Why Customers Leave

Customer churn is a common challenge for SaaS (Software as a Service) companies, and it can have a significant impact on a company's bottom line. After all, this is the whole reason that Customer Success even exists!

In this post, we'll explore some of the most common reasons for customer churn in the SaaS industry and offer insights on how companies can proactively address these issues.

• Lack of Product-Market Fit

One of the most common reasons for customer churn is a lack of product-market fit. If the product doesn't meet the customer's needs or solve their problem, they may choose to switch to a different solution. Customer Success engagement is a great way to regularly gather feedback from customers and use it to continuously improve the product, ensuring it remains a good fit for their target market.

• Poor Customer Support

Perfection is a myth, so rest assured that your customers will absolutely encounter technical issues when using your product…and that’s ok! However, if customers are not able to get the effective help they need when they have a problem, they may become frustrated and choose to switch to a competitor. As part of a successful Customer Experience strategy, it’s critical to invest in providing excellent customer support, ultimately including 24/7 technical support, online resources, and dedicated customer success teams.

• Lack of Product Adoption

Lack of product adoption is another common cause of customer churn. If customers are not using the product as intended, or in a way that best meets their needs and allows them to solve business problems, they will cancel their subscription. Your Customer Success team must provide customers with comprehensive training and engagement to help them effectively adopt and use the product.

• Failure to Launch

Ever heard of the phrase “shelfware”? That’s when someone buys your software and never implements it….leaving it to gather dust on the shelf. Think of this as the extreme manifestation of Lack of Adoption. As you can imagine, failure to launch is a pretty direct line to churn. After all, no one wants to keep paying for software they have never used.

• High Prices or Lack of Perceived Value

High prices or a lack of perceived value is another common reason for customer churn. If customers feel that the cost of the product outweighs its benefits, they may choose to switch to a cheaper alternative. When’s the last time you evaluated your pricing strategy, or did some benchmarking? I bet your customer’s procurement team has close eye on your pricing. If your price is aligned to the market, then you must double down on proving the return on investment (ROI) with your customers, to ensure they recognize the value of your product.

• Competition

Competition is natural and healthy in any market. It seems odd to list this as a cause of churn, but bear with me: Imagine your customer is experiencing any of the other pain points listed here: lack of understanding how to use your product to achieve their business goals, perceived (or real!) lack of product-market fit, or even poor adoption….and you’re not directly solving these issues with your customer. You better believe your competitors are waiting in the wings to step in and steal your customer away. In fact, most won’t even be ‘waiting in the wings’, they’ll be walking right in the front door.

• Changes in Business NEEDS

No business is static. To survive in today’s world, companies must evolve and shift to continue meeting their customer's business needs. Sometimes your customers may change in a way that means your product is no longer a good fit, and they may choose to switch to a different solution. You should regularly engage with customers and understand their changing needs to ensure your product remains a good fit for their customers.

However….don’t fall into these two common traps:

• Highly customizing your SaaS product to fit the needs of just one customer

• Compromising or completely sacrificing the vision of your product and its roadmap, due to pressure from your existing user base

Reducing customer churn is a critical challenge. By understanding the most common reasons for customer churn, companies can develop a strategy to proactively address these issues and ensure customer success. This can include providing excellent customer support, continuously improving the product, offering competitive pricing, and proactively engaging with customers to understand their needs and address any issues that may arise… this is where Customer Success shines.

Is your company at risk for churn, and you’re not sure what to do?

Contact me and let’s get you on the path to success!