Here’s an in-depth look at how this feature works and why it’s beneficial.

6 Key Benefits of FastSpring’s Subscription Pause Feature

1. Flexibility for Customers

Life can be unpredictable, and sometimes, customers temporarily may not need or be able to afford a service. The subscription pause feature allows them to disable billing and services temporarily without canceling their subscription. This flexibility builds trust and shows that your business values customer needs.

2. Retention Strategy

Rather than losing customers permanently due to cancellations, the pause feature provides an alternative. By allowing customers to pause their subscriptions, businesses can retain them over the long term, improving customer lifetime value and reducing churn rates.

3. Automatic Resumption

Once a pause is initiated, subscriptions automatically resume on the configured date. This eliminates the need for customers to take additional action, making the process seamless and ensuring service continuity when they’re ready to return.

4. Customization Options

FastSpring’s subscription pause feature is highly customizable, allowing businesses to:

• Define the maximum pause duration.
• Determine whether customers can initiate pauses themselves or require assistance.
• Tailor the experience to match their subscription model and customer needs.

5. Reduced Churn

By providing an alternative to cancellations, businesses can significantly reduce churn rates. Customers facing temporary financial constraints or changes in service needs are more likely to return after a pause than if they had canceled altogether.

6. Improved Customer Experience

Offering a pause option demonstrates empathy and understanding of your customers’ challenges, or of even just their usage habits and expectations. Offering a pause feature enhances their overall experience and strengthens their loyalty to your brand. 

For example, a November 2024 Wall Street Journal article cites an Antenna report showing that the rate of streaming service subscribers who canceled one year and rejoined the next increased from a median of 29.8% in 2022 to 34.2% in 2023. Since more and more people may be regularly stopping subscriptions and then rejoining later, making the process easier for your customers can foster goodwill and loyalty, ultimately improving retention.

How to Implement FastSpring’s Subscription Pause Feature

Step 1: Configure Pause Settings

• Within your FastSpring account, configure the subscription pause settings to align with your business strategy. 
• Decide on the maximum allowable pause duration and whether customers can initiate pauses themselves. (This configuration setting allows you to choose the number of bill periods the customer can pause for.)

Step 2: Customer Communication

• Clearly communicate the pause option to your customers. Highlight the benefits, such as avoiding cancellation fees or preserving their subscription benefits upon resumption. The number of billing cycles for which a subscription can be paused is configurable, but it must be set in advance.
• If the pause feature is not enabled for customers, only sellers can pause subscriptions.
• The pause applies only to the configured number of billing cycles, and this setting must be saved in the subscription’s configuration.

Step 3: Monitor Paused Subscriptions

FastSpring provides webhooks to monitor and manage paused subscriptions. Use these to identify trends or common accounts, such as common pause durations or reasons for pauses, and refine your strategies accordingly. (FastSpring sends webhooks when a subscription is paused or updated to resume, such as subscription.paused and subscription.updated.)

Step 4: Leverage Automated Notifications

Set up automated email notifications to:

• Confirm the pause request.
• Remind customers when their subscription is about to resume.
• Offer incentives, such as discounts or bonuses, to encourage early resumption.

A Win-Win for Businesses and Customers

The subscription pause feature is a powerful tool that benefits both businesses and customers. By reducing churn, improving customer retention, and enhancing the overall experience, it positions your business for long-term success. Customers, in turn, appreciate the flexibility and understanding, fostering loyalty and trust. A “Pause” option reduces churn by catching these “non-permanent” cancellations.

Buyers feel less pressure and more positive about the brand, leading to higher lifetime value (LTV).

Start leveraging FastSpring’s subscription pause feature today and give your customers the flexibility they need while ensuring your business thrives in the subscription economy.

Are you looking for a merchant of record that will partner with you to grow your business internationally? FastSpring provides an all-in-one payment platform for SaaS, software, gaming, and other digital goods businesses, including VAT and sales tax management, payment localization, and consumer support. Set up a demo or try it out for yourself.

The post Enhance Customer Experience With FastSpring’s Subscription Pause Feature appeared first on FastSpring.

