Reduce Your Churn Rate: Retaining SaaS Customers in 2023

January 11, 2023

The year is 2023: Customer Acquisition is dead.

Pretty dramatic, right? Also, it’s untrue- customer acquisition will always be one of the largest components of successful business, no matter the industry.

Yet, in a world where subscription billing reigns supreme, particularly when offering Software as a Service (SaaS), many companies are more willing to burn cash in hopes of acquiring 5 new customers rather than retaining one loyal one.

If you’ve had success simply pressing for acquisition and leads instead of nurture and retention in the past, it makes sense that you would continue this trend. However, this is where the system breaks down. There is a finite amount of people willing to pay for your service, especially in B2B versus B2C, especially the more niche your solution. This makes capitalizing on the customer wins you’ve already made instrumental in the long-term health of your business. 

Enough overview; time for the meat and potatoes.

The ‘Why’ of Reducing Churn

Churn Rate, in this context, is a measure of the number of customers who leave a company during a given period.

Any marketer worth their salt is going to want the cold-hard facts on this topic. It’s easy to say “Do this for success.”, but I’m here to show and not just tell. 

Here are some quick facts on customer retention vs. customer acquisition and the importance of reducing churn.

You’ll spend 5x less retaining a customer than acquiring a new one

Marketing is expensive, usually a lot more expensive than nurture. This involves a Customer’s Lifetime Value (CLV/LTV). Companies with a focus on subscription billing need to take into account the CLV of their customers. 

Depending on the service you offer and the price point at which you offer it, it can take months to truly begin to profit off of a customer. Every customer and qualified lead may be a win for the sales team, but if they’re not meeting their expected CLV, you could be losing more from them than gaining.

Your existing customers are 60-70% more likely to try new products and services than new customers

If you expect to be adding new services or products to your mix, existing customers are even more critical to your business strategy.

If they’re loyal to your brand and happy with the service you provide, you’ve built a level of trust with them. This trust ensures they see new offerings as an extension of the great service you already provide them. It’s a no-brainer that they’ll be first in line to give it a try. Not to mention, they’re willing to spend 31% more on your products than new customers.

A 5% increase in customer retention can increase company revenue by 25-95%

If you weren’t dedicated to retaining customers before reading that statistic, you should be now. If you still aren’t dedicated to retaining customers after reading that statistic, read it again.

Over time, your return on investment (ROI) rises with retained customers, scaling exponentially with each time they’re billed for your services. 

Not to mention, each loyal customer represents a walking advertisement for your brand. If they refer even one more customer, that theoretically could double your ROI in a snap. We’ll talk more about referral programs in the next section of this article.

The ‘How’ of Reducing Churn

Would you look at that? It’s the next section of this article! Now that you know why reducing customer churn is essential to growth, let’s get into how you may be able to lower your churn rate.

Get to the Bottom of Your Churn

In your day-to-day you might be a business owner, sales representative, marketing associate, you could even wear multiple of these hats at once. But what you need to be to lower your churn is an investigator. 

You cannot figure out what makes your customers drop-off without talking to them directly. Full-stop.

Customer feedback is essential in pinpointing where their loyalty ends and their desire to leave begins. Was your product not meeting their needs any longer? Did your pricing outpace their budget? Did they simply get bored with your service and stop using it? The only way to know is to ask, and just so we’re clear, usually “exit surveys” won’t cut it. When’s the last time you filled out an exit survey with the clear and true reason you left?

Remember: it would be nice to win their loyalty back, but it’s usually unrealistic to expect. The second best option is using their experience with your service as a learning opportunity.

Communicate Before They Migrate

If you think engaging with your customers as they leave is important, you’ll love this next tip: communicate with them while they’re using your service. Reach out to them via email, engage with them on social media, and show your appreciation for them!

These simple lines of communication show that your business holds them in higher regard. That they’re more valued  than just a sale you made months ago and have forgotten about since.

Rewards and Referrals Programs

Rewards programs are key in building many customers into long-term customers. How better to engage with your customers than to give back to them? Offering special deals and savings to customers is a surefire way to keep them around that much longer.

The more you’re willing to give to them, the more they’ll be willing to give even more back to you. The ultimate gift from a customer is the highly sought after referral. Picture this: You sell a product to someone, and they love it so much that they then “sell” your product to a friend by recommending it. Then, you reward them for the referral, and they’re incentivized to do it again. That’s the kind of marketing anyone can get behind.

Better Customer Service. Period.

 The prior three points boil down to this final point: Better customer service is king, and poor customer service is the #1 reason why customers leave companies in the first place.

58% of customers will never use a company again after a negative experience, and 45% of customers will share that negative experience via an online review. Furthermore, it’s estimated that a single negative online review can lose an average of 30 future customers. Those numbers start to add up fast if you’re bleeding many customers through poor customer service.

Do not underestimate the impact of one burned customer.

Final Thoughts on Reducing Churn

Think of a customer as a kitchen knife. What do you think sounds smarter? Throwing away your kitchen knife as soon as it’s slightly dull and buying a new one ad infinitum, or sharpening (nurturing) the knife you already have?

In 2023, we’ve got access to an infinitely larger audience of prospects than decades prior. As great as an opportunity it is to possibly serve anyone, anywhere, I worry this leads to indifference when handling your customers and doing right by them. They feel that indifference every time they interact with the Apple’s and Meta’s of the world. Give them reprieve from that jaded feeling and guarantee their loyalty.

The year is 2023: Customer Acquisition isn’t dead, but make this the year of Customer Retention instead.

Are you marketing for B2B SaaS and a little lost? Don’t worry, Shelbë’s got you covered! Check out this article on 7 Helpful Tips for B2B SaaS Marketing Team written by one of the best at OM for a jumping off point on tactics. 

Or, if you’re looking for a team to take over B2B SaaS marketing for you: why not schedule a discovery call with us? It certainly doesn’t hurt, and if we’re a good fit for one another, adding a driven team of performance marketers into your mix is a surefire way to make 2023 your most successful year yet.


Trenton Ackerman

Marketing Specialist
OM Performance Marketers

Trenton is new to the field of marketing, but coming from the customer service industry, has nearly a decade of experience in putting the client first and working to get the best result possible. Diligent, inquisitive and detail-oriented, Trenton is always looking to improve himself and the project at hand. He is meticulous and will never hesitate to ask, “What can we be doing better?”

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