A Churn Reduction Guide For Stripe

In the ever-evolving landscape of SaaS businesses, one metric reigns supreme: churn. It's the silent assassin, quietly eroding revenue streams and hindering growth potential. For SaaS founders and startups using Stripe, churn reduction isn't just a strategic endeavor; it's a fundamental necessity for survival and prosperity in the competitive market. But combating churn while using Stripe can require a combination of many different techniques and strategies. 

Our team has built multiple startups on top of Stripe (including Churnkey). That’s why we’re here to take a deep dive into understanding churn (and the most common reasons it happens) and reducing your churn rates, specifically for SaaS businesses that use Stripe as their payment gateway. 

TL;DR Interested in churn reduction for Stripe? We’re breaking down everything you need to know, as a Stripe user, about understanding churn and reducing it. 

What is churn?

Churn, in the SaaS world, is like that sneaky friend who quietly slips away from the party without saying goodbye. More specifically, it’s the percentage of customers who stop using your service or product over a specific period of time. You can calculate your churn rate by taking the number of customers you've lost during a given period and dividing it by your total number of customers at the start of that period.

Whether it's voluntary churn (when a customer makes a conscious choice to unsubscribe from their current plan) or involuntary churn (when a customer’s account is cancelled because of payment failure or some other involuntary incident), churn hits SaaS businesses where it hurts, messing with their revenue streams and throwing off growth plans. And it means more than just losing a few bucks; it's a sign that something's not quite right and needs fixing.

What are the most common causes of churn?

In order to effectively reduce churn, you have to understand the root of the issue. Some of these causes are easier to control than others, but there’s almost always some measure that you can take against the most common causes of churn. 

Poor onboarding experience

Churn reduction truly begins with onboarding. When consumers sign up for your product, this is your first chance to retain them long-term. The goal of an effective onboarding process is to prevent people from signing up, trying the tools or services once, and then never logging in back again. A good tactic here is to send scheduled emails throughout the entire onboarding period of time to check in with the user, answer their questions, and share articles or lessons with relevant and useful information. 

Bad offers

Sometimes customers will cancel their subscription if they feel that they’re no longer getting adequate value for their money. Having a bad offer can result in higher than necessary churn rates and even losing customers to competing products that offer more value. In this case, you may need to reassess your pricing, your available features, etc. 

Ineffective customer support

This one is pretty simple. If your customers don’t feel like their issues are heard or they can’t get an adequate response to tickets or problems that they’re having within your product, then they’re much more likely to churn. This is why it’s vital to have support for troubleshooting in place and to ensure customer success by resolving queries and complaints in a timely manner. 

Poor cancel flows

If the only thing standing between your customers and cancellation is a big red button, you’re not doing your job correctly. A good cancellation flow not only enables a smooth, positive exit for customers who are determined to cancel — it also provides you with an opportunity to retain them. 

Seasonal churn

One common reason for churn that’s somewhat out of your control is seasonal churn. Many businesses find that their subscriptions drop off around a certain time of year. For example, SaaS businesses frequently observe an increase in churn during April’s tax season. Certain techniques, like effective messaging can help counter this type of churn. 

How can you implement churn reduction for Stripe?

Now that we’ve tackled the concept of churn and some common causes, let’s talk about different strategies and techniques that you can use to reduce churn as a Stripe user. 

Native Stripe Features

Since you’re already using Stripe as your payment gateway, it’s not a bad idea to leverage the functionalities that are native to the Stripe platform in order to reduce your churn rates. Features like Stripe Billing can help you fight involuntary churn by leveraging Smart Retries, automated failed payment emails, and an automatic card updater. 

The best thing about using Stripe as your payment platform is the fact that you can seamlessly integrate your Stripe account with your Churnkey dashboard. The Churnkey Stripe app displays key high-level metrics from your Churnkey data, now at your fingertips within the Stripe dashboard. You’ll be able to see every customer interaction with your cancel flow within your Stripe dashboard — including cancellation reason, freeform feedback, offers they’ve accepted, and if they’ve abandoned their cancellation attempt.

Utilize Cancel Flows

A good cancel flow can help you reduce customer churn, increase customer loyalty, and provide you with valuable data on the reasons behind your company’s churn. A cancel flow involves an automated series of custom events that a customer completes whenever they begin the cancellation process of a SaaS subscription or product. With a well-designed cancel flow, you immediately turn every cancellation attempt into an opportunity to craft a better relationship with your customer. 

Offer Subscription Pauses and Trial Extensions

When a customer is pretty much dead-set on cancelling, there are two tactics left in your arsenal that you could potentially use to retain them. If it’s an existing customer, you can offer to temporarily pause their subscription. And if it’s a trialing customer, you can offer to extend their free trial.

While a pause is obviously not ideal, here’s the truth: a pause is always better than a cancellation. If you don’t provide an option to pause subscriptions, you could permanently lose customers who might still need your product one day but simply can’t (or don’t want to) keep paying for it right now. 

When it comes to trial extensions, the mindset is similar. Sure, you’re giving these customers more time to use your product for free, which is obviously going to affect your bottom line. But that additional time may be just what your customer needs to spend more time in your product, explore its features, realize its value, and choose to subscribe once the extended free trial is over.

Providing a free trial extension doesn’t only give your customer more time to see the value in your product — it also gives you more time to show them the value, to really lean into nurturing a relationship with your customer. You can use this additional time to provide trial customers with more helpful educational and onboarding resources and to ensure that these customers are reaching key milestones in your product.

Provide Pricing Tiers

If you’re having a problem with churn, then one of the most important strategies is to assess your current price points and pricing structure. And if you’re not offering various pricing tiers, then now might be the time to consider it. One of the simplest and most constructive ways to reduce user churn is by redirecting customers with different needs to more relevant pricing tiers. Providing your customers with options can go a long way when it comes to minimizing churn.

You can even offer an annual pricing tier. By providing an annual subscription with discounted prices, you can help customers save money over the course of a full year, safeguard your cash flow in the event of monthly churn, and reduce your customer acquisition cost while increasing your customer lifetime value.

Leverage Customer Feedback

When it comes to churn reduction, leveraging customer feedback can truly be one of the most important pieces of the puzzle. Just look at Buildertrend. When Buildertrend started using Churnkey to collect essential customer feedback and present tailored offers towards discrete customer segments, they saw major results. Within five months, they achieved an impressive 45% reactivation rate with $570 in revenue saved per customer. Customer feedback can help you figure out what you’re doing well, what you need to improve, and why customers who leave are choosing to stop using your product.

Offer Targeted Discounts

Did you know research shows that offering a medium-sized discount can increase the average future value of a customer by 20% to 25%? The power of an effective discounting strategy can’t be overstated when it comes to churn reduction. Providing personalized, targeted discounts to customers who are considering cancellation can not only help you increase your retention… the right discounts can even get your customers to pay you more. 

Conclusion

For SaaS businesses, implementing churn reduction for Stripe is vital for maintaining a healthy bottom line and long-term growth. By understanding churn and the common causes for churn (like poor onboarding, ineffective cancel flows, or customer service issues), you can more effectively implement churn reduction techniques and strategies (like native Stripe features and integrations, subscription pauses, pricing tiers, customer feedback, and targeted discounts) that will help you reduce your churn rates and improve customer retention. 

And if you want to make churn reduction easy, Churnkey can help you lower cancellation by up to 54%. With our platform, you can supercharge all aspects of customer retention and optimize your company’s growth. You'll keep more customers with personalized cancel flows, recover more failed payments, and expand customer-driven product development.

Schedule a demo or sign up for a free trial to start reducing churn today.