negative churn, where the additional spending of existing customers offsets any current churn. Negative churn is achieved by adding more scalable low touch strategies and high touch strategies. Examples of low touch involve upselling, seat expansion and upgrade to a more premium plan. To find out what longer-term high touch strategies you can use to increase negative churn of your business, click below to view the full webinar.

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Our illustration of how negative churn is achieved over time

Looking for more insight from the full webinar? Click the button below to watch a recording of the webinar and stay updated when these webinars are happening as well as receive links to the future webinars if you’re unable to attend.

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