User churn rates can make the difference between the success and failure of an app, product, or subscription-based service. Much time and focus are spent on acquiring customers, but all that hard work could be in vain if you are constantly leaking customers.
One excellent solution is to invest in user onboarding. This process helps reduce user churn significantly, which dramatically impacts the profitability of any digital SaaS business.
Below, we'll take a look at 10 ways to reduce user churn so that you can improve the health of your business.
What is User Churn?
User churn rate definition can be different according to the specific context of a business, but for this example, we’ll describe a definition that most makes sense to us and will make sense to a lot of SaaS businesses.
User churn rate is the percentage of the customers that were lost from the number of customers that were obtained within a specific period of time.
Let’s say, 250 users signed up in 3 months, 50 of them canceled by the end of the given three-month period. This means that the churn rate is 20%, as 50 is one-fifth of 250.
Here’s the formula form
Users that signed up during a given time period - A
Users from A that canceled by the end of the given period - B
For most businesses, reducing customer churn down as low as possible is indicative of the health of the company. A lower churn rate means that once a customer is acquired, it is very unlikely that they will cancel.
However, there are some times when a little user churn can be good.
When is User Churn a Good Thing?
In general, user churn is negative and should be avoided; however, it can be positive for your business in some scenarios. Occasionally, specific customers are a bad fit for your product or brand for several reasons. Additionally, some users are challenging or unprofitable. Losing these customers can be beneficial, but these are marginal and exceptional scenarios. Additionally, this indicates that user acquisition channels have space to improve, as some users unfit for your product are finding their way through, which could be replaced by users that are a better fit. Increasing the efficiency of acquisition spending will be helpful.
When Should Developers Start to Think About User Churn?
Many product managers and developers only think about user churn when their numbers lower dramatically. However, user retention should begin the minute that users are required.
Thoughtful onboarding needs to incorporate user retention from the first day.
Week 1: Aim to get users to engage with the product more than once.
Week 2-4: Establish a regular pattern of use.
Week 5: Make your product become so necessary that your customers can't do without it.
By engaging users from day one, developers can ensure that they stick around.
Here are several tips on how to do that.
#1. Improve the User Onboarding Experience
One of the best ways to reduce user churn is by maximizing their initial experiences. To achieve this, developers should capitalize on the brief window of opportunity that arises when a user tries a product. This means explaining the value of your product directly and clearly.
Getting users to their “aha moment” means getting the onboarding experience right.
Here is a list of best practices that will help retain your customers.
1) Devise a workflow that shows your product's core value quickly and directly
2) Design your user onboarding so that users are guided through the workflow seamlessly
3) Keep product tours precise and to the point
4) Use tooltips to highlight the key features or actions
5) Design UX to get to the heart of your product’s value
The crucial thing to remember here is the concept of time to value. The longer the time to value of the product, the higher the customer churn. There are many SaaS products out there, so typically, users are spoiled for choice. If you don't quickly make it clear why your product is indispensable, your competitors will.
So, figure out why your product solves your user's pain points, and design your user onboarding to show them how your product will make their lives easier in the most direct manner possible.
Users don't have weeks to sit around and figure out why the product is good. Solve the problem, and you'll keep them engaged.
#2. Send a Welcome Email
A personalized welcome email is a nice touch, but it also presents a fantastic opportunity to engage your users in ways that will increase their chances of becoming permanent subscribers. An effective welcome email functions to:
A) Build trust
B) Remind to engage with your product
C) Explain who you are
D) Underline how your product can help them
E) Explain what steps they should take to get value from the product
Another trick that you can't miss is personalization. Firstly, use the customer's name and try to make the email as dynamic as possible.
Secondly, don't send the email from a noreply@yourbusiness type email address. Send it from the person within the company, like the CEO, account manager, etc. While this might seem like a small detail, it can make a big difference in an increasingly impersonal digital world.
Finally, another advantage to a personalized email is that it presents a further opportunity for engagement. Ask customers questions related to what they need to make your relationship work. Questions like:
What do you want to get out of the product?
Do they need assistance getting started?
What improvements or features would they like to see in future iterations of the product?
#3. Consider Different Onboarding Mediums
A big part of onboarding users is that you should use any and every tool at your disposal to get them engaged in your product. Digital adoption platforms like Usetiful offer developers a range of tools that help usher users towards their aha moment. Depending on the product or the user demographic, different mediums will be most effective.
Some of the tools that can help users learn about and engage with your products are:
Videos
Product tours or walkthroughs
Tooltips
Written content
Product checklists
Of course, understanding which types of content to use takes some experimentation. If a product is complex and requires several steps for the user to complete a process realize the aha moment, a mix of mediums might be necessary. Of course, more intuitive products can get away with lean onboarding like tooltips.
These last three tips are all excellent to use in the early stage of product adoption. But to build the type of customer loyalty that ensures users continue to use your product (and encourage others to use it too) requires a different set of approaches.
#4. Increase Feature Adoption
Demonstrating the core value of a product is enough to get them interested, but driving awareness of other features is required to keep them around. The landscape is very competitive, and users also need to gain additional value in more minor but significant ways.
After users reach a level of familiarity with a product, they settle into a comfortable pattern of usage. We all do it. We often use a product or service for the core solution it offers and ignores a whole host of secondary functions it provides.
These features can offer a great deal of functionality — often tightly connected to the problem that led us to download the service in the first place — but if we don't know about them, we won't use them. And when we don't use them, it can make us more likely to abandon the product. This phenomenon even has a name: feature blindness.
Judiciously placed tooltips and hotspots can be used to eliminate feature blindness. Users are most engaged as they use a product, so small tips when they navigate can help direct them to other features they can grow to love. The more features they find indispensable, the more you can reduce user churn.
#5. Understand and Measure Customer Feedback
Users are a treasure trove of valuable information about your product. Product managers and developers obviously know and understand the product deeply, but they are too close to it in many ways.
For this reason, customers are often best placed to give the type of insights that can improve a product. Additionally, it never hurts to make sure the customers know you value their opinion and that you are actively trying to make the app or service as good as it can be for them.
For developers, it's crucial to understand why a customer loves your product, what they love about it, and what you can improve. Customers often leave reviews about services they use, so make sure to pay attention to these appraisals. You can garner lots of insights about them and nip future problems in the bud.
Even better is the use of customer surveys. Of course, timing is crucial. If you are just establishing a relationship with a customer, a long, detailed survey is ill-advised. They haven't invested enough to give their time. So if you do go down that route, they will likely need incentivization in the form of a giveaway or a prize. Indeed, this technique can be used with long-term subscribers to encourage them to engage in the survey
As for the type of questions you should ask, make sure they are open-ended questions. Yes or no answers have their place, but going deeper can produce better solutions with more information.
Some of the best questions you can ask are:
What caused you to start using the app or product?
Is the app's core function working for you?
What do you use it for, and how does it fit inside your current workflow?
How can the product improve?
What additional features or functionalities would you like to see?
By collecting and analyzing this feedback, you can make your product or service more attractive and have a better idea of how to organize user onboarding. For example, by understanding what features your customers love, you can place emphasis and more development capacity on them.
Now that you know the fundamentals of how to reduce user churn, you are ready to make your own improvements in your business!