My EVIL Method to Improve Customer Retention

my evil method to reduce churn in your saas business 150x150 My EVIL Method to Improve Customer Retention How to TRICK your customers into wanting to keep using your SaaS.

Well, not really TRICK as much as… well… read on.

BTW, what I’m going to tell you got GetResponse an almost instant 15% drop in cancellations pretty much overnight.

Okay, so someone asked me what I thought about SaaS companies that don’t let you cancel your subscription with the push of a button on the site.

Here’s my take on the issue of making someone jump through hoops to cancel their subscription.

First of all, anyone that puts up significant barriers to exit – even just requiring a phone call to cancel their subscription when the vendor didn’t require a phone call to sign-up – could be violating the forced continuity rules of their credit card companies / merchant accounts / Federal Trade Commission (FTC)

I suggest you learn what rules apply to you and follow those to the letter.

But to me a good rule of thumb is this… if you are doing something you think might violate forced continuity rules, it probably violates some ethical rule first so just stop right there.

If you’ve followed me for a while, you know I don’t like to lock customers into contracts. Rather, I like to keep them around for 3 – 5 years on average by delivering amazing service and helping them solve their problems or take advantage of opportunities.

Here’s why… customers who want out will get out one way or another, and unless you let them out easily they might complain publicly (from annoying to massively damaging), they could force a chargeback through their credit card company (too many of these and you’re in trouble), and / or file a complaint with some entity, possibly a government one, that is more powerful than you.

Uh, okay… so why are there vendors that require you to call them to cancel?

Easy… some companies think they can salvage a deal by requiring the person to call to cancel and trying to persuade them to stay.

Other companies know that simply requiring a call to cancel – even if they don’t do anything but say “thanks for calling, you’re done here” and don’t try to down-sell, cross-sell, or persuade will keep a statistically significant amount of people from making the effort to cancel in the first place.

Is it possible some even use less-than-ethical means to frustrate or stall a customer so they can’t cancel when they finally decide to call in? I’m going to go out on a limb and say yes, but I’ll leave it at that.

While some will say the call is used to get more insight into why the customer is leaving, I say just let them go and call’em a day later to see why they left.

But the point about causing people to not cancel because they have to make a call works on number of different psychological levels. In fact, Robert Cialdini outlines why this is the case in his book “Influence: The Pyschology of Persuasion” where he talks about “Commitment and Consistency.”

Essentially, the phone call is a big deterrent to stopping a subscription to a service we use since – as humans – don’t want to admit to another human being with our voice that we wish to stop something we’ve already commited to.

A button on a website, or even via email, takes a lot of that “commitment” out of it… but when we have to tell another person that we’d like to quit, it is hard.

The other reason requiring a phone call to cancel works in the vendors’ favor is that… well… we’re lazy. If it isn’t a big button on a page that we can push, we simply are less likely to do it. Sorry, you might run 15 miles per day, but we’re still lazy.

The flaw with that logic is that some people are lazy UNTIL some faceless corporation irritates them. Then they take to the blogs, Twitter, the Facebook… and never let it go until we… well until see another shiny object I guess.

But the damage is probably done by then.

(BTW, that is one reason to not be a “faceless corporation” and be authentic… more on that another day)

Like I said… just let’em go because at that point, it is too late; you already failed.

And the little artificial barriers to exit only make people mad.

Honestly, you should have been proactive in seeing the potential for churn and working to keep that customer successful BEFORE it got to that point (kinda one of the cool things about being a SaaS vendor over, say, a traditional software vendor: VISIBILITY into user behavior).

To comply with the forced continuity rules and to keep customers on track toward success, I recommend to my clients that use a self-service sales process (read: most of them) that they also have the same for leaving the service.

Make it easy for the customer to cancel, but here’s the catch…

and this is the part that is so EVIL that to continue on means you assume all risk.

Here we go… MUHAHAHAHA (evil laughter)  icon evil My EVIL Method to Improve Customer Retention

Just like you must sell them on the value of your offering upon sign-up, you must do this on exit, too.

Remind them of why they signed-up, and what they’ll lose – not just the saved data but their investment in the product to this point – if they cancel.

Remind them a couple of times, too, because if they actually cancel, all is lost.

Make them have to re-consider whether that is the decision they want to make right then or not.

But also have a big button that will let them cancel right then.

When we’ve employed this strategy, complaints, chargebacks, etc. are unchanged, but churn rates by folks who got to that point went way down.

Okay, that ISN’T EVIL AT ALL, but it’s super freakin’ effective.

But I have to say this again: if they get to the point where they were thinking about bailing on you, you’ve failed in other areas.

If you are monitoring for this type of behavior, now is the time to re-engage (in a value-added way) those folks who thought about canceling, but didn’t.

Those who did cancel, follow-up and see why they left and ask them how you can help. Can you recommend a different service for them? Leave them with a great experience.

For those who haven’t tried to leave yet, now you have to go back and figure out how to proactively monitor for churn threats, make sure they are fully engaged, and above all… make sure they are achieving success with your product.

Successful customers are good customers who stay around longer.

Now go make your customers successful.

About Lincoln Murphy

If you need help growing your SaaS, request at least a 15-minute call with me via Clarity. My role of Customer Success Evangelist at Gainsight has me super-busy, so I'm not taking on any new long-term consulting clients right now. Clarity is it for now. Be sure to join my mailing list - I send cool stuff to the list all the time - or circle me on Google+, connect LinkedIn or follow me on Twitter.

Comments

  1. I *just* went through this hassle when cancelling my Vonage service; they required a call. So they wasted 15 minutes of my time just to find out that, as it turns out, their product blows and Google Voice is free. If I could have simply turned off my service with the click of a mouse, I might not have bad things to say about them. I’d feel “ok” about the company. After going through the cancellation process, I think much less of them.

    Conversely, I just this week I bought business cards from Vistaprint. While their site messaging and constant, in-your-face offers scream, “We are cheesy and constantly trying to upsell you on promotional items,” their customer service team is absolutely amazing. I had to call them to fix one of our card proofs. They were very friendly, helpful and quick. Now that’s a phone call I’d willingly make again. And my perception of the company (in spite of a goofy website) is very, very high.

    The people who answer your phone are the face of your company. Whether it’s a cancellation or customer support, it’s pretty damn important. Just ask the team at Zappos…

  2. I like the idea of trying to serve and add value to the customer throughout their experience, even as they are leaving you. I wonder if it would also help to provide the leaving customer with usage data about how much they have used the service, the kinds of things they have accomplished.

    Lincoln, you say: “For those who haven’t tried to leave yet, now you have to go back and figure out how to proactively monitor for churn threats, make sure they are fully engaged …” I’m curious how you have done that in the past and how you recommend people do it. My company, Apptegic, is building a service that is focused on helping people monitor for churn threats and understand engagement. I’d love to get your feedback on it.

  3. Lincoln, great post.
    I especially liked the “VISIBILITY into user behavior”. We see our customers turns user behavior to gold in terms of identifying churn risk a head of time. I think the ability to identify specific usage event(s) and react in real time (manually or automatically) is a crucial element for any SaaS vendor.

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  2. […] My EVIL Method to Improve Customer Retention […]

  3. […] by giving people the ability to cancel from within the app, there is a psychological effect that seems to calm them down and make them feel more in control. If they decide to click the […]

  4. […] My Evil Method to Improve Customer RetentionDon’t worry, it’s not so evil! Lincoln Murphy explains in this article what companies can do to improve their retention, without frustrating customers who already have their foot out the door. […]

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