• Preparing for Cyber Weekend: A Marathon, Not a Sprint
• Ensuring Smooth Transactions: A Refresher on Our Refund Policies
• Still on FastSpring Classic? Elevate Your Business With FastSpring Contextual
• Customer Churn: Turning the Tide With Proven Retention Strategies
• The Only Thing That’s Constant With Tax Law Is Change

Need FastSpring support? Visit our Support page.

FastSpring provides an all-in-one payment platform for SaaS, software, and digital products businesses, including VAT and sales tax management, payment localization, and consumer support. Set up a demo or try it out for yourself.

Preparing for Cyber Weekend: A Marathon, Not a Sprint

Gearing up for Cyber Weekend in the world of ecommerce is like preparing for a marathon. FastSpring is ready, and we want to ensure your success by providing key steps you can take to ensure a smooth and successful peak sales season.

• Optimize website performance: FastSpring is ready, are you?  Conduct a thorough performance check on your website to ensure that it can handle increased traffic without slowing down or crashing. 
• Enhance the user experience: Make it easy for customers to find products, navigate through the website, and complete the checkout process.
• Optimize your store and products for conversions: Conversions don’t just happen, you need to optimize for best results.  
• Fulfillment planning: Analyze past Black Friday/Cyber Monday sales data to predict which products will be popular. Ensure that you have sufficient licenses uploaded to meet the increased demand. Read about FastSpring Fulfillment here.
• Cyber Weekend deals: There is a lot of competition out there. Create compelling and exclusive deals to attract customers. Consider bundling products, offering discounts, or providing limited-time promotions to entice shoppers. Read more about Product Discounts, Coupons and Multi-Discount Coupons, and remember that FastSpring has a “Combine Discounts” setting for coupons.
• TEST!: Test your products, test your fulfillment, test your coupons. Not sure how?  Read about it here.
• Promotions: Start your marketing campaigns well in advance. Utilize social media, email marketing, and other channels to create awareness about your deals.
• Security measures: With increased online activity comes an elevated risk of cyber threats. Ensure that your website has robust security measures in place to protect customer data. Once a customer enters the checkout, FastSpring employs risk management to help safeguard you from fraud.
• Customer Support readiness: Anticipate a surge in customer inquiries and prepare your support team. Need some help with purchasing issues?  Reach out to FastSpring Support!

Preparation is the key to providing your customers a positive experience during this peak sales season. Remember that this visit on Cyber Weekend will begin the impression that customers have of you and your brand throughout their customer journey.

Luanne Albright
Manager, Customer Support

Ensuring Smooth Transactions: A Refresher on Our Refund Policies

As the holiday season approaches and we gear up for the much-anticipated holiday shopping frenzy, we understand that ensuring a seamless shopping experience is of utmost importance. That’s why we want to take a moment to refresh your knowledge on our refund policies and limitations.

Refund policy: When a refund request is received, we guide the customer to your support contact email, allowing your team to manage direct customer interactions and process refunds from the App. Our refund policy is available here. 

Refund limitations: It’s important to note that there are some restrictions on refunds, depending on factors such as the payment method used or the time since the order was placed.

Partial refunds: Partial refunds are not supported for orders paid through specific payment methods, including Alipay, Sofort, Giropay, iDeal, Check, and Wire Transfer. Attempting to initiate partial refunds in the platform with these payment methods will result in an error. If you prefer a full order refund with these payment methods, a manual process is required. In these instances, you can contact our support team for assistance in processing these refunds. This policy also extends to any tax refund requests involving the mentioned payment methods.

Tax refunds: FastSpring can refund tax on orders for both US and VAT countries within 90 days of the purchase. For other countries that charge tax on their orders, tax can be refunded within 30 days of the purchase. You can contact us on the buyer’s behalf to request these tax refunds, or they can directly reach out to us through our consumer support site to create a case. If an order falls outside the 30 or 90-day timeframe, we won’t be able to refund the tax, and the customer should contact the relevant tax authority in their country for a tax refund. 

In case you choose to contact us on a customer’s behalf, we’ll need the customer’s tax exemption form for U.S. customers or their tax ID for customers in other countries to process the tax refunds and/or apply tax exemption to subscriptions.

Contact Support: To comply with liability, FastSpring Support must issue refunds on your behalf for the following circumstances:

• Real-time payment methods: AliPay, GiroPay, Sofort. and iDeal.
• Transactions from more than 6 months ago.
• Wire Transfers and US checks.
• Transactions with an open dispute case.
• Tax refunds.

