{"id":13349,"date":"2022-11-03T09:43:00","date_gmt":"2022-11-03T13:43:00","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=13349"},"modified":"2025-01-07T06:40:03","modified_gmt":"2025-01-07T11:40:03","slug":"how-modern-saas-finance-teams-can-reduce-customer-churn","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/how-modern-saas-finance-teams-can-reduce-customer-churn\/","title":{"rendered":"How modern SaaS finance teams can reduce customer churn"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tHow modern SaaS finance teams can reduce customer churn\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2022-11-03T09:43:00-04:00\">November 3, 2022<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"How modern SaaS finance teams can reduce customer churn\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/how-modern-saas-finance-teams-can-reduce-customer-churn\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author\">\n\t\t\t<div class=\"co-authors\">\n\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/david-appel-feyikemi-oniyitan\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/David20and20Fey20HubSpot-350x350.png\" class=\"entry-author__image\" alt=\"David Appel &amp; Feyikemi Oniyitan\" \/>\t\t\t\t<span class=\"entry-author__name\">David Appel &amp; Feyikemi Oniyitan<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\t\t<\/div>\n\n\n\n<p>Usually, customer churn rate is every SaaS company\u2019s worst enemy. But in this article, we\u2019re going to show you how to not only deal with churn effectively but also how you can use your customer churn data as a valuable tool to build your business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-voluntary-churn-vs-involuntary-churn-what-s-the-difference\">Voluntary churn vs. involuntary churn: What\u2019s the difference?<\/h3>\n\n\n\n<p>Before looking at customer retention strategies that can help <a href=\"\/blog\/tips-to-boost-net-revenue-retention-and-stop-churn-in-its-tracks\" target=\"_blank\" rel=\"noopener\">reduce customer churn<\/a>, it\u2019s essential to understand the difference between voluntary churn and involuntary churn. These are defined as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Voluntary churn:<\/strong> This type occurs when a customer chooses to unsubscribe from your product or service. The reasons motivating this type of churn can vary. It might be that your customers are having problems with bugs in your software or an important feature they\u2019d like to see missing.<\/li>\n\n\n\n<li><strong>Involuntary churn:<\/strong> Involuntary churn is the second type and occurs without your existing customer\u2019s formal knowledge. The most common situations behind this type of churn involve a problem with your payment processing or an expired credit card on your customer\u2019s end of the transaction.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1440\" height=\"752\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/image-1-1440x752.png\" alt=\"\" class=\"wp-image-27250\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/image-1-1440x752.png 1440w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/image-1-768x401.png 768w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/image-1-1536x803.png 1536w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/11\/image-1.png 1600w\" sizes=\"auto, (max-width: 1440px) 100vw, 1440px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>Now that you know the two basic types of customer churn to look for, let\u2019s go a bit deeper. What trends and patterns of concern should catch your eye if they appear, and what can you do about them?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-spot-and-act-on-usage-trends\">Spot and act on usage trends<\/h3>\n\n\n\n<p>Modern SaaS subscription accounting software makes it incredibly easy for SaaS companies to catch small, negative changes in customer behavior before they have the chance to develop into full-scale problems. As a SaaS CFO, this strategy of early detection followed by corrective action should be your go-to mindset for customer churn.<\/p>\n\n\n\n<p>More specifically, you\u2019ll want to take the pulse of these two revenue-based churn metrics regularly:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: bold;\">Churn MRR:<\/span> Monthly recurring revenue (MRR) churn is expressed as a percentage and informs you of the revenue you lost to churn over a given month. To find your churn MRR, subtract the amount of recurring revenue you lost to churn from your starting MRR for the month you\u2019re measuring. Divide that by your starting MRR to find your churn MRR.<\/li>\n\n\n\n<li><strong>Downgrade MRR:<\/strong> Your downgrade MRR is almost identical to your churn MRR but describes the revenue you lost to downgrades rather than churn. The formula used to find this metric is the same as the one described above. Just plug in your downgrade MRR instead.<\/li>\n<\/ul>\n\n\n\n<p>A streamlined and automated approach to your accounting department will help you quickly identify any negative revenue developments. You\u2019ll also be able to <a href=\"\/blog\/tips-to-improve-forecasting-your-saas-companys-monthly-recurring-revenue\" target=\"_blank\" rel=\"noopener\">run detailed forecasts<\/a> on various MRR scenarios.<\/p>\n\n\n\n<p>Outside of staying vigilant around your SaaS metrics and drafting proactive strategies, what else can you do to cut down on customer churn?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-automate-your-renewal-process\">Automate your renewal process<\/h3>\n\n\n\n<p>As a general rule, you should always look at your business processes and ask yourself the following question: Which can I automate, and which can I delegate? Once you\u2019ve answered those questions, you\u2019ll be able to focus intensely on a few central tasks rather than rushing around in a hectic haze.