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SaaS Customer Retention - Learning from Failure: Causes of high churn-rate.


We've looked at several SaaS companies. Here are the 7 attributes of companies with high churn rates:

Lack of Competitive Pricing

When the SaaS product is overpricied for the customer's needs and a customer is able to find a competitor solving their problem at a price-point that makes more sense they tend to leave. If the product is sticky, high-quality or stands out in it's features and support that may not be the case.

Customer who bought-in with the the wrong expectations

Often for SaaS products selling to a broad audience, the target audience is a broad group consisting of multiple customer segments. The value some customers in specific segments may derrive from your offering is often unclear to them. Customers buy the product with the wrong expectations and leave when they discover they aren't even using certain features that they are paying for.

Sloppy onboarding

There’s no second chance for a first impression. If you fail to onboard a customer to your product, you may fail to retain them. There is no better way to put this.

For mid-market and enterprise SaaS, lack of Customer Success or Account Managers is a problem

For a customer paying a top dollar for your software access to solutions to their unique problems is very important. Often such problems and their solutions vary customer to customer and are not documented. From the perspective of the customer, nothing beats being able to email or call somoene who can understand their problems and champion their cause. Customer Success Manager (also sometimes known as Account Manager) serve this purpose.

Downtime or breaking when the customer needs your tool

If your SaaS serivce is unavailable when the customer needs it the most you are likely to lose trust and lose them (When this happens or is about to happen you'd know that it's time to invest in better engineering).

Lack of access to features that the customer needs

Sometimes your SaaS offering just isn't able to grow as fast as the customer's needs. (If they drop off due to this reason, it's time to invest more in product and engineering).