Please note for orders placed more than 6 months ago or paid via check, we require the customer’s PayPal email address for manual refunds. Wire transfer refunds require the customer’s bank details and come with a $30 USD fee, which can be deducted from the refund or charged to your account. PayPal is also an option for manual wire transfer refunds at no extra cost.

If your customers request a refund with any of the above conditions, please contact our support team for assistance.

TJ Pohlman
Platform Support Specialist

Still on FastSpring Classic? Elevate Your Business With FastSpring Contextual

At FastSpring, your success is our mission. Transitioning to our Contextual Platform isn’t just a move — it’s a strategic leap towards unmatched growth and revenue.

Contextual Platform: Benefits

• Enhanced efficiency: Optimize performance, reduce costs, and empower your team for peak productivity.
• Improved customer experience: Elevate customer satisfaction, build loyalty, and boost repeat business with advanced features.
• Data-driven insights: Leverage cutting-edge analytics for informed decisions, discovering growth avenues, and optimizing your offerings.
• Scalability: Seamlessly expand your business. Our platform grows with you, ensuring you never miss a beat, even during high-demand periods.
• Competitive edge: Stay ahead in your industry. Embrace the latest technology, attracting and retaining clients effortlessly.

Contextual Platform: Features

• Storefront variety: Ditch single checkouts. Contextual offers web, popup, and embedded storefronts. Popup stores increase conversions by 30%, simplifying the purchase process.
• Event notifications: Experience reliable, detailed event notifications through Webhooks. Payloads are KV pairs and contain extensive data on the event. You can choose what events you want to subscribe to!
• Robust API: Say goodbye to limitations. Our powerful API enables seamless integrations with third-party systems, including marketing analytics tools, CRMs, DRMs, BI tools, and more. We host Postman examples here.
• Account management portal: Provide consumers with secure access to order history, fulfillments, and subscriptions. Customized by you, hosted by FastSpring.
• Subscription features: Unleash the potential with paid and free trials, subscription pausing, and seamless product renewals, ensuring dynamic subscription management.

Witness Success: Learn from Walls.io’s Journey!

Explore the Walls.io case study. Witness their triumphant shift from Classic to Contextual, reaping the benefits firsthand.

Review additional case studies from sellers who achieved success using various features of the contextual platform.

What are you waiting for?

Seize the power of FastSpring’s Contextual Platform. Open a ticket with our support team now! To learn more about migrating from Classic to Contextual, check out our documentation. 

Patty Novrocki
Customer Support Knowledge Manager

Customer Churn: Turning the Tide With Proven Retention Strategies

In the fast-paced world of sales, cancellations are an inevitable reality. While some situations might seem beyond your control, more often than not, there are proactive measures you can take to mitigate customer churn. Buyers churn out of transactions for a myriad of reasons, ranging from misconceptions to unaddressed concerns. The key lies in understanding these reasons and employing effective strategies to retain them.

By moving the needle just a little, you can see huge payouts by the end of the year. 

Reducing your monthly churn by 1% can result in a 9% annual churn rate decrease. That means if your ARR comes in at $100,000, you’re getting an extra $9,000 in revenue by the end of the year!

Here are a few hot tips from FastSpring to help you reduce your churn rates and keep your buyers around for longer!

1. Onboarding Journey: Get the most out of your onboarding journey. 

Buyers wanted your product for various reasons, whether it be its quality, features, your company’s reputation, or its price, but there was a specific motivation behind their choice.

In the world of SaaS businesses, customers aim to get the most out of your product, but what that means can vary depending on the customer. 

Making sure that your buyers get the level of the product that balances both the most value and the most efficient price point for them is critical. Encourage them to hit usage-based goals and key journey points along their onboarding. If they don’t see the value, they’ll be at risk of leaving. 

With our Product Offers API, you can ensure that your buyers are seeing the product and package that will bring them the most value. You can choose which offers to deliver, whether it’s an upgrade, cross-sell, up-sell, down-sell. Give them the most flexibility and best value for their money. 

2. Contract Terms: Offer longer contract terms, and reward buyers for choosing them.

Monthly subscriptions are flexible but come with risk securities for you as a seller. Annual Subscriptions provide a longer-term commitment for you and result in a significant reduction in monthly churn rates. 

