Why the solution to reducing churn is aligning your product with customer goals.
As a Founder, it hurts me personally when a customer churns. At my last startup, Validately, we would often get cancellation emails from customers along with positive product feedback. Churn from customers who loved our product was particularly frustrating and confusing.
The solution to this issue was aligning our product with customer goals and delivering true value. This case study explores how we achieved this alignment, the resulting impact on our business, and lessons learned.
At Validately, our churn problem stemmed from a specific customer segment - designers at small companies. Enterprise customers had great retention rates as did UX Researchers at all company sizes. But Designers at small companies had high churn rates. They appreciated our product, but didn't recognize its full potential. To address this issue, we needed to understand all of their needs. They loved Validately because it was easy to use to get design feedback. But this customer segment didn’t have a continual pattern of getting design feedback. They would tell us that they were canceling, “because they didn’t need to get design feedback anytime soon.”
We meticulously analyzed product usage patterns for this segment and identified a specific pattern that created a deeper connection to our product. When Designers in the SMB segment took notes on usability feedback tests inside Validately, they almost always renewed. Conversely, the churn rate for this segment who didn’t take notes was really high. Through customer interviews we realized why note taking made Validately more sticky. It created the perception of Validately as a “research hub” not just a usability testing tool. In addition to getting quick feedback, many Designers had a desire to build a central repository of design feedback. Note taking created that connection to that goal.
With this knowledge, we started to experiment. Our CS team made note taking a new focus. We also used messaging automation to highlight the benefits of this feature. Our product design team also started creating new features like @ mentions and # tags to improve note taking.
By proactively messaging customers about how note taking can help them create a “Research Hub,” we drove higher feature engagement and better business results. Our strategy led to significant increases in trial upgrades and product-led sales upgrades. Customer retention rates also improved from this segment, and new expansion opportunities emerged as satisfied customers advocated for our product within their organizations.
Customers don't churn just because of a competitor's new feature. They value the relationship built with a product and the time invested in learning and integrating it. Guiding our product team to focus on fundamental value propositions and aligning them with customer goals resulted in a stronger product and more loyal customer base. The results was improved revenue metrics.
To reduce churn and foster deeper customer loyalty, understand the value propositions that matter to customers and then explicitly align your product to their goals. Focus on core value propositions, proactively message customers, track progress, and implement personalized nudges and alerts. By delivering value, you will build a loyal customer base that will result in business growth and success.
Want help? I am happy to chat with you about how you can specifically align customer goals to your product.
Steven Cohn is the Founder and CEO of Winware.
Winware helps SaaS teams drive better trial conversion rates or higher retention rates by optimizing SaaS onboarding to align product features with customer's goals.
If you want a free analysis of your onboarding with specific suggestions on how to improve it to drive faster time to value, please contact us.