Top 10 reasons why customers cancel (and what you can do to prevent it)
It’s not me, it’s you.
In the customer and SaaS vendor relationship, it’s very likely that SaaS companies are the ones being left brokenhearted. When did the customer make the decision they were going to leave? Why won’t they give us another chance? How can I make them stay? But maybe, it’s their own darn fault.
If account managers and sales reps are focused on “the hunt” and trying to upsell — it is less likely they’ll be able to keep track of each deal they close and how they’re doing. This gap is most easily covered by customer success managers.
I polled a couple of customer success communities on LinkedIn to see what CSMs had to say about why customers canceled. There could be a multitude of reasons why customers cancel, but sadly many companies don’t catch on until its too late to save the account. Here are the top 10 reasons why customers cancel. Once you know why, then you’ll know what to look out for and when to intervene.
1. Not seeing ROI on their investment after purchase
Could it be buyer’s remorse? Or maybe their expectations were too high?
What to look out for: Decrease in usage or straight up inactivity after sign up
What you can do: Review their goals set with your product and guide them throughout the onboarding/adoption phases so they aren’t left to their own devices early on.
2. Not implemented in time
They can’t determine ROI if they’re not up and running nor fully evaluate the solution. They want it, and they want it now!
What to look out for: Account not fully set up
What you can do: Establish an internal customer journey map and use it to help guide users through the optimal adoption plan and lead them towards value. Using customer engagement management solutions, it is possible to keep track of their progress and be alerted when there’s been a stall.
3. Loss of key user or advocate
What to look out for: Decline in interaction with advocate
What you can do: Offer switchover training for new users and make sure you know more than one person on the team where possible. It’s important to maintain high-level visibility to keep management onboard.
4. Poor utilization and/or adoption
What to look out for: Low usage or usage drop, user engagement is stagnant
What you can do: Ensure successful adoption by guiding them through the process and understanding their goals. Then internally define clear parameters that would help identify what is considered “poor adoption/utilization” to allow the CSMs to proactively go on a rescue mission.
5. Not realizing the value proposition
Sometimes they may need a bit of encouragement to show and remind them of the ROI from your product. However, if your support isn’t timely or helpful or have issues with billing or have a hard time working with someone from your side, they might not see value.
What to look out for: Number of support tickets, question value of investment
What you can do: Help benchmark your accounts’ engagement over time to show them where they are improving. Present them with some statistics to show the positive impact of their investment.
6. Lack of features in the product
Many SaaS customers will cancel simply because other (competing) services are adding new features and moving forward. They’re going to want the latest and the greatest, not 2012.
What to look out for: Feature requests or feedback from users
What you can do: Have your CSM reach out periodically to source feature requests or even during their check-in calls. It is helpful to get their feedback if you are monitoring their usage within certain modules and then proactively asking them what they think. Then remember to share this feedback with the product team to let them know what really matters to the customers.
7. New management
This is when new management comes in assessing why we’re using this or that. This opens the door to justifying the expense of your current solution and why not another.
What to look out for: Information about management change
What you can do: Proactive call to introduce self and solution to new management and offer training.
8. Buggy product
What to look for: Increase in support tickets or calls for help
What you can do: Be knowledgeable, empathetic, and offer solutions/alternatives in a timely fashion. Then make sure to tell your development team to fix the bugs!
9. Outgrow solution or company downsizes
What to look for: Requests for advanced features or lower fee structure
What you can do: Share this feedback internally. There might be options to scale up or down on the product. Communication is key.
10. Not a right fit, the product is not for them
What to look for: Customer’s understanding/expectations of your product are not accurate
What you can do: Participate in the tail end of sales discussions and offer a clear path for implementation/onboarding to set clear expectations.
11. The people factor
All it takes is one bad experience for a customer to write off a company. It’s important to pay attention to all the customer-facing people on your team, regardless of department or function. If your sales team thinks a certain CSM’s personality might align well with a customer, it’s good to consider these pair ups, and vice versa.
12. Acquisition by a company that has standardized on another solution.
(via Chuck DeVita from Growth Process Group)
Have you experienced other reasons (absurd or not) that customers have canceled? I’d love to hear your thoughts in the comments below.
A follow up blog: All non-renewals lead back to adoption.