Offering a reward for choosing to commit to a longer-term will drive more traffic toward this option. 

3. Dunning Management: Use Dunning Management to improve your odds at collecting.

If your buyers do fall delinquent, FastSpring is here to help. We offer a dunning management program to help you maximize the number of buyers you are able to return to good standing. The good news, you don’t need to do anything extra. FastSpring   provides Dunning Management enabled out of the box! Read more about our Dunning program here. 

4. Pause/Resume: Allow your buyers to pause and resume their subscriptions.

Sometimes, a buyer may not need your subscription temporarily for a multitude of reasons. Allowing your buyer to pause the subscription instead of canceling it will give a much greater chance that they return at the end of the pause period, and your buyer will be happy about the flexibility. You can customize how long they can pause, and your buyers can resume at any time. 

5. Packages Variation: Allow upgrades and downgrades mid-term. 

We all strive to select the appropriate package for our needs, yet occasionally, we overlook the best choice.Perhaps your buyer has chosen the exclusive upper tier, but really, they’re only making use of the basic functionality. While this does mean more money for you in the short term, if they’re more likely to churn, it is worth getting the package that is right for them. 

With our proration API you can show your buyers what it would look like to either upgrade or downgrade, and give them the flexibility to make plan changes midterm. More flexibility for your buyers means they’re more likely to stay longer. 

6. Cancellation Survey: Don’t give up on canceled customers; win them back!

Although buyers may cancel for one reason or another, that doesn’t mean they’re gone for good. With our subscription.cancelled webhook, you can reach out to a buyer once they’ve canceled and try to win them back. Maybe you just want to collect some feedback about why they’ve left, or maybe you can offer them a deal to stay. 

Remember that you possess the means to reconnect with lost customers. By integrating that webhook into your email platform, you can engage with these former buyers. Whether you succeed in winning them back or not, their feedback holds tremendous value in shaping strategies to retain future customers.

Danica Larsen
Customer Success Manager 

The Only Thing That’s Constant With Tax Law Is Change

As a FastSpring seller, there’s no need to worry because we stay on top of all worldwide tax changes so you don’t have to. But, if you’d like to stay informed, you can always find detailed information about what’s changing in the tax documentation here. 

Here are some things to be aware of: 

VAT Rate Changes Effective January 1, 2024

Digital Reporting Requirements (DRR), aka Electronic Invoicing or E-invoicing

• Separate country requirements are starting to appear everywhere. It varies by country but typically involves processing, transmitting, and receiving transaction data in a specified electronic format. It is NOT a PDF invoice delivered electronically. We are working behind the scenes to ensure compliance with e-invoicing requirements worldwide.
• It’s important to remember, requirements vary by jurisdiction. Sellers are responsible for any digital reporting requirements on their sales TO FastSpring. FastSpring only handles this type of compliance on sales to the customer or end users. 
• We currently facilitate DRR standards in the following countries:
  • Japan Qualified Invoice System (QIS)
  • Serbia eFaktura (SEF)
  • Taiwan Electronic Government Uniform Invoice (eGUI)
  • UK Making Tax Digital (MTD)

1099-K: Changes in Reporting Requirements

For 2023, the reduced reporting threshold for Form 1099-K is expected to be $600 (previously $20,000). Although guidance is still unclear and it may change before year-end. Sellers who transact in the US with sales over $600 will receive a 1099-K. Please make sure your mailing address is up to date. If you need to make changes, or If you haven’t already confirmed your tax status, complete the W8/W9 electronic questionnaire here. 

Beth Thorpe
Senior Platform Support Specialist 

FastSpring provides an all-in-one payment platform for SaaS, software, and digital products businesses, including VAT and sales tax management, payment localization, and consumer support. Set up a demo or try it out for yourself.

The post FastSpring Support: 2023 Q4 Updates From Customer Support appeared first on FastSpring.

Interestingly, even though I paid for a year-long subscription, the company didn’t let me keep the last three weeks of access to its premium features.

As soon as I started canceling, a popup warned me that I’d immediately lose access to all paid features. 

“This action will immediately downgrade your subscription. Are you sure you want to continue?”

