3 things you can do to bring back churned customers

Churn is an important metric for a SaaS business. Strike that. It’s one of the most important metrics for a SaaS business, especially, in its early stages. There are never ending discussions on what an acceptable churn rate is. Honestly, I don’t see how there can be a universal benchmark figure for this. For example, when SaaS businesses in India compare themselves to their American counterparts, they will see a marked difference in what they can consider “normal”.

Whichever way you see it, tackling churn is crucial for a business. The study of churn metrics and what it means for a business is a separate topic in itself. To not digress, I’m linking to an article that talks about it in detail.

In the above article, the author talks about the concept of “negative churn.”

“This [negative churn] happens when the expansions/up-sells/cross-sells to your current customer base exceed the revenue that you are losing because of Churn.”

In addition to the above – cross-sell/up-sell/expand – can you also reach out to the customers who’ve churned in the past?

The cost of acquiring a new customer is 5 times the effort compared to winning back churned customers. So, think about this –

• A churned customer has already used your product/service. It gives you better insight into the nature of their business and why you’re right for them.  .
• You already have a lot of information about their business and their usage patterns. Why not use it to reach out to them again?

According to a study made on customer behaviour by marketing metrics:

• There is a 20-40 percent chance of mending a messed-up relation with an old customer, and
• a 5-20 percent chance of turning a prospect into a client.

Decision time. Analyze the ones who churned.

This is where it gets real!

We can segregate churned customers into two types –

• There are customers who may not come back. And the reasons for this could vary from stagnation in their business to pivots, to downsizing, etc. The reason they left is related to the changes in their business rather than your product/service.

• Everyone else falls into the other bucket. These are customers who left because of conflicts with your offerings. For example, these could be customers who were never on-boarded right. As a result never understood your product offerings to the fullest. These customers can usually be persuaded to give you another chance.

Let’ devise a strategy that will help you win back the customers who fall in the latter bucket.

1.Talk to them

If you want to get a customer back, start from scratch.

For too many companies, the only times they talk to their customers are when events like these occur:

1. The company wants to up-sell or suggestive-sell the customer
2. The customer has a problem and needs to talk to the company

Rings true?

Make a sincere effort to understand what happened. The aim of the conversation should be to understand what went wrong and how you can fix it.

• Start with asking them about what made them leave
• What changes do they desire in your product

Allow the customer to talk and maybe even ramble! The fact that someone is making an effort to hear them out makes a big difference.

For your efforts to bear fruit, make sure you end the conversation with an actionable followup on your part.

Use the information. Make amendments. Be responsible.

Once the information starts trickling back to you, start by analyzing that data.

Look at what went wrong and make changes. Take responsibility. Apologize if necessary. Let them know that you’re taking a personal interest in their issue.

Rethink your onboarding process, transactional emails, customer interactions, support, etc based on the feedback you receive. Unless there is a real change on your end, any other effort will only be a stop-gap before it spins out of control again..

2. Tell them you’ve changed too

Netflix tells customers who’ve been inactive for a while that they have something new to offer too.

Remember, you already have a lot of information about these customers who’ve left. Use that information to segment customers, because one size definitely doesn’t fit all. Do you have updates or changes that will help a particular segment better now than before? Let them know.

3. Tell them what their competition is up to

Do you have other companies in the same vertical using you? Can you give your customers insights based on what you’re seeing in their category?

Remember, it’s much easier to mend relations and get back those old customers rather than go looking for new ones.

Over to you – what do you think are the best strategies to bring back those old customers? What do you learn when you apply these strategies? We would love to hear back from you, drop by the comment section.