# Reducing Churn - The 8-Step B2B SaaS Playbook

Get actionable tips on how to identify, measure, and reduce customer churn, along with some potential tools that can help accelerate and simplify your progress.

###### Brian Yam, Head of Marketing

20 mins to read

## B2B SaaS Churn Reduction

In the B2B SaaS industry, churn is inevitable and can severely damage your company’s bottom line. Without monitoring churn and having an active strategy in place, you will end up with a big leak in your business that will only get harder to plug as you grow.

To prevent this, you can read this eight-step guide that will provide actionable tips on how to identify, measure, and reduce customer churn, along with some potential tools that can help accelerate and simplify your progress.

## **Churn Fundamentals**

Before we get into the strategies, we will briefly cover the terminology and formula for calculating churn.

The formula is as follows:

_MRR of churned customers - MRR growth of existing customers = Net churn_

**Net Positive Churn (Red Flag)**

Most SaaS businesses experience some level of positive churn. Here’s an example:

$20k MRR (customers who churned) - $12k MRR (from upsells/cross-sells) = $8k existing MRR churn

**Net Negative Churn (The Goal)**

Net negative churn occurs when the revenue from upsells/cross-sells outpaces the revenue lost from churn:

$15k MRR (customers who churned) - $20k MRR (from upsells/cross-sells) = -$5k existing MRR churn

Getting to net negative churn is essential for sustainable growth.

## **Long term impact of net negative churn**

[Bain and Company](http://www2.bain.com/Images/BB_Prescription_cutting_costs.pdf) found that net negative churn can boost a company’s profits by over 25%. Even slight improvements in churn can lead to significant growth over time.

## **Combating Churn Is Cumulative**

There’s no single solution to manage churn; it requires ongoing optimization. Below are actionable strategies.

### **The 8-Steps to Reducing Churn**

## _1. Track Everything_

Measure various metrics, not just churn rates, to analyze user behavior and early warning signs.

### **Onboarding**
- Users connecting your product with their CRM.
- Creating and launching their first campaign.

### **Retention Health Metrics**
- Track open support tickets and average resolution times.
- Measure net promoter scores (NPS).

## _2. Collect Direct Feedback from Customers_

Collect qualitative data by asking customers directly why they are churning. Implement exit surveys during the offboarding process to gain insight.

## _3. Focus on the onboarding experience_

A seamless onboarding process can significantly improve short-term retention.

### **Product Tours**
Use software for interactive walkthroughs that guide users.

### **Email Automation**
Leverage user behavior to trigger onboarding email journeys.

### **Data Onboarding**
Implement tools to automate data importing to alleviate user frustrations.

## _4. Methods to make your product stickier_

Provide native integrations to make your product an essential part of the customer’s workflow.

## _5. Develop Good Customer Success Practices_

Ensure customer success teams provide valuable insights and support to accelerate customer goals.

## _6. Deliver Exceptional Customer Support_

Prioritize response time and accuracy to improve customer experience.

### **Leveraging automation**
Create documentation to help users independently resolve common issues.

## _7. Align Teams Around Retention_

Align marketing, sales, and support teams with retention goals to ensure all departments contribute to reducing churn.

## _8. Define your churn goals and build experiments_

Set concrete and measurable goals for churn reduction and track progress.

### **Final Thoughts**

Managing churn effectively is crucial for the growth of your B2B SaaS company. Continuously assess your strategies to enhance customer experience and retention.

### About Paragon

Paragon aims to unify the SaaS ecosystem with our integration platform as a service (iPaaS). With a single SDK, you can build customer integrations efficiently.