How To Encourage Saas Customers To Pause Their Subscriptions (Instead of Cancelling)

Looking for ways to effectively reduce SaaS churn? Learn how and why you should give users the ability to pause their subscription instead of cancel.

How To Encourage Saas Customers To Pause Their Subscriptions (Instead of Cancelling)

Want to reduce your customer churn effectively? Users cancel their software-as-a-service (SaaS) subscriptions for many different reasons, but many also don’t realize that they have the option to pause and come back to them at a later date.

At Churnkey, we will be introducing ways to reduce your customer churn, encourage pause, and incentivize them to find the value in using your product

How To Reduce Customer Churn? Reduce Cancellations.

Customer churn results from a wide variety of reasons so the most important thing to do to reduce churn is to understand its cause. Once you know why your customers are canceling, you’ll be able to target the root cause and reduce customer churn.

One way of mitigating churn is to understand why users cancel their subscriptions. Collecting cancellation insights will help you figure out the primary reasons why users leave.

Voluntary VS Involuntary Churn

There are two categories of customer churn: voluntary vs involuntary. Each requires a different approach for retention.

Voluntary churn occurs when customers click that dreaded cancel button. This is an intentional decision and can be due to poor experiences with the company or if a better offer has shown up.

On the contrary, involuntary churn, also known as delinquent churn, happens when customers unintentionally let their subscription lapse. This is usually caused by failed credit card payments or technical failures by card processors. While this usually accounts for 20-30% of a business's churn, a modern dunning solution like Churnkey's failed payment recovery product can cut involuntary churn by over 50%.

Why Is Pausing Preferred Over Cancelling?

This concept where customer retention is cheaper than customer acquisition applies across most SaaS niches, and cannot be stressed enough.

A pause is better than a cancel!

Here are 3 reasons why:

  1. In challenging economic environments, customers become more price sensitive and tend to scrutinize their monthly subscriptions based on usage and cost. Without the option to pause, many who are using the product less will cancel their subscription and when they need a similar product again, they may shop around for alternatives. When you give consumers the option to pause, they can freely renew their subscription when they are in a better financial position. In this pause period, you can attract your customers with various offers to encourage them to use your product again.

This also gives you time to work on your product by adding more competitive advantages and new features for when your customers return.

  1. Offering a pause option can help you identify the root causes of churn through qualitative and quantitative measures (e.g. question surveys, identifying cancellation intent, etc) and consequently find ways to win them back (for example, through discounts and credits). It helps to gather valuable insights on why customers want to discontinue. This information obtained helps with reducing marketing costs of winning customers back and increased customer satisfaction in the long term.
  2. Users would rather pause their subscriptions! According to a study conducted by MarketingCharts on the benefits of a pause feature for B2C subscription features, it was found that among at-risk subscribers, over half (51.8%) said they would be very or extremely likely to pause a subscription if the option was available.

Should You Try To Reacquire Cancelled Customers?

A company’s main focus should still be to keep customers from cancelling. Better yet, prevent customers from even getting to the point where they are contemplating to cancel, rather than trying to win back those that have already cancelled.

But does this mean a company shouldn’t try to win it’s cancelled customers back?

This largely depends on the amount of resources you have at hand currently. If you have limited resources available, we suggest focusing on keeping your at-risk customers from cancelling rather than to win back former customers.

Understanding Why Your Customers Want To Pause Their Subscriptions.

Customers may request to pause their subscriptions for many reasons. Give them the pause feature that they ask for, but don’t accept all pause requests at face value. It’s important to look deeper and understand why they want to do so. More often than not, it falls under one of these three reasons:

  1. Unsatisfactory onboarding. The customer was not onboarded properly and feels neglected by the company’s approach towards their adoption or launch of the software. They may still be interested in using your product but need some sort of reset and plan.
  2. Cyclical product usage. The product is more suited for campaign or cyclical usage rather than continuous adoption. This reveals that your product might not be as enduring, or that you might need to accept a cyclical customer base. Hence, you’ll need to work to understand what additional features are required to make your product an ongoing, indispensable solution for your customers.
  3. Bad fit. The customer was not a good fit for your product. Selling to the wrong customers ultimately leads to customer churn and paused subscriptions. Some questions for your company to ponder upon when you encounter customers like these include:
  • Did the customer match your ideal customer profile?
  • Did the customer have the right internal resources to adopt your product/service?
  • Did your customer have any financial difficulties since using your product?

With Churnkey, you can easily track why customers leave and why they stayed. Learn more about your cancelling customers with Churnkey’s customizable surveys that collect, collates, and presents you with the reasons why your customers are leaving.

How Do You Convince Customers To Pause Rather Than Cancel?

#1. Communicate consistently with your customers.

Ensure that your company has an exit survey that goes out to all customers that cancels. The information you obtain from this survey helps with identifying the gaps in your product, and also provide you with insight on how to win that customer back.

Certain times, customer feedback may not be clear, and you’ll need to be proactive and reach out to them for further information. If you can, get on a call with your client to understand their concerns. Holding a real conversation with your departing customer could lead to meaningful finds and a better understanding of them.

#2. Present attractive offers to stay.

Now that you know why customers are cancelling, align your solutions with the customer’s problems. When you embed Churnkey’s offboarding flow into your processes, you unlock a plethora of experiences crafted to keep your customers around longer.

Churnkey presents various personalized deals for your customers, helping them craft a relationship with your company that works better for them. This comes in the form of subscription pauses, coupons, live support chat prompts, and more.

Additionally, you can offer churning customers a glimpse of what is in the works to excite them about future releases. This could be new features that could save them time (better importing) or increase efficiency (better 3rd party integration) or offer them additional value (weekly reports) for no extra work. Keep in mind to only share future releases that are guaranteed to come out soon.

#3. Keep customers engaged with Churnkey’s tracking systems.

Identify deals that convert, see why your customers leave, and who’s most at risk with Churnkey. We help you to understand why your free trials cancel so you can use your insights to increase conversions.

When free trials lapse, Churnkey tracks why and notifies you so you can follow up with your customers. On top of that, Churnkey will also present relevant offers to lapsed customers, enticing them to stay. Also, any cancellation trends uncovered by Churnkey will be reported to you so you can take immediate action.

Keep your customers engaged and lower your cancellation rates with Churnkey now!

Let us get offboarding off your plate. Simplify your churn metric calculations, easily track why your customers are cancelling and what they are looking for with Churnkey’s free trial here.