How to Leverage Google Analytics to Reduce Your SaaS Churn

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Written by Tim Jones

Though churn can be challenging to monitor and reduce, it's one of the vital metrics for growing your business. Churn affects profitability, and you'd want to conduct a churn analysis to mitigate any negative result. Churn analysis using Google Analytics can help you clear out doubts, understand customer retention rates, and know why customers are leaving your service.

But what's churn, and how can you reduce it using insights from Google Analytics?

 

What is Churn?

Customer attrition or churn is the rate at which customers are leaving or abandoning subscriptions over a specific period. Businesses can understand customer disappointment, competition, and the efficiency of their marketing strategy by inspecting churn. This is especially crucial since an unchecked high churn means low customer retention and reduced recurring revenue.

To understand how churn analysis is crucial for your SaaS business, consider these facts:

  • It costs about 6-7 times more to acquire a new customer as opposed to retaining and selling to an existing one.
  • 72% of your customers who experience outstanding product purchases are likely to share about it positively with friends or family.
  • While you have a probability of about 60-70% of selling to an existing customer, selling to new prospects comes down to about 5-20%.

Therefore, having a comprehensive churn analysis using Google Analytics can help your business to:

  • Reduce revenue losses.
  • Cut down the customer acquisition costs.
  • Improve user experience and service.
  • Increase your opportunity of up-selling and cross-selling.

 

Customer Vs. Revenue Churn

It's important first to understand the basic two types of churn; customer churn and revenue churn.

Customer churn denotes the rate at which customers leave your service. A common type in SaaS companies is where customers fail to renew subscriptions or cancel the current one before expiring. This is called contractual churn. On the other hand, non-contractual churn is where a prospective customer leaves before completing the purchase, for example, after a free trial expires.

Customers can also abandon your software voluntarily or involuntarily because they can no longer afford to pay for the service. Some of the other reasons customers churn include poor service/experience or competitive prices/marketing elsewhere.

All the same, revenue churn refers to the percentage at which the MRR (monthly recurring revenue) is lost. This is a direct consequence of customer churn or existing customers choosing to downgrade their current subscriptions.

Irrefutably, only an all-inclusive churn analysis can help you know whether customer churn affects the MRR. For example, suppose two customers leave your service in a particular month and, consequently, five other customers upgrade to higher subscriptions over the same period. In that case, the five upgrades cover up the two you lost. However, remember that cutting customer churn is the focus whether you're maintaining the business MRR or not. This is because extended customer churn over few months will eventually lower the MRR no matter the number of current customers who choose to upgrade.

 

Churn Analysis

1. Get the Numbers

Google Analytics will give the number of customers you have gained over a period of time and the ones that left the service. To ensure your business grows, you need to maintain the difference between new acquisitions and churn at a positive value.


2. Where (Drop-off Points)

Perhaps, a vital metric in churn analysis is to understand where the customers are getting unsatisfied in the conversion funnel and, in the end, backing off. Funnel analysis will reveal customer behavior — how they navigate the service and lead points behind attrition. Therefore, you'll be able to know events leading before a customer leaves. The analysis gives actionable steps to improve the experience in the poor performance areas along the conversion funnel.


3. Why

It would help if you got deeper to behold drop-off points to answer why customers are leaving your service. Answering questions like, do you have comparable prices in the industry, what is customer satisfaction rate with the service, or the customer success rate will help you grasp precisely what you need to improve in the service delivery.

 

The Cohort Analysis in Google Analytics

Cohorts refer to a group of people that share similar characteristics. Henceforward, cohort analysis is the process that entails studying and analyzing the behavior of a particular group of people. Primarily, Google Analytics group cohorts according to the acquisition date.

The importance of analyzing these segments instead of the whole audience gives you a unique customer behavior for each cohort. Thereby, you can chart a targeted campaign or advertisement tailored for a specific group of people using predictive methods to know when they're likely going to make a purchase.

 

Purchase and Churn Probability now Present in Google Analytics

The two new predictive metrics in GA help businesses get improved behavior insights from prospective customers who visit their site or app.

One of these metrics is Purchase Probability, which tells you the likelihood of the active users that visited your web/app in the last 28 days to purchase in the next 7 days. The model uses the previous 28 days of data from when the user first visited the site or app.

The second one, churn probability, reveals an active user's chances (who interacted with your business's website or app) of turning inactive within the next 7 days. In other words, how likely is a user who was active the previous 7 days to be involved again on your site in the next 7 days?

 

Bottom Line

Reducing churn in your company requires more than getting insights from Google Analytics. You'd want to take steps to reduce the customer attrition in your business if you desire to grow your business and revenue. However, while you're a professional in your SaaS business, you're not in churn analysis and mitigation strategies. Hiring a specialist can get the work done!

At Eternal Works, we bring you tested and successful reporting and ROI services. Track and prove ROI with our closed-loop reporting. Get in touch with us today and learn further how we can help you reduce customer churn.

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