Understanding Churn in Global SaaS and How to Reduce It
As the software as a service (SaaS) industry continues to grow, one of the major challenges faced by businesses is the retention of their customers.
As a SaaS company expands internationally, customer churn rates are one of the metrics they need to keep an eye on more closely. However, keeping customer churn in check globally can be a challenge, due to differences in customer behaviour and needs from one market to another.
In this article, we’ll discuss customer churn across different markets, customer loyalty strategies that you can adopt to reduce customer churn, and the importance of localisation in customer acquisition, satisfaction, and retention.
In this post:
- What is customer churn?
- Voluntary vs involuntary churn
- Analysing the reasons behind churn in foreign markets
- Implementing strategies to reduce churn
- How SaaS localisation can help reduce customer churn across the globe
- Reducing customer churn is easy with a plan and the right support
What is customer churn?
Customer churn rate refers to the number of customers or subscribers who stopped using your product or service within a particular period. In the SaaS industry, this metric is calculated by dividing the number of customers lost in a given period by the total number of customers at the beginning of that period.
For subscription-based products, like SaaS, customer churn is one of the most important metrics you can get and it helps determine the business’ overall performance. High churn rates can be indicative of problems with the product, user experience, customer support, or pricing, and can lead to a decline in customer satisfaction and loyalty.
Not all churn is created equal. Voluntary churn is when a customer leaves a service of their own accord. This can happen due to a variety of reasons:
- Dissatisfaction with the product or service
- Poor customer support
- Subpar user experience
- Changes in their operating environment
For example, a customer may switch to a competitor’s product that better meets their needs, or they may no longer require the service due to changes in their business strategy. Voluntary churn is often seen as a more significant problem than involuntary churn, as it is harder to predict and prevent.
Overall, voluntary churn is often viewed as a more significant problem than involuntary churn since it indicates that the customer did not feel satisfied with the product or service and was willing to switch providers.
On the other hand, involuntary churn, also known as passive churn, occurs when a customer leaves the service due to circumstances beyond their control. In other words, it’s customer attrition related to causes that aren’t the customer’s choice, such as:
- Not updating their subscription billing information/credit card information
- Server errors
- Being locked out of their account
For example, if a customer fails to update their credit card information, resulting in the subscription lapsing, this would be classed as involuntary churn.
Involuntary churn is often seen as a more manageable problem, as it can be addressed through proactive communication and support (e.g., notifying customers of a payment issue with in-app messages and a grace period to solve it instead of locking them out).
Analysing the reasons behind churn in foreign markets
Expanding into foreign markets can be a lucrative opportunity for SaaS businesses, but it can also come with its own set of challenges.
Foreign markets present unique challenges that can contribute to higher churn rates. Customer churn rates vary from market to market due to cultural differences (specific customer behaviours, expectations, and preferences), language barriers, and payment challenges, which can lead to foreign customers stopping to use a product or service. Let’s look at each of these factors in more detail.
Cultural differences and expectations
Cultural differences play a significant role in customer churn. Customers in foreign markets may have different expectations than those in domestic markets.
For example, customers prefer products with a lower data limit in regions where Internet bandwidth is low, while they prefer higher data limits in areas where broadband connections are relatively faster and more stable.
Likewise, expectations of customer support and customer experience differ a lot between cultures. Take the case of Japan and the US: In the Asian market, customer service is usually offered in person rather than through electronic means, so customers tend to avoid using software that requires them to contact customer support via email or live chat.
Pricing and payment challenges
Pricing and payment challenges can pose significant obstacles for SaaS businesses in foreign markets. Different currencies, payment methods, and regulations can make it difficult for customers to subscribe or renew their subscriptions. To address this, businesses should offer flexible pricing and payment options that cater to the needs of foreign customers.
For instance, a SaaS business that offers project management software may need to accept payments in multiple currencies and offer payment methods that are popular in the foreign market. This could involve partnering with local payment providers, offering discounts for long-term subscriptions, and providing transparent pricing information in the local currency.
Competition and market saturation
In foreign markets, competition can be much fiercer than in domestic markets, leading to market saturation and higher customer turnover rates. Competitors may offer similar or better products and services, making it challenging to retain customers. To stay competitive, businesses should continually assess their product offerings, feature sets, and pricing strategies to differentiate themselves in the market.
For instance, if a SaaS business does not offer local language support or payment options, customers may be more likely to switch to a competitor who does.
Language barriers and communication issues
Language barriers and communication issues can also lead to higher churn rates. In foreign markets, customers may not be fluent in the language used by the SaaS product or service, which can lead to misunderstandings and frustrations. To mitigate this, businesses should consider content localisation and multilingual support options to ensure that customers can understand and use the product or service effectively.
Once you know what your customer base likes and expects of you in each region, you can tailor customer churn reduction strategies to suit the needs and preferences of your target audience.
Implementing strategies to reduce churn in foreign markets
Ultimately, expanding into foreign markets requires careful planning, research, and execution. By understanding the reasons behind customer churn and taking proactive steps to address them, SaaS businesses can increase their chances of success and build a loyal customer base in foreign markets.
Identify what drivers customer satisfaction in each market
Just like customer churn rates differ from one market to another, so do customer satisfaction levels and the reasons for it.
