SaaS churn analysis: Configure your company for customer retention

Customer Retention

SaaS Churn Analysis | Customer Retention Customer retention is indispensable for any company but even more so for SaaS because we're in the recurring revenue ecosystem. As a consulting firm, you're enthusiastic about pulling leads into your sales pipeline. You're always ready to welcome a new market, but are you working with the same zeal to retain them for a lifetime?

Read through this narrative on:

1. Why customer retention is an important aspect of a consultancy company?

2. How to measure customer churn and revenue churn by doing a cohort analysis?

3. Two key predictors of customer churn

4. Four retention strategies that can lower your attrition rates

Why should customer retention be your focus?

Customer retention & churn

Businesses always have a strategy for customer acquisition. There is a huge amount of planning that goes into the initial investment and framework building. Yet, when it comes to retaining these acquisitions for a longer period, we just leave it up to a support team.

Overcoming customer attrition of today is not just about addressing issues or closing your support tickets. It is about building a model that is constantly engaging with clients to the point where they feel in their hearts that your service is always beside them.

Such retention rates are only possible with a solid engagement plan that involves recurring interactions in the form of training or user education materials. But before getting into the engagement model, we've got to come up with an analysis that measures the impact created by the customers discontinuing your service.

Cohort Analysis

A cohort analysis is conveyed by a table that dissects customers into different segments depending on a base metric. This criterion will be the key factor you want to build a perspective around.

The growth of SaaS is gauged by two metrics, customer churn and the revenue churn. These two metrics will be the basis of our analysis.


Customer churn

cohort analysis - customer churn

1. In Feb-18, there were 77 new customers

2. Of the 77 customers (Feb-18 cohort), 73 were still paying customers in April-18

3. By the end of April-18, there was a total of 329 paying customers

Cohort Analysis - Customer churn

Reconstruct table-1 to show the percentages of customers retained in each month with respect to the total number of customers acquired in a particular cohort. Here, every column represents a month in your customer's life cycle.

4. (70/77)*100 = 90.9% of the customers of the Feb-18 cohort are still paying customers after 3 months

Cohort Analysis - Customer churn

6. 100 - the percentages in the previous table will give you the customer churn rate in each month of the customer life cycle relative to the initial number of customers in that cohort

7. Of the 77 customers (Feb-18 cohort), 9.10% churned by the end of 3 months

Cohort Analysis - Customer churn

8. Customer churn % relative to the previous month = (Number of customers lost in a given month/total number of customers in the previous month)*100

9. Feb-18 cohort

Number of new customers = 77

Number of customers in 2nd month = 73

Number of customers in the 3rd month = 70

Number of customers lost = 3

Customer churn% w.r.t previous month = (3/73)*100

A similar classification with the MRR (monthly recurring revenue) brought in buy the new customer in a given month as the base metric will convey the revenue lost with every customer that discontinues your service.

Relative to the month the client discontinued service, there are three areas that have to be addressed.

  • If a client discontinued service in the first couple of months, we need to address the customer on-boarding process.  
  • If they discontinued at the end of a subscription cycle, it might indicate that the service lacks proactive engagement for expiring services.
  • And finally, if a client discontinues in the middle of an ongoing plan, that could mean the product or service has problems with customer engagement in general.

Once you segregate your areas of distress, the following 2 metrics will help you determine the customers who are likely to churn out in the following months.

Predictors of churn

Drivers of churn

Usage - Customer's engagement with your product

Customers who are actively using your customized solution are unlikely to break up the relationship with your service, but those that don't might inflate your customer attrition rate.  One way to figure out how your customers are interacting with your solution would be to go on a monthly call and ask how engaged are they with your custom solution.

Let’s consider a case where you’ve customized Workerly and implemented a solution to manage the temporary workforce in a manufacturing industry. What does the end-user say about the number of people using the solution?

