Double Down on Helping Your Customers Realize Value: New Churn Research Findings

How can you retain customers? This question is top of mind for B2B SaaS companies in the current economy.

Customer retention is an excellent – and often overlooked – revenue driver. According to the Harvard Business Review, increasing retention rates by 5% can increase profits by 25-95%.

To help companies reduce customer churn, IcebergIQ looked for key trends in our interviews over the last 12 months across a variety of SaaS businesses, and we co-presented these with Gainsight at Pulse 2023.

Here’s what we found to help you spot churn risk and take steps to mitigate it:

Double down on helping customers realize value.

Over the past year, customers increasingly cited price-to-value considerations as a reason for churn. This may reflect poor adoption, so SaaS businesses must set the stage from the start by ensuring implementation goes well. Monitor product usage, and proactively help customers find value. Be prescriptive in your guidance – customers really do want your expertise and it is key for helping them achieve their desired business outcomes.

Watch out for red flags signaling churn risk.

A change in your customer’s account ownership, or a change in senior leadership at their company, emerged as potential churn signals in our research. Be alert to what’s going on in your customer’s environment – new leaders often launch tool reviews with the aim of cost-cutting. The arrival of a new account owner should prompt you to connect quickly to talk about business goals and outcomes. Be aware that customers often start thinking about canceling far ahead of the renewal date, so stay ahead of the game with a value-mapping exercise at least 12 months in advance.

Implement win-back campaigns for churned customers.

You might expect your customer to go to a cheaper competitor, but that is increasingly not the case. Our research found that customers are choosing to replace a canceled product with existing tools, even if the solution is not perfect. There are two takeaways from this. First, try to position your own product as the one that is the best fallback option. Second, even if your customer does churn, they may return in time when cracks start to show in their cobbled-together solution. Keep churned customers on your radar and execute win-back campaigns.

Churn becomes more costly as you grow, according to Gainsight’s The Essential Guide to Churn. Bottom line: Invest in churn prevention now to save money later.