I canceled anyway, knowing I didn’t need the tool going forward. In the language of SaaS, I churned. And the experience got me thinking:

• Was immediate removal of paid features the best chance to keep me from churning?
• When did I officially count as “churned”? Did they count me as churned on the day I canceled? On the day my subscription would have renewed? What if I had downgraded, upgraded, or changed my usage?
• What could they have done better to try to prevent me from canceling? 

In this article, we take our best shot at answering these and many other questions surrounding churn.

In part one, we cover benchmarks and common churn formulas.

In part two, we’ll cover five churn-prevention strategies that have been successful in other SaaS businesses. 

And in part three, we’ll conclude with a set of definitions you can use when talking about churn with others — and some additional resources.

If you prefer, you can use this 👇 table of contents to jump between sections of this article. 

Table of Contents

• Part I: SaaS Churn Benchmarks
• Part II: 5 Proven Strategies for Reducing SaaS Churn
• Part III: Churn Definitions and Additional Resources

Note: FastSpring has churn-prevention features built into our platform, such as automatic card retries, custom customer notifications to prevent card issues before they happen, and much. Set up a demo to learn how we can help you reduce churn.

Part I: SaaS Churn Benchmarks

When folks in SaaS talk about churn, we don’t always do a good job of making sure we’re on the same page.

If someone says they have a 5% churn rate, are they talking about monthly, quarterly, or annual churn?

Are they including customers who never made it out of a trial? 

Can you compare the churn rate of a SaaS company targeting enterprise customers to one selling to the general public?

When we set churn benchmarks for SaaS companies, there’s so much to consider. And in this section, we break it all apart so that you can run an extensive churn analysis on your own company and have a better idea of how you’re doing.

Is There an Ideal Churn Rate for SaaS?

I often hear that a 5% to 7% churn rate is ideal for SaaS companies. But is this purely anecdotal? How common is it for SaaS companies to meet this benchmark?

In other words, 5% to 7% might be the ideal, but what’s the average?

To investigate, Ryan Law, former CMO and cofounder of Cobloom, performed an analysis of six recent churn reports or studies and found that there is no consensus on the average churn rate for SaaS companies. Half of the reports he studied showed an average annual churn rate of 10%. The other three showed a larger and wider range: from 32% to 61% annual churn.

Why such a wide range? Ryan theorizes that there’s not enough data out there to get a more accurate picture of SaaS churn because it’s not something most companies want to be very transparent about.

But he sees other common aspects that impact churn: a company’s size, and its industry.

Churn Can Vary by Industry

Industries can have very different churn benchmarks.

“Look through your own tech stack, and you’ll likely see some products you view as essential, and others deemed ‘nice-to-have,’” Ryan writes. “It’s likely that a finance or sales tools will be less susceptible to churn than a marketing tool, simply because it’s perceived to be more directly responsible for revenue.”

He adds that niche tools with fewer competitors will also see lower churn.

Company Size Impacts Common Churn Rates

Ryan points out that many of the largest SaaS companies target enterprise customers that use longer contract lengths, so their churn rate will be lower. So the flip side is that SaaS companies targeting individuals or small businesses with a larger customer base and shorter contract lengths will naturally have higher churn rates. 

While Ryan compares the common churn rates of large and small SaaS companies, what he’s really saying is that your churn rate will vary based on the size of your customer and your average contract value. The smaller the ACV, the easier it is to churn.

What Is Acceptable Churn?

Hotjar founder David Darmanin understands that a churn rate doesn’t mean much on its own. “Ultimately, churn and the amount of churn you have matters as much as the size of your market and the speed at which you’re bringing on new customers,” he explained on an episode of the ChurnFM podcast.

If your market is small, then churn matters significantly more. But if your target market is relatively large, and you use a low-friction sales approach, then you can withstand a higher churn rate without it dramatically impacting your business.

This realization led David to break down churn into two categories: acceptable and worrying. Some churn is acceptable, perhaps even necessary — especially if you’re using a more B2C-style sales approach.

“Worrying churn is where you’ve identified an ideal customer, and they’re coming on board, then they stop using [your product], or they stop paying for it,” David said.

In other words, churn really starts to matter if you’re losing a large percentage of your ideal customers.