In Japan, for instance, customer satisfaction is largely drawn from customer support and customer experience. The Japanese customer tends to be more concerned about customer service as a whole rather than just the software or product itself. That means customer churn in Japan is often caused by problems with customer support, not the product itself.
It’s also worth conducting local-language customer interviews in each market you operate in, to determine customer feedback on your product or service. Gauging customer satisfaction from a combination of data sources will give you clarity on customer satisfaction drivers and help uncover problems before they become serious enough to cause customer churn. Then, your product development, marketing, and customer service teams can design market-appropriate customer retention strategies.
Enhance customer onboarding and support
Customer onboarding and support are critical to reducing churn rates in foreign markets. When customers are new to a product or service, they may need guidance to understand how it works and how it can benefit them. By offering comprehensive onboarding programs tailored to specific cultural needs, businesses can help customers get started with their product or service effectively.
Responsive support is also crucial in reducing churn rates. Customers need to feel that they can get help whenever they need it. By providing self-service options (a localised knowledge base is crucial here), businesses can empower customers to find the help they need whenever they need it.
Review your customer success process
A fundamental step to lowering customer churn is understanding exactly how customer success works within your business. For each market, knowing what customer success looks like at every point in the customer’s journey, from initial sign-up all the way through to customer retention and subscription renewals, can make a considerable difference to customer satisfaction, which in turn will have an effect on customer churn.
If there are areas within the customer journey where customer satisfaction is low or customer pain points are known to occur, then steps should be taken to resolve them.
How SaaS localisation can help reduce customer churn across the globe
When considering, designing and implementing customer churn reduction strategies, localisation should be a key consideration from the start of the customer acquisition process. Language barriers, local purchasing habits, and cultural requirements can determine whether your product will achieve customer satisfaction levels that will keep customer churn low.
Localisation of the user interface
Even though nowadays most people have at least basic competence in a second language (especially English), that’s not enough. It’s been proven that users, even if bilingual, ignore products if they are not available in their language. The cultural adaptation and translation of your product’s UI make the customer experience more friendly and efficient in each country, which is likely to drive customer satisfaction levels up and customer churn rates down.
The main goal is to make the interface look and feel local while enabling a smooth customer experience. You can achieve this by localising:
- The information flow: Not all cultures process information in the same way. Take the case of an app’s sign-up flows. According to the purpose, the audience, the culture, and the language, the chosen sign-up flow will be different. The key idea is to reduce unnecessary friction and only ask for what each culture considers essential information.
- Layout and navigation: This involves changing the appearance of elements such as icons or images to better reflect local tastes and preferences. If necessary, rename certain things in your app to make them easier for people from different cultures to identify with.
- Branding: Customise the branding of your product by localising graphics, colour palettes, even emojis! Thumbs-up emojis, for example, are offensive in Nigeria. In terms of colours, China considers the white colour to represent death and mourning while Japan associates the colour purple with danger.
- Culturally-dependent data and processes: This category encompasses the localisation of date and time formatting, phone number formats, email address formats, customer service hours, customer support channels, customer feedback mechanisms, etc.
- SEO content: There’s no point in localising anything if nobody can find the translated version in the target market. Just like the source language copy needs to rank high on search engines, so do its several localised versions. Learn more about SEO Translation here.
Localisation of customer support
Localisation of customer support options is also critical. While customer support in English is better than nothing, it’s not good enough for your customers. If customer support is only offered in English, you risk upsetting your customers even further, particularly if they don’t have great language skills themselves.
Remember that they are contacting you with a problem! It’s crucial to get them back on track by offering satisfactory customer care in the local language, from the inception of the customer relationship.
For customer churn reduction, local customer service is the key. Customer service that caters to local needs (within your customer base) can lead to a lower customer churn rate in foreign markets. For example, you can set up forums or social media profiles in the target market’s language to provide customer support 24/7 instead of sending tickets during office hours only. Also, consider localising:
- Customer support emails and ticket descriptions
- Customer notifications
- Chatbot scripts
- Customer contact numbers (make sure you display local numbers or international ones with their corresponding dialling codes)
- Local customer support hours (both on- and offline).
- Customer support documentation like help articles, user guides, and how-to articles
Localisation of marketing collateral
The localisation of marketing assets includes messages on landing pages, advertisement, product descriptions, slogans, social media posts, blog posts, customer success stories, tutorials, etc.
When all this content is available in the local language, not only do you have a much easier time reaching out to local prospects and converting them into customers but you also drive customer satisfaction. Remember that higher customer satisfaction is linked to customer retention. In other words, the SaaS customer churn rate will be affected positively by customer satisfaction.
Reducing customer churn is easy with a plan and the right support
Reducing SaaS customer churn levels may entail a lot of effort. Fortunately, solid market research and localisation strategies can save you a lot of trouble in the customer acquisition and customer retention stages of your customer lifecycle, which in turn can lead to customer churn reduction.
If you’re interested in discussing how we can help with customer churn reduction, don’t hesitate to contact us!
Author: Maria Scheibengraf
Maria Scheibengraf is an English-to-Spanish marketing and SEO translator specialised in software (SaaS, martech, fintech), and Operations Manager at Crisol Translation Services, which she co-founded in 2016. With a solid background in programming and marketing, Maria has an in-depth understanding of the technical intricacies involved in software programs, websites, and digital platforms. Maria is also the author of The SEO Translation Bible.