3. Retention  >  Develop An Early Warning System

Develop an early warning system to reduce SaaS churn

Developing a warning system to predict churn is a decent approach to reducing churn proactively. Assign churn score to customers that will help your sales team to identify users who are about to churn. Take necessary action to retain them.

●● INTUITIVENESS

Asana

Asana has developed a metric that it calls Account Health Score to measure customer success.

Upscope

Upscope has a simple ranking system that ranks users on the basis of usage.

UserIQ

UserIQ measures five key metrics to that it calls churn indicators.

How to use the technique

  • Identify key metrics that predict churn and engagement. For instance, login sessions, usage details, account activity, email open rates, satisfaction score, etc. are some of the metrics that determine the engagement level of a customer. Identify ones that accurately predict churn. Use our free churn optimization framework for more details. 
  • Develop a system to evaluate and monitor these metrics. Create customer health score or churn score metric based on identified metrics. The customer health score is used to identify customers about to churn.
  • Develop a dashboard for your team where they can monitor customer health score, share details, and work on campaigns to retain customers. The warnings should be displayed in the dashboard so that your team knows everything about customer’s health. Such as dashboard will streamline the process.
  • Create an engagement plan. The purpose of early warning is to engage customers who have low health score and are likely to churn. Create an engagement plan such as email series, retention callback, promotions, discount offers, etc.
  • Assign users to sales reps for engagement. Don’t automate the retention process. Ensure customers are taken care of by your sales team. Assign a reasonable number of customers to a rep.
  • Track performance. Is your warning system working fine? Are you tracking the right metrics? Is engagement plan delivering? Amend the warning system if it isn’t working. Read this free guide for more details.

Mistakes to avoid

  • Not defining customer health or churn score. Doing it all manually won’t work. Create a robust warning system so that customers with low health score popup in the dashboard right away.
  • Not reacting on time. The whole point of developing an early warning system is to reduce churn by taking proactive precautionary measures. Take action on time.

Research evidence

Khan, Manoj, Singh, and Blumenstock developed an analytic framework to detect signs of churn. This was achieved by assigning a churn score to customers. This approach to developing a rigorous system to create a warning system helps reduce churn.

%%%

There is a lot of research going on to develop models for calculating customers churn probability. Use their findings for your SaaS!


Related techniques SEE ALL THE TECHNIQUES >

Implement with our proven SaaS Churn Optimization Framework

Download a PDF with an exact process we use with our SaaS clients to research, define optimization opportunities and test.