It can even be a good thing to lose users that don’t fit your ideal customer profile (ICP). They’re not the users you want to spend time supporting or seeking feedback from.  

But there’s another distinction that matters to David: How do users feel about the product when they leave?

“Ultimately, I think what has a much bigger impact on this kind of flywheel you’re creating (in our case, at Hotjar) is that if people are exiting or pausing with a bitter feeling, that actually has a much bigger impact than the fact that they stopped paying you. Because word-of-mouth for us is actually much bigger fuel than the revenue that we’re collecting or churning or dropping or whatever.”

This is where collecting feedback from churning customers comes in (a topic we’ll dive into farther below).

What’s the Best Churn Rate Formula to Use?

To measure churn, the easiest churn rate calculation is the number of churns during a given period divided by the number of customers at the beginning of a period. 

For instance, if you’re calculating monthly churn, and you start with 1000 customers and lose 27 of them, your churn rate for that month would be 2.7%.

But this formula misses out on a lot of important details. 

For instance, it doesn’t take into account the number of new users you gained during that period and how many of them churned, versus the number of existing customers that churned. 

It’s also not weighted for growth. If you lose the same amount of users each month, but you continue to gain more customers than you lose, your churn rate will decrease, but there’s been no change in customer behavior.

If you use this simple equation to measure monthly churn, you might even notice that your churn rate can vary depending on how many days are in a month!

For these reasons, the basic churn rate formula does not give you an accurate account of how you’re growing or who you’re losing. It’s just too simple.

When deciding how you’re going to calculate churn, Outlier AI recommends two things:

1. The churn formula you choose should be in line with your top business priorities. Decide what details are most important to you to track and refine the formula accordingly.
2. Don’t make the formula too complex. “The more complex it becomes, the more likely someone will make a mistake calculating it at some point, and you’ll have a misleading metric.”

Business analysts have published their own churn formulas. Steven Noble’s post about how Shopify measures churn is a must-read. And a Baremetrics post looks at churn of different types of customers, such as users downgrading or annual plan subscribers leaving.

One more thing: When people talk about churn, they’re typically referring to the number of customers lost. But there are other types of churn you can measure, such as revenue and transactional churn. Check out Outlier AI’s post for more on these.

Monthly vs. Annual Churn: Which Should You Track?

There’s a big difference between monthly and annual churn. If you lose 7% of your customers to churn over a year, that’s a way different number than losing 7% of your customers every month.

While it’s not a bad idea to be measuring both, your monthly churn rate should be much, much lower than your annual churn rate.

What Is Negative Churn?

When attempting to get the big picture about churn, you shouldn’t just take into account how many customers you’re losing. The full picture includes the behaviors of your returning customers, as well. 

And that’s where negative churn comes into play.

I’ve heard people ask whether negative churn is a myth. It’s not actually, but it might not be what you think.

Negative churn occurs when the revenue gained from upsells and cross-sells outweighs lost revenue from churned customers over a period of time. 

When you’ve reached this point, you could continue losing customers with no new customer acquisition and still increase your revenue (at least for a while).

According to VC Tomasz Tunguz, reaching negative churn should be a goal. 

“Combined with annual prepay contracts, negative churn is a very powerful growth mechanism,” Tomasz writes. “When thinking through your pricing model and your customer success strategy, it’s worth trying to engineer negative churn into your startup.”

Next Level Churn Rate Analysis: Who and Why

On a high level, a churn analysis is simply analyzing the rate at which you are losing customers. 

But don’t stop there. Your churn rate just tells you the what, not the why or the who. To really understand and do something about churn, you’ll need to know why people are churning and which users you’re losing. 

SaaS growth expert Fred Linfjärd recommends using a mix of quantitative and qualitative data analysis to understand who is churning and why, as well as how to take action.

Quantitative Data Gathering: Website and Product Data

Sample questions to try and answer:

• Which user groups are more likely to churn?
• Are there patterns in their product usage?
• What support documentation did they view before churning?

Qualitative Data Gathering: Surveys and Exit Interviews

Questions to try and answer:

• Why did they leave?
• What would make them reconsider?

Hopefully this gives you a better understanding of how churn is impacting your business. Next, let’s look at how to develop a churn-reduction action plan.

