Reduce Churn with Retention Emails

by wyzwarrior December 10, 2017

Churn is and will be the end for your SaaS business. Too much churn and you have to start hunting for new users like zombies hunting for survivors (where there are too many zombies and very few survivors). Good news though! It’s possible to tackle this – and you can avoid stumbling around searching for solutions before finally running out of money.

In the early days of SaaS, retention wasn’t too big a deal. Competition was very scarce, and demand was reasonably higher than the supply. But in today’s flooded market, you could have dozens of apps performing the same service. When your focus is on getting more and more new users, it’s a losing battle, meaning your bucket becomes so leaky, “all you can do is add more customers to the top of the funnel in the hopes that you’ll make up for all those you’re losing,” says Patrick Campbell of PriceIntelligently.

Retention for a SaaS business is very important. In general, the best in class SaaS companies have an 80% retention rate of paid customers after 90 days. Clearly, they’re doing something right. Look at it this way: if you reduce your gross churn by 1%, you’ll see a boost of almost 13% in monetization (revenues) and 7% in retention. However, if you improve your acquisition by 1%, you’ll only see a net boost of 3%.

So, retention is clearly the way to go. But how do you keep your users and cut down the competition and thousands of other things that lure your new user away? There are several ways, but let’s discuss “Email”.

How emails reduce churn?

Emails can be considered as the bitter pills of the digital world. Oftentimes, they’re not pretty and are rough. But, most of the time, they do the job. Radicati found that a message is 5x more likely to be seen in email than via Facebook.

Three major reasons why this is so:

  • Emails help the user move towards their goal
  • Emails can be the perfect medium for storytelling
  • Emails can propels the user back to your app

Let’s deep dive into each of these aspects:

Helping the user move towards their goal

What is the goal of a new user in signing up for your app? It’s definitely not to become organized, save time or money (or both). Their goal is to become a better version of themselves. Which means, you’re selling them that – an improved future – with your app. Email is the perfect method for this progression, where you help them move from point A to point B.

What are you selling?

Send retention emails to your users, and use each email to move your user step by step towards their goal. There is a high chance that you’re already doing this for your onboarding emails, all you need is to just apply this to your retention emails too.

Retention emails are not just for sending at the end of a free trial or after a user has cancelled their subscription. You should send them throughout the user’s lifecycle, to nudge them towards the action that you need them to take.

Perfect Medium for Storytelling

Emails are a one-to-one connection. They can be considered as the modern day form of letter writing. They’re personal. They have that inherent intimate feeling to them, it’s “me writing to you”.

And that’s why they’re powerful. When you use retention emails to tell stories, your user’s interest gets roused and they get sucked in.

Propels the user back to your app

A study did by Totango with over 1 million prospects/customers of software business found that over 50% of paying customers are not using the service they paid for. The same study found a near-perfect correlation between non-use and cancellations. A period of non-use almost always precedes a cancellation. And this is the behavior you’re targeting by reprogramming your user to include a new set of actions: using your app.

The first step in changing their habit is to create a nudge to prompt a new behavior. And an email serves as the perfect cue to start this new routine. Sending a retention email to bring your user back to the app is your primary goal.

We’ll discuss on some must-use retention emails in a later post.

Keep tuned in!!

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