<\/p>\n\n\n\n<p>For now, we\u2019ll focus on automation, specifically as it applies to your renewals. Putting this aspect of your SaaS accounting department on autopilot can free up your team to field much more important issues around customer satisfaction, revenue, and other profit drivers.<\/p>\n\n\n\n<p>Depending on the scale of their operation and payment processing, many SaaS companies have found that just sending automated renewal emails can do wonders for boosting efficiency.<\/p>\n\n\n\n<p>It\u2019s also become common for companies to set up automated email notices that alert customers when their card fails to go through for payment. Usually, the email will tell the customer they have 7-10 days to update their card info before it gets charged again.<\/p>\n\n\n\n<p>This is an excellent strategy because it offers customers a window of time to get the situation straightened out instead of automatically churning customers. It helps with reducing revenue churn, but it\u2019s also thoughtful to your customers because they\u2019ll avoid the hassle of signing up again after involuntarily churning.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-build-customer-loyalty-and-incentivize-commitment\">Build customer loyalty and incentivize commitment<\/h3>\n\n\n\n<p>Offering incentives for customers who stick around is a fantastic way to build loyalty for your brand while strengthening ties to your happiest buyers. Accounting software built for the cloud can help you chart your course of action while planning your customer loyalty campaigns.<\/p>\n\n\n\n<p>With the power of automation at your fingertips, you\u2019ll be able to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: bold;\">Chart strategic risks and benefits:<\/span> See how your loyalty campaign plans impact your short-term and long-term revenue. This is very important because the long-term cost-benefit details of these arrangements can be time-consuming and complex to calculate manually.<\/li>\n\n\n\n<li><strong>Compare different scenarios in depth:<\/strong> With accounting software, you can instantly compare different \u201cif-then\u201d scenarios just by entering your data and pressing a button. This will enable you to arrive at insights and opportunities you might have missed with manual calculations and planning.<\/li>\n<\/ul>\n\n\n\n<p>We\u2019ve said it before, but it bears repeating. An automated accounting suite isn\u2019t just another purchase for the office. It\u2019s a long-term investment in your SaaS company\u2019s growth and ongoing elimination of customer churn.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-take-a-modern-approach-to-customer-churn\">Take a modern approach to customer churn<\/h3>\n\n\n\n<p>Embracing a streamlined and modern accounting workflow is one of the best things you can do if your goal is to leverage finance into a true revenue generator.<\/p>\n\n\n\n<p>If you\u2019re not careful, though, the switch to automation can also come with some costly mistakes that might even boost your customer churn numbers. <a href=\"https:\/\/www.sage.com\/en-us\/sage-business-cloud\/intacct\/resources\/Infographics\/5-steps-to-building-your-b2b-subscription-billing-strategy\/\" target=\"_blank\" rel=\"noopener\">Click here<\/a> to find out how to implement automation for maximum effectiveness.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Usually, customer churn rate is every SaaS company\u2019s worst enemy. But in this article, we\u2019re going to show you how to not only deal with churn effectively but also how you can use your customer churn data as a valuable tool to build your business. Voluntary churn vs. involuntary churn: What\u2019s the difference? Before looking [&hellip;]<\/p>\n","protected":false},"author":1606,"featured_media":9237,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[158,43,49],"tags":[2,334,170,427,346],"business_type":[40,312,41],"lilypad":[],"context":[418,430],"industry":[450],"persona":[150,100,98,96],"imagine_tag":[209,436],"coauthors":[615],"class_list":["post-13349","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accountants","category-money-matters","category-trends-insights","tag-accountants","tag-automation","tag-business-strategy","tag-cfo","tag-cloud-technology","business_type-small-business","business_type-accountants","business_type-growing-business","industry-software-saas"],"sage_meta":{"region":"en-us","author_name":"David Appel &#38; Feyikemi Oniyitan","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1272762106.jpg","imagine_tags":{"209":"Accounting","436":"Intacct Accounting"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/13349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/1606"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=13349"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/13349\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/9237"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=13349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=13349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=13349"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=13349"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=13349"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=13349"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=13349"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=13349"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=13349"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=13349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}