Churn & Burn: How To Keep your SaaS Alive?

It’s not because it’s holiday season I am going to stop blogging. And for the record, I blog literally once a day with nothing scheduled in advanced. So pretty much ad-hoc.

But I figured this is a great topic to address when I’ve seen the occasional tweet about lesser sales or slower growth.

Lots of people are in the SaaS business, and anyone that has built one, made attempts or wants to will know or realize how fucking hard it can be to acquire customers.

The short answer in reducing churn? – Pause.


The chances are that your SaaS is not particularly blue ocean and you’re trying to compete against others that:

  • Have a better positioning right now
  • Maybe have a more mature product
  • Have a bigger bankroll to burn on growth experiments
  • Built up a bigger street rep than you
  • Might have acquired a true audience over meaningless followers
  • Are just smarter than you or have a better sense in commercial acumen.


The list goes on and you can’t figure out where the problem is.

The problem being: Losing customers and churn hits you in the face harder than a baseball bat knocking your teeth out.


It can be discouraging to see people cancel their subscription after a month or two when you worked of freaking hard to acquire them.

Cost Per Acquistion


The CPA can truly vary, but early-stage founders know that it takes hours, days or weeks to acquire a customer. This could be through sweat, blogging and SEO or CPC ads. Regardless of the channel: You spent either a significant amount of time acquiring them or actual cash.

And even if you believe you spent $0 on them, there are hidden costs.

But the problem is never about acquiring them. Acquisition is the easiest part. It’s keeping them that can be insanely challenging,

FML, I Am Losing Customers

Yes. Don’t deny it. You will drop f-bombs. It’s heart wrenching. I had the same feeling over and over again until I made a realization in the B2B and B2C space: People don’t always need your product or service 24/7 or 30 days a month.


The main reasons people cancel their subscription is:

  • They found a better platform or offering
  • They might have bad experience with CS (this is a diff league btw that I need to address in a blog post)
  • They found it served its purpose for now
  • They are not in a financial position to keep up with the payments
  • They realize they need it only for a few months per year and just cancel
  • Lots of businesses or customers are seasonal driven or Q driven. Which means they cancel after peaking
  • They found out on their CC bill it’s an expense but never really extracted the most value
  • They feel the product is not ready yet to commit themselves because not everyone like to build a business on top of a startup


Truth is, there are more reasons why a customer will cancel over why they should stay.

There’s only one true way to stop or slow the bleeding: Adding a pause button to your SaaS.

Take A Pause

Go check any SaaS, how many platforms have a pause button? Almost none. And yet it’s so obvious. My observation is that adding a pause button to a subscription makes a lot more sense to reduce that churn. And here is why:


  • Your cost per acquisition can supersede the actual subscription cost, including time spent on customer support.
  • If a client cancels, their data might be retained for a while but cancellations will imply a loss
  • You will have to spend more money or resources in customer retention when they cancel and you might start operating at a negative
  • If a customer can pause their subscription for a certain period or indefinite time – they never really left your SaaS which makes it a lot easier to remind them in X time
  • If a client pauses, it can be of various reasons and also sends a strong signal to you: They love the platform but are not needing it at the very moment.
  • It sends a signal that they like to keep using it without data loss and are not likely to shop or compare for a competitor (at least it reduces the odds)


Take summer time or holiday season (x-mas, NYE etc): Lots of customers are just interested in working or focus on only very specific things.

A 2 month gap during summer could lead to canceling their subscription and might never return to you because they bumped into a competitor.

Emotions


Lots of cancellations can stem from an emotional perspective. SaaS fatigue or subscription fatigue is real. And not everyone can just spend hundreds or thousands of dollars on application per month when their situation has changed.

Lots of clients will cancel because:

  • They checked their financials and react with the instinct of immediate cancellation without thinking twice
  • Realize how many subscriptions they have that are currently unused or only used for a specific period
  • They might or might not have found an alternative that’s cheaper but lesser optimal but we cannot discount the idea that lots of consumers look at price first and values later

Close

I apply this strategy to the majority of my own SaaS builds now, and adding an option to pause a subscription has reduced my CAC and increased my LTV per customer.

I worry less about keeping clients but can focus on the onboarding aspect and figure out what the reasons are people need to take a break in using one of my platforms.

Key notes are:

  • It’s easier to acquire customers. But much harder to keep them
  • You don’t lose your customer immediately, but it opens up a range of faster and more efficient alternatives to serve a customer or to retain them
  • Customers that cancel and leave you entirely are almost always considered a loss
  • SaaS applications come and go. And customers are as fickle as you changing underwear. It’s up to you to build better BRAND LOYALTY.

Jingle bells, merry x-mas and subscribe to my newsletter if you want more in-depth content.

  • For more focused advice or actual coaching, I would suggest to take a look at LaunchPad.
  • If you are looking for a more private circle of entrepreneurs, then you can join me on Discord with FocusX
  • Looking to start out? NanoBets might be a great place to start with.