If the customer has a continued engagement with your solution, they're likely to renew their subscription for years to come. This also gives you a wider scope to upsell the existing solution as the market evolves. While a dip in the usage implies that either the solution doesn’t have the features that were expected from your service or simply that it wasn’t a problem-solution fit, implying a potential risk of churning.

Survey - Net Promoter Score (NPS)

Surveys are a double-edged sword and must be sent out at the appropriate time with the right set of questions. Net Promoter Scores (NPS) brings an analytics perspective to your survey. The score is calculated after a survey that asks the participants to rate how likely they are to recommend your service on a 10 point scale. Additional questions on certain aspects may also be added to gain some business intelligence. The answers are then graded across 3 categories:


Looking at your customer base through the lens of NPS, you know where to focus your attention and which customers can be leveraged for brand promotion.

Customer retention strategies

The segmented customers are then engaged and empowered by narrowing down the customer touch points to the following:

Customer Onboarding

customer onboarding | customer success

There's an extant notion that SaaS consultants might become aloof after getting a signed contract in place. As a consultant, it is important to tear down this assumption by letting them know that you'll be walking beside them throughout the journey.

The best way to emphasize this would be to map out a relationship journey early on and stick to it. The first phase of the customer life cycle revolves closely around the value of your solution. Plan your service around this.

  • Introduce them to the team that’ll be with them in every step of the way.

  • Connect over a call on a regular basis to inquire as to how the customized solution has been working.

  • Ingrain in their minds that you are just a support call away.

Proactive communication

Zoho Payment Store

An ecosystem where Zoho partners can use data to optimize their interaction with the customer is the payment store. The transaction reports tab of the payment store plays a crucial aspect in determining the customers who need proactive assistance instead of a reactive support team. The store displays a list of customers in-line for renewal and another fragment who've downgraded their service. But, how often do you use this information?

Customers who are in the pipe for renewal or have downgraded their plan wouldn't always discontinue the subscription. Nevertheless, the risk of customer churn is too important to overlook. Get on a call with this targeted clientele. Work towards having customers for life!

Engagement Model

Customer engagement

Once you’ve modelled a perfect solution that has been functioning efficiently, customers begin to analyze other aspects of value that you bring in apart from software. Thus, customer engagement comes into the picture.

Engagement is a massive structure supported by multiple pillars. Some are built over content while others are nurtured by friendly relationships.


When on social media, it is crucial to create content that speaks to customers at every stage of the buyer's journey. However, building a reader list for your content takes time, patience, and perseverance. The platforms are huge. The channels are over-crowded. The content forms are many. And, just a few weeks of social media presence won't cut it. You need a prolonged effort on continued engagement to understand your audience and the type of content they consume.

The initial milestone of a successful strategy calls for a steady update of the company blog, one not just about product updates. It should speak to the relationships that the company has built. Fill your blog with stories about existing customers, their vendors, outstanding customer testimonials, targeted tips, and every other thing that sparks eagerness around your firm.

Customer Relationships:

No form of virtual connection can win over personal presence. Although building such massive brand value as a small company might weigh in on the investments, an alternative way to spark this emotional connect would be to introduce them to the bigger network behind the solution. Zoho community meetings and Zoholics offer a good starting place. When end users begin to understand the bond between the vendor and the partner, a wider perspective opens about the drive behind ideating the perfect problem-solution fit.


Customer training provides huge opportunities for monetization and personalization that consultants have often overlooked in their revenue model. Training isn't just about product evangelism and education. It's is a distinctive opportunity to drive adoption, subscription renewals, customer satisfaction and sometimes it can even open another revenue stream that adds on to your licensing and implementation cash flow. Start by dedicating a few hours a week to host free webinars. After a couple of months of building up your audience base, gradually shift to workshops and office hours. 

Crux of curbing customer churn 

Every point of contact with the customer is an opportunity for innovation and improvisation. Try and tweak these interaction points because even a small increase in your retention rate has a massive impact on the company in terms of the revenue they bring along.

What's your suggestion on retaining SaaS customers? 

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