My EVIL Method to Reduce SaaS Churn

My Evil Method to Reduce Churn in Your SaaS BusinessWant to know how to TRICK your customers into wanting to keep using your product so you can reduce your SaaS churn rate?

Well, I’ll tell you exactly what TRICK to use, though… spoiler alert… it’s not really a “trick.” Just keep reading.

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

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.

Understand the Rules

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.

Lock ’em In with Awesomeness… not Contracts

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?

One Call Stops ’em All (But is that Actually Good?)

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 Psychology 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.

One Button Reduces SaaS Churn

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’s 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)

Let ’em Go. Let ’em Go!

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 to Cancel, but…

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)  👿

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.

Reduce SaaS Churn By Doing This

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

I am a world-renowned Growth Architect, Consultant, Author, and Keynote Speaker and have helped drive exponential growth across the entire customer lifecycle for more than 1000 companies worldwide I wrote the Customer Success book which you can buy at Amazon. If you need help growing your company or would like me to speak at your event, please contact me. Also, connect with me on LinkedIn or follow me on Twitter or Facebook.