Part II: Five Proven Strategies for Reducing SaaS Churn

Ideally, your churn prevention strategy is led by the qualitative and quantitative research you’ve been conducting — because once you know who is churning and why, it becomes much easier to prioritize which strategies will have the biggest impact. But it’s always helpful to know what other companies have done that has worked well. 

1. Update Your Dunning Management System

It’s common for 20 to 40% of customer churn to be involuntary: the result of expired cards, technical issues authorizing transactions, etc. Fred Linfjärd explains why making sure you have an advanced dunning system should be your first priority when battling churn.

2. Prove Value as Soon as Possible

Preventing churn starts at the beginning of the customer journey, and an especially critical time is during the onboarding process.

You’re undoubtedly aware of how important it is to make it easy for SaaS customers to get started. If there’s too much friction from the get-go, they’re not going to keep using it. 

But there’s also more and more talk about the importance of providing “quick wins.” As Lincoln Murphy explains, “​​Customers who realize value quickly are the ones that stick around the longest.”

There are plenty of ways to orchestrate quick wins within the product itself. But it’s also something you can do more directly through emails.

Back when Christoph Engelhardt worked for Moz, he was able to decrease its monthly churn rate of new users by 40% by sending an email that showed the value Moz was providing to its customers within the first thirt​​y days. He explains the process he used in an in-depth post.

3. Look for Red Flag Metrics

Search the product behavior of churned customers to uncover patterns. These behaviors can be red flags alerting you that a customer is in danger of churning. 

Groove, a shared inbox for businesses, reduced churn by 71% through this data analysis. Groove’s team compared the product usage between new users that churned before thirty days and those who stayed. They discovered that users who churned had much shorter first sessions and less frequent log-ins than users who remained on after the first thirty days. 

4. Customize Your Cancellation Offers

A common churn reduction strategy is to automatically send an offer to users who decide to cancel their subscription, whether it’s a discount, the ability to pause the subscription, or something else. 

Wavve, a social media tool for podcasters, was able to recapture over 30% of users who pressed the cancel button by adding an offer at the end of a short cancellation survey.

This strategy worked so well because attaching the offer to the cancellation survey allowed Wavve’s team to personalize the offer based on why a user was canceling.

5. Automate What Works, Including Collecting Feedback

Once you’ve reduced churn, how do you keep it at a consistently low rate?

You keep collecting feedback in an automated way.

The personalized offer attached to a cancellation survey that Wavve employed was also a huge part of Fred Linfärd’s strategy when he reduced churn by 50% at a photo editing software company. 

The cancellation survey allows you to keep collecting valuable feedback to stay on top of why customers are churning. “You can automate or systemize your qualitative feedback collection and, in this case, find out why they leave you. So typically, an exit survey would be sent to someone who cancels, either via an email or maybe even when they hit the cancel button. If you can automate that collection, that’s going to continuously get you feedback, so you don’t have to think about doing it,” Fred explained in our interview.

As your product and customers change, so will the reasons they churn. Continuing to evaluate feedback is an important part of maintaining a low churn rate.

And by automating the feedback collection process, it frees up your time to work on other projects.

Want more strategies to reduce churn? Fred offers some great tips on how to reduce churn and increase your average customer lifetime value through specific strategies that upsell customers to annual contracts. Check out the interview here.

Part III: Churn Definitions and Additional Resources

What Is Churn?

Customer churn, also known as customer attrition, is the loss of users to a product or service. It’s the opposite of customer retention.

What is a SaaS Churn Rate?

A SaaS churn rate is the measurement of the number of SaaS customers who cancel their subscription during a given period.

What Is the Average SaaS Churn Rate?

There is no consistent average churn rate for SaaS. Per multiple studies, the average churn rate can vary from 10% to 60% depending on the size of a company and its market.

Churn and Retention KPIs to Track

Besides monthly or annual customer churn rate, other SaaS metrics that can give you a fuller picture of customer churn and retention include: 

• Dollar-based net retention rate (NDR)
• Customer lifetime value (CLV)
• Monthly recurring revenue churn (MRR churn) and annual recurring revenue churn (ARR churn)

How FastSpring Can Help

Reduce involuntary churn using our built-in revenue recovery tools, such as automatic payment retires, customer reminder emails, and a self-service portal. ​​

Learn more about our subscription management platform.

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