How to Reduce Churn with a Customer-Focused Cancellation Flow
Canceling ≠churn.Too many SaaS teams see the moment when a customer presses the “Cancel my account” button with a feeling of surrender. In reality, about half of users initiate this process two or more weeks before their accounts expire, giving you ample time to re-engage and retain them.
Even though it's hard to change the mind of canceling customers, they are still a better opportunity than trying to convert someone who's not familiar with your brand. Existing customers already have experience with your product and know how to use it. They have already gone through the trouble of signing up and paying for your app, meaning you've done the hard work of showing them how your product can create value for them.
In this article, we look at how teams can approach cancellations as opportunities to re-engage and retain less-than-happy customers. This starts with optimizing the cancellation process so that customers only use it as a last resort action.
How to optimize the cancellation process of your SaaS product
Allowing customers to churn on their own is standard practice for most SaaS companies. Making the process seamless means less frustration on the part of the customer and less time your team has to spend canceling a customer.
However, that doesn't mean you should just let customers leave without making an effort to change their mind. An optimized cancellation flow can go a long way in keeping a large amount of customers who're considering dropping your product. The two essential elements of a good cancellation flow are:
- Allowing customers to self-cancel, but reminding them what they stand to lose by performing this action—the value they've built inside the app in the form of customer data, historical data on communication with customers, sales, and so on.
- Suggesting a compelling alternative to canceling. It could be a downgrade to a lower-tier plan, which is better aligned to the needs of the customer, or a few hours of consulting with the customer success team that will allow the customer to take advantage of the product.
Pure Chat has implemented these principles to great success in their offboarding experience:
Whenever a customer of Pure Chat requests a cancellation, they see a screen that reminds them of the progress they're going to lose—all the data they've built up about customers and transcriptions of chats they've had with them.
Users get multiple alternatives with two strong options—to pause their plan and skip payments for 2 months or downgrade to a free plan. The latter option is particularly interesting as it essentially makes the decision instinctive—you can keep all the value you've built inside the app for free. This is a very compelling prompt to keep your Pure Chat account, which allows the company to re-engage customers and get them on a paid plan again if they need it.
Even with such a flow in place, a fair share of customers would still go ahead and cancel, so it's important to have a strong framework in mind on how to work with these customers to get them back to your product.
A 3-step framework to retain customers who are about to churn
To take advantage of the short window between the time a user presses “cancel” and when their account gets closed, you need a strong plan. The following 3 steps will help you make the most of this opportunity.
Step 1: Learn why they're leaving
As soon as a customer initiates a cancellation, you should reach out to them to learn what motivated their decision.
The two things you have to consider about this survey is whether you send it in-app or email it to users and whether you ask them to share the reason, based on a list of pre-set options, or leave the question open-ended, so they can provide information in their own words.There are several ways in which you can do this:
In-app exit survey
Many products collect information immediately after a user has hit “Cancel.” This method works well because the decision is still fresh and users would be more likely to share information while they're still in your app. Preset options are a good option in this case—they ensure a higher response rate as they make it easy to provide feedback with 2 clicks.
LeadPages is a great example of how this tactic looks in practice. Whenever someone initiates a cancellation, they see the following set of options:
What's really great about this example is that LeadPages wastes no time to collect this information and then target cancelling users with a relevant offer. As soon as one of their customers has self-segmented themselves by choosing one of the options, the app gives them alternatives that are relevant to their motivation. So, if they say they're leaving because the service is too expensive, they're reminded of the option of downgrading their account, and so on.
Cancellation confirmation email
Emailing customers to confirm their cancellation gives them peace of mind and provides great customer experience. Create an automated email, sent 1-2 days after a customer has cancelled, which includes a link to the survey. This maximizes your chances to learn if they didn't fill out the survey the first time.
These work well when they're perceived as a “hand-written” message coming from the CEO or someone on the team. In addition, by using an open-ended question, you can collect higher quality feedback to understand the reason a customer is cancelling. Groove had a great experience with these — by tweaking the question and the language they used, they managed to get their response rate to 19%!
In some cases, it might be useful to follow up with a cancelation interview to extract even more insight from customers who are churning. Your main goal with these should be to learn — avoid pitching your customers to reconsider, as the risk of annoying them is too high.
Bidsketch uses this tactic to collect feedback and improve the product. Their interviews take 45 minutes, so to get people to sign up for them they even offer a $100 Amazon gift card to users who agree to participate.
The important thing in this step is to find the deep reason behind your customer's decision to cancel their account. Once you know that, you're ready to provide a targeted solution that can address their concerns.
Step 2: Offer customers a solution that's aligned to their motivation
When you start analyzing the feedback you get from customers, you'll understand that the decision to cancel ultimately comes down to 4 specific “categories” of reasons:
These customers are moving to another product because they find your offering too expensive. This can signal a more general problem with your marketing personas or your pricing strategy. The quickest way to address the concerns of these customers is to offer them a discount or a downgrade.
However, use these tactics with care as they can easily backfire—users might take the discount and leave as soon as the promotional pricing expires. Audible uses this tactic as a follow up to the following survey:
Users who respond that they're canceling because the service is too expensive are offered to keep their membership at a 50% discount for 3 months.
These customers are canceling because they're grown to the point where your product is not serving their needs anymore, or they're pivoting their own product or changing their business model and don't need your product anymore.
Users might also fall in this category if they tested your product for a while, but didn't find it a good fit for their needs.
Expanding the trial or offering a free upgrade to a higher-tier plan is one way to give yourself a bit of runway to retain those customers. Their feedback is valuable as it can point you to a new segment that you can go after by optimizing your product to serve their needs.
Some customers will be canceling to switch to an alternative solution or a competitor. Offering a discount or a free upgrade is the most straightforward way to keep these customers in the short term, but the feedback they provide should push you to examine the value proposition of your product and introduce features that hook your users and make switching to an alternative impossible.
Customers get pushed away when they feel neglected by your team. In some cases, there might be a member of the customer's team who's actively advocating against your product because they've had a bad experience with it or because they have a preferred alternative. In these cases, it's important to be pro-active about providing better communication and support so that these customers feel valued.
Segmenting customers allows you to target each group with the most relevant offer that's likely to make them change their mind and keep using your product.
Step 3: Keep showing value even after customers cancel
Just because someone pressed “Cancel,” it doesn't mean you should stop emailing them and showing them value.
Use what you've learned about them in the previous 2 steps, to tailor your approach and maximize the chances they stick with your product.
How soon and how often you target them really depends on the reason they're cancelling. Generally, you want to learn about what sparked the decision as soon as possible—that's why so many products push cancelling users to complete exit surveys so early in the process. In addition, if you know a customer is leaving for another competitor, you need to target them with a special offer before they've managed to buy another solution, transferred their data to it, and started using it actively.
On the other hand, if your customers are a few months away from making a decision on what tool to go with, you might want to target them with a long-term campaign aimed at keeping them engaged.
For example,15Five discovered that many of their users were moving away—they were trying the product before they were ready to start using it as a team. To keep those customers engaged after their trial has expired, they created a series of emails with educational content on something their audience was really interested in—how to be a better manager.
15Five has found a way to keep customers engaged and improve the chances that they come back to the brand without even touching their core product.
Never give up on a customer
As long as your product is solving the pain of a customer, there's a chance that you can keep this customer or get them to come back after they've canceled.
That's why it's so important to have active conversations and to understand what drives their behavior. Being able to discern between those who can derive value from your product and those who'd never be a good fit allows you to focus your resources on keeping the former and turning them from disgruntled users into loyal advocates for your brand.