Jul 28, 2016

Read Time 5 min

CS as a SaaS growth strategy, measuring churn the right way, cultivating super users


Fighting Churn Newsletter

We begin this week with some exciting news for the team here at ChurnZero: we were named by Washington Business Journal as one of five DC startups that could be the next big thing!

DC Startups that could be the Next Big Thing

In the article, our CEO You Mon Tsang talks about his long career as a successful entrepreneur, starting and selling three companies in the span of just 15 years. But which of his startups does he believe has the biggest potential yet? You guessed it: ChurnZero! We’re honored to be included in this group of local companies that are making waves in DC and beyond!

Customer success as a SaaS growth strategy

Looking for no nonsense advice on using customer success as a growth strategy for SaaS businesses? Look no further than these 5 hacks to grow your business like crazy:

  • Use your customer success steam to inform lean growth: The Lean Startup idea is based on first listening to what your customers want, then presenting them with a minimum-viable-product, listening to them again, and improving the product accordingly. You can fit customer success into this model seamlessly, right from the beginning, by giving your team the job of finding out what success with your product means to your target audience. You can use tools like surveys and customer interviews, but much of your best feedback will be on the fly from users trying to successfully use your product and chatting with your customer success team to find out how to do so.
  • Design follow-up emails to make users love you: Email marketing can be a huge opportunity for growth when designed using analytics and customer success theory. Take a customer success-centric approach to content, ensuring each email communication provides real, immediate value, combined with analytics that help your marketing team fine tune your emails around what your target audience wants most. Make all your messages count by optimizing, personalizing, and automating them for quick delivery – and above all, providing real value. When you train your customers to expect something of value every time they open your emails, your open rates will soar – which leads the way towards cross-sells, up-sells, and making more money!
  • Catch them before they fail: Customer success tactics are used by growth hackers all the time to keep closer tabs on users. Your customer success team should be proactively reaching out to users before there are problems, just to check in and see how everything’s going. If things aren’t going well, you’ve caught a potential unsubscriber before they’ve even thought of leaving, giving you a chance to make things right, impress the client, and hopefully, earn some public client kudos in the process. This helps you reduce churn drastically, which reduces your Cost to Acquire a new customer and makes your business more profitable in the long term.
  • Content marketing meets customer success: Content and Inbound marketing are both founded on content and that content has to be both free of fluff and genuinely useful to your audience. That means only including immediately actionable tips and advice that don’t waste your target’s time. Growth depends on your audience finding what they need on your site fast and getting so much value from it that they want to share your solution with everyone they know.
  • Use Customer Lifetime Value (LTV) and Cost to Acquire (CAC) to double-check your strategies: You can use your CAC and LTV numbers as barometers for how well your marketing is attracting your target demographic, and whether or not your customers are finding success with your product. If your CAC is high and your LTV is low, this tells you something is off (don’t have the right target demo, messaging is not right, etc.). Maximizing the lifetime value of your customers is the name of the game for SaaS businesses, because when you’ve got LTV, you’ve got growth.

Interested in more actionable advice on how to keep your customers? Check out these 8 advanced tips from Kissmetrics that will help you never lose a customer.

Measuring churn: the right way and the wrong way

“Churn” is a term that gets thrown around a lot, but not enough businesses know what it’s tied to and how to prevent it. Oftentimes it’s left to the Product team to address and while they understand the importance of customer retention, they often end up pouring all their efforts into working on features that will attract a significant customer base, leaving the retention part for later. The fact is that you can build all the best features and acquire thousands of customers, but your startup will never thrive if you can’t keep any around.

So what is the best way to measure churn? The answer to this all-important question is a deep one.

For starters, there are two basic churn formulas:

Revenue Churn = (revenue churned/overall revenue)

Customer Churn = (number of customers churned/total number of customers)

Revenue churn is hugely useful for the business side of things. You can use it to quantify your overall customer value and see which are your most valuable customers. But looking at this churn number by itself can lead to some misleading conclusions. You cannot afford to over look customer churn because while having a few customers that are willing to spend more, getting a higher percentage of customers to stick around is even better.

But being able to calculate your churn rate is just the tip of the iceberg; the real information is in the deep details of your churn. Check out the full article to learn more about discovering these important details including:

  • How to not be mislead by churn in the short-term
  • Usage metrics that help you predict if a customer will churn (having an early warning system is paramount for this effort)
  • Pinpointing the source of churn

Word to the Wise

This week’s wisdom comes from a discussion panel at the Subscribed conference a few weeks ago. The panel – which was made up of leaders from three very different subscription businesses – explored the topic of identifying, cultivating and leveraging super users. The entire panel discussion is worth a listen (see below) but here are some highlights we found particularly interesting:

  • What is a super user? It is a subscriber who is loyal to the point of action. This action might be in the form of referrals, feedback and/or other beneficial behaviors but it is the action that is key. Their loyalty extends beyond their own immediate interests.
  • How do you support and encourage super users? The best tactics will vary business to business but you want to provide super users with experiences that are exclusive, personalized and clearly beneficial. Make them delighted to be a special member of your community.
  • How do you cultivate super users? All businesses should follow an important theme: find ways to add value to your solutions through content, community and enhanced support.

Click to listen to the audio of the full session!

Subscribed Conference - Discussion Panel on Super Users


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