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5 Sales & Marketing Mistakes That Lead to High Churn in SaaS

By William Steward on Thu, Dec 18, 2014

Facepalm_227785Struggling to keep your SaaS company's churn rates down? Think that there's more you could be doing to approach the much revered negative churn? (Where upsells outpace lost customers)

You've come to the right place. 

In this article I run through 5 of the most common sales & marketing mistakes we see SaaS companies making. They all increase churn, and consequently decrease your customer lifetime value, one of the most important metrics in SaaS.

1) No Automated Onboarding

Are you using tools like HubSpot or Intercom to automate the new customer onboarding process? 

Related: read our 7-step essential user onboarding checklist 

When you sign a new customer, you shouldn't just leave them to get to grips with the software by themselves. It's vital that you build tutorials into your software, and provide your customers with plenty of learning material to help them to maximise the value they extract. 

Tools like Intercom allow you to send automated emails out to your customers based on how they are using your software. Custom tailored advice which can massively reduce churn.

2) Lack of Monitoring

Another cause of high customer churn for SaaS companies is the lack of customer monitoring. Tools like Intercom can help you to understand exactly how your customers are actually using your software, in order to identify where customers commonly get stuck and fail to get value. 

By monitoring how your customers use your software, you can prioritise improvements to be made, and new feature offerings. If you're not monitoring how your software is being used, then it's likely you're throwing away a large number of customers who pass their frustration threshold.

3) Poor Customer Success Team

It's fundamental that your SaaS company invests in its customer success team. Your team should be monitoring how customers are using their software, and actively reach out to help them extract more value. 

Having an excellent customer success team increases customer retention, upsells, and referrals. If you're not already investing in making your customer success team as good as it can be, then it's time you get started. It'll more than pay for itself over the years.

4) Overpromising

Overpromising in your marketing is a sure way to end up with higher than average churn rates. Don't make promises your organisation can't keep. If you oversell your software, you'll quickly lose customers, and damage your brand. 

You're much better off pleasantly surprising your new customers by slightly underselling, than dissapointing them. 

5) Selling to the Wrong Persona

Have you developed buyer personas for your SaaS company yet? A big reason many SaaS companies experience lots of customer churn is that they're targeting the wrong personas with their marketing. 

It's not uncommon for founders of a SaaS company to try and reach other people like themselves -- and in the process miss more lucrative personas. Think very carefully about your software, and take a look at your best customers. 

How are they using it? What industry are they in? What made them choose you over your competitors? 

These are all things you need to know and understand, so you can target more of the same people. Don't waste time and resources marketing to the wrong people.

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